How Many Savings Accounts Do You Need?

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Last updated on July 31, 2019 Comments: 15

Back in the day, we had just one savings account. Mine came with a passbook. Now we ask–how many savings accounts do you need? We have the answer.

These days, more banks are offering low- or no-fee savings accounts. This can make it tempting to open a lot of different accounts. And, in some cases, having multiple savings accounts can be a good idea. But there’s also a time to keep things simple.

So just how many savings accounts does it make sense to have? Well, it’ll all depend on your particular situation and how segmented you want your finances to be. Here are some of the things to consider when it comes to how many savings accounts you need.

Pros and Cons of Multiple Accounts

Before we dive into deciding how many accounts to get in the first place, let’s look at some of the basic pros and cons to a multiple savings account approach.

Pros of multiple accounts

  1. Better goal tracking: This is the primary reason my family keeps multiple savings accounts. It makes keeping track of our savings progress and goals much easier.
  2. More separation of finances: We’ll talk more about this in a moment. But, basically, keeping money in separate accounts keeps you from accidentally spending your new car money on your vacation, for instance.
  3. Micro-control over deposits: If you want to save $50 a week for vacation and $30 a week for Christmas, multiple accounts makes that easy. When you’ve met your savings goals, you can then stop making deposits to those accounts. Yes, you can do this with your savings all in one account, too. But multiple accounts makes it easier, I think.

Cons of multiple accounts

  1. Potentially more fees: If you’re paying for the privilege of using each of your seven savings accounts, you’re doing it wrong. There are too many good, free options on the market to pay hefty fees for this strategy. But you do need to be on the lookout when opening new accounts.
  2. Potentially lower interest rates: This will likely only come into play if you maintain thousands of dollars in savings. Many accounts offer an interest rate bump when your average account balance passes a certain threshold. Separating out your savings can make each balance below this threshold so that you don’t take advantage of the interest rate bump. This is something to keep in mind as you overall savings becomes more substantial.
  3. More to manage: We’ll talk below about good ways to keep this strategy from getting too hairy to manage. But know that it will take a bit more work from you on the front end.

How Much Separation Do You Need?

Some people are really good at setting aside money as part of a larger account. For instance, you might have $500 in a savings account. You know that $100 is for your next vacation, $200 is for your next car, and $200 is for one-off expenses. If you’re good at keeping track of that and not spending money earmarked for other purposes, that works great.

In this case, you may just need two savings accounts: one for emergencies, and one for everything else.

But what if you’re not that great at this method? Maybe you need your money to be a bit more separated so that you are sure to spend savings for its intended purposes.

This is how my family is. I don’t like keeping track of earmarked money all in the same account. So we segment our savings with completely separate accounts. For instance, right now, we have accounts for emergency savings, travel, Christmas and birthdays, and one-off expenses. The accounts are all free, so it costs us nothing to segment our savings in this way.

You’ll need to determine based on your money management style what works best for you.

Also, keep in mind that some banks offer a middle ground option. For instance, PNC Bank offers its wallet system. This lets you earmark money for different purposes, even though it’s in the same account. Budget systems like YNAB let you do this in your budgeting system, as well.

One of these options can help you keep track of what you’re saving for, even without having multiple accounts available.

What Would You Use Multiple Accounts For?

When thinking through this question, the key is to keep balance in mind. You don’t want to open fifteen savings accounts just because you have fifteen different short-term savings goals. That would be difficult to manage, at best. But you might decide to create one account for short-term savings goals and one for long-term goals, for instance.

You may already have an idea of which accounts you’d like to open. But here are some ideas of the various things you might use savings accounts for:

  1. Emergency Savings: This one is a must-have for any saver. You should stash your emergency savings account in a high-interest savings account. Keep it accessible, but consider separating it from your primary checking account. This reduces the temptation to transfer money when it’s not really an emergency.
  2. Long-Term Savings: What counts as long term? That’s really up to you. You could consider any goal that’s more than a year or two out as a long-term savings goal. This account could include savings for things like a down payment for a home, a big vacation, or a new car.
  3. Short-Term Savings: Do you have a savings goal you can reach in just a few months? Maybe your annual family vacation or some new furniture? You might consider opening an account for shorter-term goals like these.
  4. One-Off Expenses: This could also be an additional free checking account. But it’s where you can put money for expenses you pay annually or quarterly. For instance, I use this account to stash money for our annual car registration and taxes.
  5. Specific Goals: You can also open savings accounts–as long as they’re free!–for specific savings goals. This can make it easier to keep track of all of your short- and long-term goals. For instance, my family has an account specifically for Christmas and birthdays. We also have a separate account for vacation savings. This gives me an at-a-glance view of how much we have saved for specific goals.
  6. Credit Union Relationships: Many times, credit unions have much better lending rates than banks. But to access a credit union loan, you may need to keep a bank account open there. If you have a local credit union you like, open a savings account there. Stick enough money in it to avoid fees. Then, just let it sit. You’ll then have access to the credit union’s lending products (most of the time). But you can put your other savings accounts elsewhere if those other locations are more convenient.

However you decide to use multiple savings accounts, it’s important to think through the details on the front end. You don’t want to keep opening new accounts and then having to close them because you simply aren’t using them. It’s better to begin with a plan and then go from there.

How Can You Manage Multiple Accounts?

So how do you go about actually managing all of these accounts? Well, you’ve actually got a few options here. Which one you choose will depend on the number of accounts you open, the goals for your accounts, what where you open your accounts. Here are a couple of options for managing multiple savings accounts:

Open them at the same bank

Opening all of your savings accounts with the same bank is a good way to get an at-a-glance view of all your accounts at once. It also makes your life easier. You can quickly transfer money from your checking account to one of your savings accounts. And you can transfer it back again if you need to do so.

Our multiple savings accounts are all with Huntington Bank. They’re all free. And when I log into our account view, I can see quickly how much we have in each account.

Having all your accounts with the same bank is convenient. But it doesn’t let you take advantage of the best deals and interest rates around. Plus, attaching your emergency savings account to your primary checking account isn’t always a good idea. So consider opening this account at a separate location, especially if that also lets you get a better interest rate.

You can also take a hybrid approach here. For instance, you might decide to keep your one-off expenses and short-term accounts with the bank that has your checking account. If money is revolving in and out of these accounts more quickly, you don’t need to worry about the interest rate as much. But then you can put long-term savings and emergency savings elsewhere, so you can take advantage of good interest rates.

If you do this, just get into the habit of transferring money from your checking account to your long-term savings and emergency accounts. Better yet, set up your automatically deposited paycheck to put money into these accounts on payday.

Use a good budgeting program

Another way to manage multiple accounts, even if they aren’t at the same bank, is with a good budgeting software. Options like Mint and YNAB will automatically pull in your account balances. So you can get an at-a-glance view of accounts that aren’t at the same bank or credit union.

These programs can also help you keep track of savings goals using these accounts. For instance, when you set up a savings goal with Mint, you’ll link that goal to a specific account. As you save money, Mint will tell you how much progress you’ve made. If you want to save a certain amount by a specific date, it’ll let you know how much to put into the account each month to reach your goal.

My suggestion would be to use a budgeting program that pulls in your account balances automatically. This is especially helpful if you are juggling multiple accounts. Otherwise, you’ll find yourself logging into several different online banks to get a picture of where your accounts are.

How Much Are You Paying for the Privilege?

Finally, be sure that you completely understand the fees involved with maintaining multiple savings accounts. As I said above, our accounts with Huntington are all fee-free. If they weren’t, I definitely would not maintain that many savings accounts.

Sometimes it’s worth your while to pay some small fees in order to access much higher interest rates or other privileges. But with all the fee-free accounts available, even high-interest accounts, it’s usually not worth your while.

If you have a higher balance to stash away, you can likely get out of paying more fees. But, again, just be sure you understand how much you’re paying to maintain multiple savings accounts, across the board.

Check Your Strategy Frequently

As with everything in life, there’s a time to go with multiple savings accounts and a time to pare things down. Be sure to check in on this strategy frequently to be sure it’s working for you and your family. I would suggest at least an annual check-in of your savings progress, fees, and management style. But it’s probably better to evaluate this strategy every few months.

How many savings accounts do you have? What do you use those accounts for?

For low fee, high rate savings accounts, consider one of these options:

Article comments

Tom says:

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Chuck says:

YNAB for the win… I have two, but that’s just because they’re in two different banks and the 2 business day thing to transfer money between them is a hassle.

Conversely, I have 24 budget categories which are designed to save money monthly for a goal, ranging from home insurance to Christmas to “subscriptions” (Amazon Prime, O’Reilly Safari, etc.)

Using bank accounts to keep track of what money has what purpose seems horribly difficult after 4 years with YNAB.

David says:

Years ago I found about Smartypig
It allows you to put money into savings goals on monthly basis. You can put money towards a goal as often as you like and they don’t penalize you for funding a goal early or even ending a goal and taking the money back out to fund something else.

Beth Anne says:

I found when I started using YNAB I actually closed a lot of accounts I had b/c the software managed the money n it didn’t matter where the money was sitting.

Anonymous says:

I have savings accounts across lots of banks,I’ve been taking some time to close some of those accounts.

Anonymous says:

Just one. High yield online savings. I can take a ledger sheet at home and divide the money into categories if I feel the need to do that, but it seems like a lot of work to have it in all different accounts. Simplify!

Anonymous says:

I have three savings accounts but should really only have two. I use ING Direct, USAA and Navy Federal. I really should close Navy Federal because I never use it and they don’t have a local branch here. I keep my USAA open because I like their checking account and them give me free ATM withdrawals and I have ING for my sub accounts and the “higher” interest rate. I really should open an account at a local credit union but haven’t felt compelled to yet.

Anonymous says:

I view the ING sub-accounts as just one. Sure they are technically different but i count all ING savings as 1 line on my balance sheet. I also have one account at my local credit union. It is tied to our car loan. We get a .25% discount on the loan interest rate by having both a checking ans savings account with them. Once the car is paid off we will into consolidating to just the one at ING.

Anonymous says:

I have four. One is dormant with $60 in a credit union just so we have the relationship continued with them as they have great loan rates. Not that we should need one but still. We have one connected to our primary checking with $200 or so. No biggie there either. We have an ING Direct Savings account and an Ally Demand Notes account for long term savings. These pay higher interest. So, technically four, but in practice, we use/track two.

Anonymous says:

Hmmm, I don’t know – less than 10. Three banks. One is our escrow account, one is our “real” emergency savings (to cover the mortgage if we are out of work), one is for things like new appliances or other “anticipated, but maybe not anticipated right now” expenses. I also have a vacation savings account, a holiday savings account, a lease mileage overage account I keep for a family member who isn’t as good as me at ignoring their savings, an account for charity donations, and I think there’s one or two more. For me it works, ymmv.

Anonymous says:

I keep it simple, just one account. I keep it as part of my interest checking account. It is generally short term otherwise it goes into a money market account.

Anonymous says:

I have one account at ING and several different subaccounts because I find it easier to save when you have specific targets to save for. We have an emergency fund, a house fund (which is about to get wiped out in 3 weeks when we move!), a Disney fund that we plan to take the kids next year, and a tax/insurance fund since we don’t have escrow for our mortgage.

Anonymous says:

I have 7. You definitely make a good point. I certainly don’t need 7 and in fact I may be missing out on better returns by dividing up my savings in this way. This summer I was already planning to streamline my finances.

Luke Landes says:

Are your 7 accounts spread across different banks? Does each have its own saving purpose?

Anonymous says:

Three are in the same account. Tbh there is no reason why I can’t streamline my savings.