Equity Goose
Most people save for retirement by setting up a single savings account that they tap into from time to time for emergencies. They’ll save and save but inevitably have to draw down multiple times due to financial emergencies or splurges like vacations. When your retirement and emergency funds are in the same place, it’s very difficult for those funds to grow.
The solution to this problem is to have separate accounts. You should have one savings account that you can never touch or tap into- this is what I like to call the “Equity Goose” (see the link below for more information). The Equity Goose is a sum of money that never decreases in value, it’s only purpose is to purchase assets that cash flow like real estate or to earn interest.
So the ideal situation is to have your Equity Goose account that only increases in value, and a separate emergency account that may rise or fall depending on circumstance. In addition to these accounts, you should have multiple other accounts for all the other things you’re saving for- vacations, a new car, your kids’ college educations.
Compartmentalization
A great resource for creating these multiple accounts in INGdirect.com. While I don’t get any financial benefit for mentioning them, I like them because they have a higher interest rate- 1.5% at the moment, which is much higher than other money market accounts. They also allow you to open up several accounts online very easily, which sure beats sitting down with a banker who’s questioning why you need six accounts.
Learning to compartmentalize your accounts is an extremely valuable tool! Practicing it will allow you to save much more money and put you a few steps ahead most Americans.
Links
For more information read “The Equity Goose and the Cash Flow Golden Egg”
To visit INGdirect.com click here 
