I Have 7 Different Savings Accounts. Here's Why

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KEY POINTS

  • I have many savings accounts open.
  • I've chosen to open seven accounts because each one provides different benefits.
  • Having multiple accounts can make sense to save for different financial goals.

Would multiple accounts work for you too?

I have seven different savings accounts. This requires me to do a little more work to manage my money, which makes this an unusual decision for me since I've mostly moved to simplify my financial life as much as possible. 

But there's a good reason why I have so many accounts open. In fact, I believe there are three big benefits to having multiple different savings accounts. Here are the reasons why I've made this choice for storing my spare cash. 

I have different goals I'm saving for

The most important reason that I maintain multiple savings accounts is that I am saving for lots of different goals. For example, I have:

  • An emergency fund
  • A home maintenance fund
  • A vacation fund
  • A fund for car repairs and replacement
  • A fund where I'm saving for big purchases
  • A savings account for kids activities and summer camps
  • A fund to save for a motor home I want to buy next year

Maintaining separate funds for each of these goals allows me to track my progress toward accomplishing each one. I can easily see if I'm on track to save my target amount by the date that I've designated for when I'll need the money. And because the money is earmarked for a specific purpose, I won't use it for other things besides what I've set it aside for.

Because I have different accounts for each goal, I can also set up automated transfers of the necessary amount of money into each account every month so I can ensure I stay on target without any extra effort. I've calculated exactly how much should be going into each account, and those funds are transferred just where they need to go on the day my paycheck is deposited. 

Some of my accounts are joint, but others aren't

Another big reason why I have separate savings accounts is because my husband and I want to keep some joint accounts and some separate ones. This way, we each have access to money of our own. We can each save for big purchases that we are interested in making without having to ask the other for permission to buy them. And we can work together on saving for joint goals, like buying the motor home or going on vacation. 

I take advantage of the benefits different banks provide

Finally, the last big benefit of having multiple accounts open is that I can take advantage of the benefits that many different banks provide. 

I can make sure I don't go above the FDIC insurance limits for accounts, so my money will be protected even if something goes wrong at the bank. And I can put some money into an account with a higher yield, even if accessing my money from that account is a little bit more complicated. 

For each of these reasons, maintaining seven separate accounts makes sense for me. And I think, for many people, having multiple accounts could be a smart financial move. The specific number you need will depend on your unique financial goals and your own situation, but don't assume that having just one account is the way to go.  

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