Why I love using savings vaults so much

Savings vaults

I first learned about savings vaults through Revolut banking where I was a metal customer for quite some time. I absolutely loved the cashback and advantages when I used the metal plan. I recently switched back to free as I'm not using my Revolut as much anymore and it didn't make sense to keep paying for it. I can't part with the account though.

When saving up for the emigration in 2022, I was using the vaults option to separate my savings for different goals. This way I had a good overview of where we were standing and could adjust my financial plan accordingly when needed without the need to calculate things fully over and over again. I simply made a spreadsheet adding the numbers of the vaults and the sheet did the maths. I added money when there was a deposit and lowered the amount whenever I paid something. A kid can do it!

It really helped me budget my way to the emigration and work out all the finances correctly.

Spanish Bank Account

When we arrived in Spain, it soon became clear that here in Spain, you have to have a Spanish bank account if you're registered as self-employed. The tax agency will not have it when you give them a Revolut account, or in fact, many other online banking options (we tried several). This banking nightmare was very stressful because we followed several lists of options, but none of them turned out to be allowed. As you need a bank account to register as self-employed, we needed to open the Spanish account in the end, it also came with mandatory insurance of 250 euros a year. Great! This was because my boyfriend didn't have a residence card yet and the account needed to be opened with a passport instead of the NIE number.

Rounding up purchases

Something that I've been using for quite some time using Revolut, is rounding up purchases for automatic savings. I really liked that option and was hoping that this Spanish account would offer something similar. I decided to check the options in the account and found that this bank also offers savings vaults. Navigating through them was horrible, I swear Revolut is so much more user-friendly but at least they have the option.

Creating vaults

The process was a bit different than in Revolut though. A new account needed to be opened (which could be done online, thankfully) without any costs, and then you can round up your purchases with the card which will be sent to this second account. From there, you can assign these amounts to 5 vaults maximum. My only complaint is that there are only 5 vaults possible, which is limiting my current savings plan. I'm considering getting a second card so that I can open 5 more vaults for more savings options.

Being ahead of bills

Not only am I now able to save up for my goals, but I also use it to be ahead of the yearly bills such as our car insurance. I remember it was a big budget cut when we stretched our budget to buy this car for a certain amount, leaving me with very little money to play with. And then the insurance turned out to be either 25% more expensive for half-yearly payments OR needed to be done for the year at once. Thankfully, I had some HBD savings which I used for that. I didn't want to cut our budget this much again next year so now I'm saving towards this goal monthly so that when the time arrives to pay again, I have this all covered.

Another thing I like to do to create a bit of extra budget/savings is to be ahead of monthly installments when this is possible. For example, we asked for an installment option to pay for the taxes from the first quarter. It was approved and it will not be deducted from the bank until the start of July, giving us some extra time to build in this monthly bill. Instead of waiting until July, I used these three months to add the first three installments into a vault as a buffer in case we have unexpected costs. If I don't have unexpected costs, I can move these funds to another vault to save quicker towards that goal.

Quarterly payments

Vaults are also ideal to use for quarterly payments such as taxes. I prefer seeing the money that's left as is, not including the tax payments so I'm also using the vaults to move the monthly tax contribution for being self-employed aside from the checking account.

Borrowing money from a vault

Creating these vaults also means I can borrow money from my savings when this is needed. After all, most of these vaults are used to save up money for a goal that will take several months up to a year, meanwhile, I could use this money for unforeseen costs or a good deal that I find for something I really need anyway. For example, we will get a tax return somewhere this year, we know how much it is but not when it will arrive. I could use a bit of our own savings to pay for something as I know I can refill the vault as soon as the tax return arrives.

In conclusion, I've learned that using several savings vaults makes budgeting much easier and it helps avoid having to stress out about unexpected costs. What about you? Do you use savings vaults or anything similar?

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Posted Using LeoFinance Alpha