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Comment by shubhamjain | Hacker News Reader

Is there any significant benefit of thinking tens of long-term/short-term goals and planning, and managing different funds for them (emergency, travel, house, card, kid's college education..). Why not just have a 1-2 funds to dump your savings in and be smart about withdrawing from it? One could consist of conservative investment vehicles, other could have more aggressive ones.

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Because when you've got one big savings account it is a lot easier to look at it and say "Oh! I can afford a new car now!" and cash out your entire savings on one thing without taking the other things into account.

Having different accounts for different goals keeps a clean separation of concerns. When your car account has enough to buy a car then you can buy it and know you aren't taking away from what you have planned for your kid's college education. If you decide to take money from one account to pay for something else you have to actually think about what you are doing and are more aware of the trade offs.

I've found de-coupling to be the key to altering this sort of behaviour. The balance of my savings and investment accounts are separate from my budgeting. I allocate funds at the budget level, the balance of my various accounts being a secondary concern.

Yes.

It makes your funds easier to keep track of (what did you spend your money on?) and it makes overspending very difficult (without noticing).

I keep different buckets of money in different accounts with auto deposit.

Subdivision like that usually happens when you go from a less complex organic system to something more engineered. Compare this to just running programs, to having 27 different VMs running on a baremetal hypervisor. That serves to subdivide complexity to make it more manageable.

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