Savings accounts are a good way to dedicate funds for specific purposes.
In the Ramsey baby steps, step 1 is to put $1,000 in an emergency fund. While you may think you need a “new” (fill in the blank), emergencies are just that – emergencies such as: car repair, medical treatment, furnace repair amongst other similar things.
Step 3 in the Ramsey baby steps is to build at least 3 to 6 months of expenses in savings. This increase in emergency funds ensures a safety net for normal and extraordinary emergencies such as home repair or change in employment.
After or concurrently saving for an immediate emergency fund and 3 to 6 months in savings, start a specific savings account for your yearly and platinum dreams.
Each year, you likely take a vacation or a short getaway; eat out for meals; buy holiday and birthday gifts; attend a concert, play or sporting event; do a project around your home, etc.
Once a year, make a list of all the activities and purchases you make outside of your normal budget expenses (mortgage/rent, utilities, etc.), assign a financial impact to each activity or purchase, and then determine an overall total. Once you have an overall total, divide it by 12 to determine a monthly savings amount. If you determine the list is beyond your income, take time to reduce or eliminate some of these extra expenses so you remain true to budget.