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Savings Accounts with Buckets: How They Work
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A savings account is an ideal place to stash cash for everything from emergency car repairs to vacations. The problem is that the total balance shows what we have, but not always what that money is for. That’s where savings buckets come in.
What are savings buckets?
Savings buckets let you divide your money into clearly organized goals. For example, you could have “emergency fund”, “summer trip” and “new laptop” buckets — all within your main savings account. You still see one total balance, but buckets let you track progress for each goal.
The money in each bucket earns the same annual percentage yield (APY) as the overall account. So as your account earns interest, your bucket balances grow.
As with any account at a bank or credit union, deposits are federally insured up to $250,000 per customer, per bank and ownership category (“single” or “joint” account). This protection applies to savings buckets. So the total amount in the account is protected up to $250,000, regardless of the number of savings buckets that make up that balance.
This feature can have other names, such as savings pockets, savings vaults, or sub-accounts, but the idea is the same. The goals are funded by the deposits you make to your savings account, as well as the interest the account earns. You decide where each dollar goes, and the savings pockets help you stay organized.
High-yield savings buckets
Buckets are especially powerful when paired with high-yield savings accounts, or HYSAs. These savings accounts have higher APYs compared to average options. This means your balance grows faster and you can fund your goals faster. Some of the best HYSAs have no monthly fees and offer tools that let you move money to your buckets automatically. And your savings buckets earn the same APY as the main account.
Savings pockets are similar to the cash-based envelope system, but your money earns interest and your savings can be on autopilot. And unlike keeping cash at home, which can be lost or stolen, money in bank accounts is protected by federal insurance.
HYSAs with buckets
Here’s a list of some institutions that have strong APYs and offer savings buckets, or make it easy to create savings goals with multiple accounts.
Ally savings buckets
Rate: 3.20% APY (annual percentage yield).
Monthly fee: None.
Limit: You can have up to 30 savings buckets in an Ally savings account.
Automatic contributions: Yes.
Limit: You can have up to 30 savings buckets in an Ally savings account.
Automatic contributions: Yes.
Ally Bank, Member FDIC.
Capital One savings accounts
(Technically, you open multiple savings accounts instead of multiple Capital One savings buckets. But the bank lets you give each account a nickname to help you stay organized.)
(Technically, you open multiple savings accounts instead of multiple Capital One savings buckets. But the bank lets you give each account a nickname to help you stay organized.)
Rate: 3.20% APY.
Monthly fee: None.
Limit: No limits noted.
Automatic contributions: Yes.
Capital One, Member FDIC.
OnePay savings pockets
Rate: 3.35% APY when certain requirements are met. Here are two ways:
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Receive at least $500 in eligible direct deposits a month, or
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Have a total balance of at least $5,000 at the end of the previous month.
Monthly fee: None.
Limit: One main savings feature, plus up to three pockets.
Automatic contributions: Transfers made via the OnePay app.
Note: OnePay is a financial technology company. Funds are federally insured via a partner bank.
SoFi® savings vaults
Rate: 3.30% APY when certain requirements are met. Here are two ways:
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Set up a direct deposit in any amount, or
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Make eligible deposits of at least $5,000 every 31 days.
Monthly fee: None.
Limit: No limits noted.
Automatic contributions: Yes.
SoFi disclosure
Sub-account alternatives
If your bank doesn’t offer built-in buckets, you can still use this same approach with multiple savings accounts. You just treat them as your own set of buckets (emergency fund, annual bills, travel, etc.).
For example, say you want to open an account that earns a really high rate. NerdWallet’s list of the best savings accounts features banks with savings rates as high as 4% or more. Not all of them offer savings buckets, but some will let you open more than one account. So you can open one for each savings goal.
High-yield accounts are typically online-based, so accessing them is similar to accessing savings buckets online: Sign into your account (one for each goal) and check your progress. You could even open online accounts at different banks (if you have a large number of goals, or if you want to earn new customer bonuses, for example).
How to set up savings buckets
Ready to create your own savings vaults? Here’s how you can start. Your setup will depend on your bank, but the process is generally the same whether you use one account with buckets or multiple savings accounts.
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List your goals. Start with the big ones like your emergency fund and annual expenses, then add your other personal projects.
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Assign a dollar amount and a deadline. This is where you give each goal a target. You can change the target at any time, but starting with even a rough timeline can help you prioritize. You can use the savings calculator below to help you plan.
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Match the goal to the account. Set up the account or accounts at your financial institution and give each bucket or account a nickname, based on each goal.
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Choose a simple funding rule. For example, send a set amount from each paycheck into each bucket. Or direct only “extra” money — tax refunds, bonuses, cash gifts — to a specific goal.
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Automate what you can. Institutions that offer buckets generally let you set up automatic deposits to each one on a regular basis. This can help you stay consistent and make saving feel effortless.
Common savings bucket categories
Your bucket names can be as specific as you want. To brainstorm, start with a few common types:
Emergency fund. This is the foundation. It’s for true financial emergencies, such as an unexpected medical bill, urgent car repair or a sudden loss of income. A common goal for an emergency fund is to be large enough to cover three to six months of regular expenses.
Periodic bills. These aren’t surprises. They’re predictable costs that don’t show up every month. Think insurance premiums, holiday gifts and routine home maintenance. For these rainy day expenses, a good rule of thumb is to estimate your annual total, divide by 12 and save that amount each month.
“I know it’ll happen eventually” expenses. These are likely, but the timing is fuzzy. This could include replacing an aging appliance or saving for a down payment on your next car. You’re preparing for a probable expense without needing to guess the exact month it’ll hit.
Fun and growth. This bucket is for goals you want, not goals you have to pay for. They could include travel, a new laptop, furniture or a professional certificate. When each purchase has its own bucket, you can spend with less guilt because it was planned.
Savings buckets turn a vague overall savings balance into a plan. They can help you earn interest while you build emergency savings, prep for planned expenses and save for the fun stuff, too.
» Dig deeper: Learn more about high-yield accounts
Savings calculator
Use this calculator to see how each of your savings buckets could grow over time.