If you find that you are occasionally late on cable or phone bills, or your credit card balance is higher than you would like, try using a revolving savings account. The revolving savings account, although rarely discussed, is a useful money management tool. Revolving savings accounts are a great way to pay for irregular expenses like trips to the vet, new tires for your car, and even holiday spending.

What is a Revolving Savings Account

A revolving savings account, also known as a revolving fund or rolling savings account, is a savings account used to gather money for a specific goal.

And although money is typically added to a revolving savings account via automatic transfer from a paycheck or other account, deposits can be made at any time. And unlike a savings account, which is normally added and not withdrawn from, a revolving savings account is used as needed and replenished regularly, hence the name revolving savings account.

Creating a Revolving Savings Account

In creating your revolving savings account, you may ask how much do I put in to it. The answer to that is going to be different for everyone. To find the amount, you need to know how much you spend on these type of expenses in the past. These are expenses like:

• Holiday and birthday gifts
• Car maintenance and registration
• Health care
• Annual credit card fees

You can decide at the beginning of the year how much you want to spend on all these categories. Or you can go back through your credit card statements, expenses calendar record, or bank statements to get an idea of how much you should set aside in your revolving savings account. A calendar is an excellent tool to help you manage your money. 

Funds can also come from your spending plan, a specific monthly dollar amount, tax refunds, and bonuses.

The thing is, none of these expenses are unpredictable. If you own a car, you know you’re going to have to get tires at some point, and probably make some other repairs too. These expenses can add up fast. Revolving savings accounts are not made up of bill or emergency fund money.

Building a Better Spending Plan

Use a revolving savings account as a buffer between regular savings and irregular expenses. Over time non-budgeted, irregular expenses can add up and begin to deplete other savings.

It’s another tool that can help you manage your spending. Remember, there is no all-encompassing tool for managing your spending plan. Use what works best for you and your family. A pencil and paper, an Excel spreadsheet, or an automated application, use what works best for you.

A revolving saving account plan can help you in the process of managing your money.The best spending plan is one you can use and stick to consistently and works for your family. When you commit to planning and tracking spending, you will start to see success, and your spending plan will permit you to spend in areas you value and save toward your goals.