How Many Savings Accounts Should I Have?

A common question in the world of savings is, "How many savings accounts should I have?" Unfortunately, there is no one-size-fits-all savings solution, it's all about figuring out what works best for you and your financial goals. Many people have success with just one savings account, but for others, it can be difficult to understand just how much you're saving for each of your goals. An example would be if you're saving up for a mortgage while also using your savings account to save for travel and maintain your emergency savings fund. While one savings account will certainly do its job for all three objectives, breaking them into categories may make it easier to track each goal.

Let's dive into some of the ways to use the multiple savings accounts method:

Track Your Goal Progress.

Think of your savings accounts as goal trackers. When you have separate accounts for different financial objectives, you can allocate funds with precision. Whether it's saving for a dream vacation, a new car, or a cozy retirement cottage, you'll always know exactly where you stand. Having this visual can help boost motivation and keep you on track. Use each savings account for target goals and determine how much you want to save towards them.

Get Peace of Mind with Emergency Funds.

An emergency fund is your financial safety net and a good first goal for having a savings account. By giving it a dedicated account, you can protect it from any accidental spending. When your car breaks down or an unexpected medical bill arrives, you'll be relieved knowing your emergency fund remains intact and ready to help, should you ever need it. Some people find it helpful to take it a step further and break down their safety net into subcategories, such as home expenses, overdraft protection, or losing a job. It's like having a well-equipped toolkit for life's unexpected challenges.

Save More Together with Joints Savings.

Opening joint savings accounts can be a game-changer if you're in a committed relationship. It can provide financial transparency, simplify shared goals — like buying a house or planning for a family vacation, and reinforces your financial partnership. It's like building a financial dream team with your partner, working together to achieve mutual goals. Experts advise that while it's a good idea to have a joint savings account (or even accounts). But it's also a good idea to continue to have your own personal savings.

Take Advantage of High-Yield Opportunities.

You're probably already aware, that there are many different types of savings accounts from certificate of deposit to money market to high-yield. And some offer better interest rates than others. By diversifying your savings across various account types, including a high-yield savings account, you can maximize your earnings on funds you don't immediately need.

The Automation Advantage.

Set up automatic transfers from your checking account to your savings accounts, and you'll effortlessly contribute to your financial goals without even thinking about it. Just determine what percent you want to go to each account (e.g. 5% to an emergency fund, 5% to a travel fund, 10% to short-term goals), set it up, and monitor your goal-based savings.

While having multiple accounts may not be for everyone, if it works for you, it can be a great organizational tracker or you can benefit from the perks of different types of accounts.

Still have questions? We’re here to help! A Personal Banker from FNBO can help you set up a savings account and assist you in tracking your savings along the way.