Benefits of Using Multiple Savings Accounts
You may already know that a savings account is an excellent place to keep money safe, but you don’t have to limit yourself to just one account. Opening multiple savings accounts can help with financial planning and organizing your finances. You should have a savings account as an emergency fund for unexpected expenses in life, such as car repairs, medical bills, or job loss.
Utilizing Multiple Savings Accounts
There are a few things to consider before opening multiple savings accounts and depositing money into them. Creating a strategy can help you organize your savings and direct funds to the right accounts.
Determine What You’re Saving For
The first step is to determine what you are saving for. Figure out how much your goals will cost, then calculate whether you can realistically save that amount. For example, if you want to take your family to Disneyland, you’ll need to account for the costs of admission tickets, travel, accommodation, and meals. After that, you can adjust the numbers and timeline to ensure that you can save the desired amount alongside your expenses, budget, and available time.
Know What Your Bank Offers
Secondly, you should find out if your bank allows you to open multiple savings accounts. Look out for monthly fees, minimum balance requirements, transfer fees, transfer limits, or any other factors that may incur additional costs if you use multiple accounts.
Automate Transfers As Much As Possible
Thirdly, once you have identified your goals and know how much you can save, consider the automated transfers mentioned earlier. This is important when executing your strategy as it ensures that you pay yourself first. A lot can happen in life, you might get busy, and transferring money to different savings accounts may not be high on your priority list. To ensure you continue to save, link your primary checking account to your savings accounts and schedule automated transfers for each pay period.
Refine Your Strategy
A good rule of thumb when planning and executing a financial strategy is to review your plan every two to three months or whenever you experience a change that could affect your finances. Many people face events that can alter how and how much they save or what they are saving for. With this in mind, you may need to adjust your payments over time, but that’s perfectly normal as long as you continue to work on it.
Frequently Asked Questions
How many savings accounts should I have for budgeting?
You should have enough savings accounts to organize your finances. You should have one savings account as an emergency fund for unexpected life expenses. Additionally, you might have an account for each goal, such as saving for a family trip or a down payment on a home.
How many savings accounts can you have?
The number of savings accounts you can have depends on your bank. Some may have an unlimited cap, while others may only allow one account. If you need more than one account, talk to your bank or look for one that allows you to have multiple savings accounts.
Should I keep all my money in one bank?
The money you have in your bank account is insured up to $250,000 per institution by the Federal Deposit Insurance Corporation (FDIC). You can keep more than that in one bank account if the bank permits, but the entire amount will not be federally insured. Check with your bank to find out how much you can hold in your accounts.
How much does the average person have in their savings accounts?
According to
A survey of consumer conditions conducted by the Federal Reserve Board in 2019 shows that it depends on the age of the consumer. The median wealth of people aged 65 to 74 is about $61,000, while the median wealth of those aged 55 to 64 is around $58,000, and individuals aged 45 to 54 have about $48,000. For people aged 35 to 44, the average is approximately $28,000, and those under 35 have about $11,000 in savings.
Source: https://www.thebalancemoney.com/5-reasons-for-multiple-savings-accounts-4177309
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