How many different bank accounts should you have? This may seem like an odd question, but you may be surprised to know that there are actually many different opinions about the “right” number. Some believe that fewer accounts are better, while others believe you should have an account for each different type of expense you have.
If you’re working on multiple savings goals and want to keep them separate and/or are a fairly organized person that can keep track of multiple accounts and money flow, you may benefit from having multiple accounts. Plus, if you’re an impulse shopper, this method can help you move your non-essential money to an account that is difficult to access. Here are a few answers to the ‘How many accounts should I have?’ question.
Answer #1: It depends.
This article from Time argues that the ideal number of bank accounts for an individual depends on age and marital status. As you get older, and maybe do things like get married, buy a house, have children, etc., your savings goals change. Because of this, you may need to add a new account for each new goal (i.e. buying a house, saving for college). Each new account can be a “fresh start,” whether you decide to use a new bank or open a new type of account (like opening a 529 for college savings or using a CD for a down payment on a house). Just make sure you know the terms of the account you’re opening and keep that in mind when making your decision (i.e. if you’ll need regular access to the account, minimum balance, interest rates).
Moneycrashers suggests that multiple accounts, when set up efficiently, can be a great way to streamline your finances without having to think too much about it. This article also acknowledges that for people with different personalities and habits, the multiple savings method may or may not work well.
Answer #2: Four accounts.
One personal finance blogger has four different savings accounts, set up for activities, bills, crisis, and dreams. This particular setup is what she’s found makes the most sense for her current lifestyle.
Answer #3: Two accounts: one checking and one savings.
According to Daily Worth, most people should be fine with two accounts, but they recommend adding accounts if you’re married (a joint account for shared expenses) or you have a business.
Answer #4: One for each goal you have.
Bankrate suggests that having separate savings accounts also helps you track progress towards a goal better, which is motivating in it’s own way. For instance, keeping your emergency fund account separate from your savings account to purchase a new car, you’re less likely to dip into the wrong account. It also saves you from having to do the math whenever you want to figure out how much you have in one account or the other.
If you’re a bit disorganized, and worry about spreading your money too thin across multiple accounts, you may be better off keeping things simple. Another downside to a multiple account method is depending on your current financial situation, it may not be possible to set up multiple bank accounts and have them all feeding into one another. Rather than jumping “all in” with multiple accounts, start with smaller goals (such as creating an emergency fund) and go from there.
Ultimately, whether or not you want to have multiple bank accounts is a personal decision. At Oak Bank, we have several different types of deposit accounts, including checking, savings, CDs, and money market accounts. For more information on opening one (or more) of these accounts, visit our Deposit Products page or contact us!