How Many Savings Accounts Should I Have?
Can you have multiple savings accounts? Is there a benefit in having more than one savings account?
There is no legal limit to the number of savings accounts you can have. Many people choose to open more than one for the introductory offers and transfer interest rates. As a result, these potential rewards can be an appealing reason to open multiple savings accounts.
Why Have Multiple Savings Accounts?
Aside from the attractive offers, multiple savings accounts can be beneficial for many reasons. Having more than one savings account may help organize your money, grow your money, and protect from overspending.
Set Money Aside
If you are saving for multiple things, it can help to organize how you set money aside. Having multiple accounts lets you separate your money into individual savings accounts for specific purposes. For instance, you may have a long-term savings account for a new car or the deposit for a mortgage, compared to a short-term account for a vacation.
Automate Savings
Having multiple accounts may make it easier to automate your savings efforts. You can set up automatic transfers to allocate specific sums of money to each account. These cash management accounts can make saving more efficient.
Protect Yourself from Yourself
Savings accounts can also help you curb your spending. If you have money earmarked for a special purpose, having it in a savings account may make it harder to access and splurge.
Monitor Progress
Like an operating cash flow formula for a business can help monitor financial progress, putting money into different accounts makes it easy to see which is growing and by how much. You may also be able to easily estimate when you’re going to reach your savings goal.
Build Momentum
Building momentum is as simple as seeing your money growing in those accounts. This can help you feel better about your progress and encourage you to continue.
Hold Yourself Accountable
Savings accounts may keep you accountable. Setting goals for your savings accounts may help you track your progress and adjust your funds accordingly.
Smooth Your Spending
If you know there is a big bill coming, such as an income tax or housing bill, a savings account can help you to smooth out this spending, so you are saving for it rather than taking it in one hit.
Yours, Mine, and Ours
Multiple savings accounts can be useful to separate individual and joint-funds for couples. Couples can utilize various savings accounts to differentiate between funds for shared bills and individual expenses.
Ensure Your Savings
FDIC insurance limits can protect up to $250,000 per account, but this can vary depending on whether you use a bank or a credit union for savings and financial services. So, it is important that you spread out your money if you go above this. Additionally, money in multiple accounts can help make sure you are insured if anything goes wrong with one account.
How Many Savings Accounts Do You Need?
The number of savings accounts you have is up to your discretion. However, you can have more than one. Many people utilize multiple accounts to individualize their savings based on the purpose. For example, different savings accounts can be opened for vacations, mortgages, or cars. You may find different accounts useful as a psychological trick to hold yourself accountable to your savings goals.
How to Manage Multiple Savings Accounts
Before opening a savings account, make sure you consider the terms and conditions. Many savings accounts have minimum balance requirements and will charge additional fees if it is not met. Also, compare the interest rates for different savings accounts to maximize your money.
Getting the best rates should be your priority. This can help maximize your money growth. Fortunately, it is easy enough to manage money with apps. To simplify your savings, you may open multiple savings accounts with the same bank. This allows you to access all your accounts through one institution. This can also improve the speed funds get transferred.
A Safe Haven for Your Cash
You need to know that your cash is kept safe, and spreading it into multiple accounts makes a lot of sense for this. Your finances can benefit from being insured, and the money is safe not just from scammers but also safe from your temptations when you are out and about.
The Bottom Line
We all conduct our financial business in our own different ways. There is not necessarily a “right” and a “wrong” way, but it makes sense to spread your savings among different accounts. Multiple savings accounts can help you organize and protect your money better. Others may find that separating their savings accounts can help keep them accountable and spend less.
