Building on the basics of personal finance that I started talking about last week, one of the biggest changes that The Wife and I made years ago was agreeing that cash isn’t fungible.  It took some convincing on her part to prove to me that creating different cash and investment buckets for specific purposes and goals would be better for us.  While I fought The Wife, initially, my contentions had more to do with logic rather than trying to understand how I, and she, were/are wired.

Currently my bank homepage looks like this:

ing accounts

Why Separate Accounts Works for Me

It took me longer than I’d like to admit to realize it, but for me, mental math does not work.  The money in house projects feels and is treated differently than the vacation fund.  It isn’t just a different purpose, but also what I might save into the account, how I might invade it if there is a need, etc.  I need a clear, albeit fictional, division between my buckets for me to be able to process and feel in control.  If there was one account it would be near impossible for me to know with any type of certainty that I have $X to spend on a vacation and $Y to upgrade/renovate the house.

I know there is someone out there thinking, it doesn’t matter it is all liquid cash – cash is fungible and exchangeable with itself.  However, when I made this slight change in thinking my savings habits completely changed.

The $25 or $50 a week I might be throwing into a vacation fund isn’t going into a black hole known as a general fund – and that keeps me focused and interested.  I use this buckets approach to organizing my non-qualified investments as well:

Fidelity Accts



Do you treat your stock accounts and cash as fungible?