Today many of us have bank accounts, its pretty standard stuff.
The one thing that we are not told about is how many bank accounts you should have.
At first thought you might think to yourself, why on earth would I need more than one bank account?
That’s a great question to ask because sometimes the answer is not so obvious.
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Why It’s A Good Idea To Have More Than One Bank Account
For many years I had one bank account and I thought that was pretty standard stuff until I started looking into financial freedom more.
I soon discovered that people would often have more than one account so that they could serve different purposes and be able to keep track of their money.
Simple and brilliant all at the same time.
Here Are Some Reasons To Have Multiple Accounts
1. They Help You Keep Track
If you only have one bank account it makes it very difficult to keep track of what your money is actually doing.
You might have your paycheck going in there and then money leaving it for all kinds of reasons. This could make it difficult to see exactly which bills have been paid and which have not.
If things get very messy it could mean that you end up overspending and not even realise it.
2. Money Is Allocated
Having many accounts is like having lots of pots of cash in the virtual world.
It’s a very good idea to name your accounts so you know exactly what the money is for. Doing this helps you to stay motivated and keep track of your savings.
I know personally for me once I am trying to save up for something and I can see the money building up I am much more motivated to continue saving.
If all of my money is dumped into one account I find it extremely difficult to keep track of what is happening and I eventually lose focus.
Sometimes before I realise it the money that I had planned on saving is gone and I have no idea where.
3. Help You To Reach Your Goals
One of the most important things about having multiple accounts is that you can set yourself saving goals and you can clearly see exactly where you are with those goals.
Remember when you were little and you wanted to save up for a new toy? You would put your savings into a little piggy bank and you knew exactly what that money was for. Every now and again you would count the cash to see if you had reached your goal yet.
Do You remember how good it felt when you finally realised that you had made it?
Well having all these different pots of cash is the same thing but in the virtual world.
Unfortunately, as we get older life is a little more complicated so we tend to need to save for many things at the same time requiring that you have more than one bank account.
If you know exactly what your goal is then you are much more likely to want to reach it when you can clearly see what it is and how far or close you are to reaching that goal.
How Many Bank Accounts Should You Have?
That really depends on what you want to do and the goals that you wish to achieve
Some bank accounts that you may want to have could look like this:
- Holiday fund
- Deposit for a house fund
- Wedding fund
Different Bank Accounts
Aside from the “fun” accounts, you need to have accounts that will help to keep your finances stable as well.
Here are a few accounts that you should start with:
1. Emergency Fund
Your emergency fund is your lifeline. It is there to make sure that if any financial emergency was to pop up you would be able to pay for it without it affecting the rest of your finances.
Your emergency fund is there strickly for emergencies that are outside of your control.
That might mean an unexpected trip to the hospital or because your roof has collapsed overnight.
If you have not heard of an emergency fund before you can read more about it here.
2. Day To Day Account
Your day to day account is where your paycheck goes into and from there all your money should be automated to go to where it needs to.
It’s a good idea if you can to always be a month ahead of your money as it makes it easier to make sure that your money is distributed properly.
I know that this is not always possible so in that case, you should make sure that your bills and such leave your account only AFTER you have been paid. You can easily do that by speaking to your utility companies to change your payment dates.
Once your money arrives in your account it should be automatically sent to all of your other bank accounts.
3. Savings Account
You may have lots of different savings accounts as we discussed above depending on how you want to do it.
I would advise that these accounts are clearly labeled so you know exactly what each one is for.
You also need a long term savings account which is for bigger things in the future.
You may decide that you want to invest this money later on but for now, you should have money saved that is not necessarily allocated to anything specific.
It’s a good idea to keep this in some type of high-interest account or a vehicle that will make your money work for you rather than depreciating because money does depreciate whether we like it or not.
4. Short Term Savings Account
Everyone needs a short term savings account.
This is NOT like your emergency fund which is strictly for emergencies only.
This account is for little things that pop up that need paying for. Your child’s school trip, an upgrade on your cooker, or any other lifestyle expenses.
Having a short term savings account like this will help you to resist the temptation of dipping into any of your other accounts when you need something.
Keeping Track Of All Your Accounts
When you have lots of accounts in this way its best to keep them in one place so they don’t get lost. Unless of course, you like your accounts being in different places.
There are some banks that will allow you to have one main account and then have lots of other ones attached to it. This is a really handy way to keep your money so you can see everything at a glance.
Final Thoughts On How Many Bank Accounts Should You Have
The number of bank accounts that you have is not as important as what those accounts are being used for.
The purpose of these accounts is to help you to better manage your money. It’s about keeping your money in an organized fashion.
If you have been struggling with money this is a really great way to start.