Account balance should not be your monthly budget
The main problem is often that the entire amount in the bank account seems available here and now. On payday, the account shows 7,000 euros, but 4,500 euros of that is actually savings, 1,000 euros will soon be allocated for housing payments and bills, and 1,500 euros remain for daily expenses.
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In the bank app, all this is still shown as one sum. Therefore, an 80-euro dinner, a new phone, or a spontaneous weekend abroad may seem much more affordable than they really are.
This is the same principle as the envelopes people used to use: one for rent, another for food, a third for a rainy day. Clearly separated envelopes no longer exist in digital bank accounts, and it is this kind of separation that is often missing.
People control expenses more easily when money is given different purposes, even though mathematically all euros are the same. Research shows that keeping savings in separate accounts can strengthen self-control and improve financial well-being.
“Many people do not know exactly how much they can spend until the next paycheck because they see both daily money and savings accumulated over several months in the account. The problem does not start with one big purchase – savings often slowly melt away due to food orders, weekend entertainment, and discounted shopping. Separating these amounts makes decision-making easier,” says Edvardas Arnatkevičius, Head of Customer Relations Management Department in Lithuania at Bigbank.
Different tools for different goals
The current account can hold the amount needed for monthly expenses, and a reserve for unforeseen cases can be kept in a separate savings account.
However, a separate account alone is not enough if money can be transferred back with one click. A more effective system usually has several layers: automatic transfer on payday, a clearly defined savings goal and tool, whose balance does not appear daily on the bank app’s home screen.
For shorter-term goals, one can choose a term deposit, government bonds, or lower-risk money market funds. These tools differ in returns, the possibility of early withdrawal, fees, and applicable protection, but the most important thing is that such tools act like an envelope, which is usually not worth tearing open in advance.
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E. Arnatkevičius recommends dividing money by time rather than promised interest: “Amounts that may be needed in the next few months should not be affected by market fluctuations or be difficult to withdraw. For one to three-year goals, one can look for predictable returns, and for longer periods accept greater value fluctuations.”
It is important to also consider costs: current account administration or securities custody fees, fund management expenses, purchase commissions, and taxes on earned income. Investing 1,000 euros in a financial instrument with 2.6% interest would earn 26 euros per year. If platform fees are 12 euros, almost half of the interest would disappear before it is even received.
The longer the term, the more choices
If money will not be needed for at least five or ten years, one can consider investing in diversified equity funds or exchange-traded funds – ETFs. Their long-term return potential is higher, but during a market downturn, the value can temporarily drop by several tens of percent. Therefore, investments in stocks are not suitable for next month’s bills or financial backup.
Savings tools should be periodically reviewed due to changing interest rates. After the previous reduction, the European Central Bank increased the deposit facility interest rate to 2.25% in June 2026, which also raised EURIBOR. This does not mean all banks will immediately offer higher interest, but the returns on deposits, bonds, and other short-term instruments may change. Therefore, before choosing, it is worth comparing not only offers from different institutions but also different savings tools.
There is no universal answer as to where to keep “excess” money. The right solution may be a combination of several tools: daily budget in the current account, reserve in the savings account, deposits or government bonds for nearer goals, and diversified investments for the long term.
The main goal is not to make access to your money as difficult as possible or to earn the highest return at any cost. It is more important that when looking at the daily account, it is clear how much can actually be spent, and tomorrow’s savings are not confused with today’s budget.
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