Do You Have Multiple Savings Accounts? Read This If The Answer Is ‘No’
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This website is passionate about numerous personal finance topics.
The most important topic covered here is savings. We’re bullish on people putting money away for retirement, emergencies, and even big-ticket item purchases.
Though the website covers savings extensively, there’s one aspect to savings we’ve never tackled – until right now.
Did you know it’s a good idea to have multiple savings accounts?
Most people only have one savings account and dump all of their extra money into that account. Still, as this article on LifeHacker explains, multiple savings accounts dedicated to specific goals is the smarter move.
The general idea is to think of each savings account as a folder.
“Like the old-school “envelope” or “bucket” budgeting system where you take your money and put it into an envelope marked for a specific purpose, this approach works the same, except it’s digital and automated by your online bank.
As an example, you could have savings accounts for different categories, like this:
- Emergency fund
- Taxes Fund
- Vacation fund
- New car fund
- Wedding fund
The idea here is that by seeing all your saving goals separately, they’ll be easier to track.”
Having multiple savings accounts also saves time by not forcing a person to use spreadsheets to figure out how much money is allocated to different financial goals.
As Lifehacker points out, one problem people will run into with multiple savings accounts are the bank fees associated with these accounts. The website has a suggestion.
“That’s why you should stick to online banks, which typically don’t charge monthly fees, have low minimum opening balances, and offer some of the highest annual percentage yields in the market.”
For more great advice on boosting the amount of money in your savings accounts, check out the 5 expenses to cut now to watch your savings skyrocket and the spending rule that could save you thousands of dollars to put back into savings.