How Many Savings Accounts Does Someone Need?

When it comes to our finances, plenty of people like to know they have enough to cover the bills, have some to one side for a rainy day, and have enough left over for some treats here and there throughout the month. So, with that in mind, how many savings accounts does someone need?

Of course, this is a personal choice, and it can be easy to think that just one is enough. However, there can be benefits to having multiple savings accounts that mean we’re more on top of our finances than ever before. Sometimes, it’s all about considering what you want in the future.

The pros of having multiple savings accounts

When it comes to figuring out how many savings accounts someone needs, it’s important to weigh up the pros and cons. Thankfully, there are plenty of benefits to having multiple savings accounts, including the fact you have broader FDIC insurance protection. The FDIC covers someone up to $250,000 per bank and per ownership category. If you have more than this in your account, you might find that some of your money is at risk. You can also keep your savings goals more organized. For example, if you are currently saving for a deposit for a house, you can put this in a long-term savings account and then use other shorter-term accounts for other things, such as saving for a vacation. Then, there’s a chance you could enjoy higher-yield offers and more bonuses. If you are proactive when you set up your new savings account, you could enjoy the perks and benefits that come with opening new accounts, including higher interest rates.

The cons of having multiple savings accounts

Of course, just as there are bonuses to having multiple savings accounts, there are also a handful of cons. One of the more obvious is the fact you now have more funds to manage. While there is no number that’s considered too many, it can be tricky to keep on top of what money is for what and which account is giving you the most interest if you open so many that you feel overwhelmed. Some also have minimum balance requirements or minimum monthly deposits that have to be made to avoid monthly fees or to get the best interest rates. If you’re splitting your money into various accounts, you might not be hitting these targets every month. Finally, not having all of your savings in one place could mean you’re missing out on getting the most interest on your money.

How many savings accounts does someone need?

There is no one number that’s right for everyone when it comes to how many savings accounts you need. However, opening more than one is becoming more and more common. One of the biggest reasons is that people have different savings goals, and the timeline to reach all of them could be different for different things. People are advised to have an emergency fund savings account just in case their source of income takes a sudden hit. This means having a set amount of wages put to one side in case you lose your job or have a sudden huge bill to pay. Having this in one account means you know that money is always there for an emergency. Then there are the other things you could be saving for in life, such as a new house or car, back-to-school shopping, a wedding or big birthday, or a vacation. These tend to have shorter timelines and could be things you need to access more regularly. There’s also a chance you might put smaller amounts into these accounts when you have money to spare. Keeping these separate from your emergency savings fund means you should have to figure out what you can spend and what needs to remain every time it comes to making a purchase.

There are ways to keep on top of multiple savings accounts

Thankfully, there are ways we can make managing multiple savings accounts easier. For one, using nicknames for your accounts can make things easier to manage, such as renaming one account your “Emergency Fund” and another your “Vacation Fund” account. You can also shop around to see what interest rates are out there. If you know roughly how much you can save each month, why not look for one that rewards you for depositing that much with higher interest than merely sticking to the bank you currently use just because it’s convenient? You can also automate your savings payments to come out of your main account on a set day of the month, so you don’t have to worry about making payments every month.

How many savings accounts does someone need? Simply put, it depends on someone’s savings goals. However, having more than one could offer some huge benefits, especially if you have multiple things to save for at once.