How Many Savings Accounts Should I Have?

Ways to Organize Your Cash

person in red and white striped shirt reviewing finances
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You probably know that a savings account is an excellent place to keep money safe. But you don’t have to stick to one account—multiple savings accounts can enhance how you organize your finances and save for specific goals. There’s no limit to how many savings accounts you can or should have, but it gets hard to keep track of them after a certain point.

Learn the benefits of multiple savings accounts, how many you can have, and how you can use them to organize your finances.

Key Takeaways

  • Multiple savings accounts can help you organize and save for your financial goals.
  • Setting up multiple savings accounts is easy if your bank allows it. You can also have accounts at multiple institutions.
  • A strategy helps you define your goals, how you will reach them, and keeps you on track.

Why Use Multiple Savings Accounts?

You might wonder why you should use more than one account; there are several reasons to use more than one.

It Sets Money Aside

Setting up different savings accounts for specific goals helps you save for those goals. You begin by moving money out of your primary checking or savings account to a new savings account. Doing this removes it from easy access and helps you resist the temptation to spend the money you've earmarked for something else.

It Automates Your Savings

If you have a steady income, you can automate monthly transfers to multiple savings accounts. That way, you never forget to save for your goals, and you get money in the right place quickly.

Many banks have automatic transfer features that come standard with your account. If yours doesn't, you might be able to transfer funds to another bank, but check to see if the bank will charge you for it.

Automatic transfers keep you from forgetting to save. However, make sure you deduct the money you have scheduled for transfer from your budget, so you don't forget it will be transferred and spend it.

It Protects You From Yourself

After you move money into a savings account earmarked for a particular goal, you may experience some guilt if you raid that account for luxury items or unnecessary expenses. This behavioral trick can help you stay on track.

You Can Monitor Your Progress

Multiple savings accounts let you track your progress toward your goals. When everything is mixed together, it’s less clear where you stand because your money is all in one place. You can even label each savings account with the goal you have to help you track your financial plan.

You Can Build Momentum

Success is motivating. If you see an account growing, you have positive reinforcement to continue your saving behavior. Working toward your goals is more enjoyable, and you’re more likely to keep it up.

You Hold Yourself Accountable

Your account balance doesn’t lie. If you decide to save money for something but don’t follow through, it’s important to figure out what’s happening. Using multiple savings accounts lets you quickly see what you might be doing wrong.

If you're not meeting your savings goals, you'll need to make sure you're tracking all of your expenses and spending. Then, make sure your goals are realistic; look at the timeline you've set for yourself and make sure you can save the amount you want with the expenses, budget, and time you have.

You Smooth Your Spending

A dedicated savings account can help you budget for significant annual expenses. For example, if you pay property taxes and homeowners insurance annually instead of using an escrow account, you might want to add to a savings account every month to build up the funds you need. By spreading out the burden of annual costs, you can avoid spending shocks throughout the year.

Your Savings Is Insured

If you’re fortunate enough to have significant cash savings, you might open savings accounts at different banks to keep your account balances below FDIC insurance limits. The $250,000 limit is typically per account per institution, so keeping excess amounts at a different institution helps you stay safe (ensure the bank is under separate coverage). That said, having more than $250,000 in one bank may be possible—ask your bank for details.

Using Multiple Savings Accounts

There is a little more to it than just setting up multiple savings accounts and putting money into them. Creating a strategy can help you get your savings organized and help money flow to the correct accounts.

If you’ve merged your finances with a spouse or partner, it may make sense to open several savings accounts. You can place money in separate accounts for spending on hobbies or yourselves. You could also create another account for joint goals and expenses. Discuss how you want to handle finances, and design a system that feels right for everybody.

Identify What You're Saving For

The first step is to identify what you're saving for. Find out how much your goals will cost, then figure out if you'll be able to save that much realistically. For example, if you wanted to take your family to Disneyland, you'd pick the length of your vacation, how many days it takes to travel, and all the costs involved in getting there. A three-day Park Hopper ticket costs $390 per adult and $370 per child. If you have a spouse and two children, you'd need $1,520 plus travel, lodging, and meals.

Four nights in a hotel, $800 for 12 meals, about $1,000 for a round-trip flight, $150 for a car rental—it's possible that you'll need $2,000 plus 10% for extra expenses. So if you can only save $100 per month for this trip, it would take 22 months to save the $2,200 you need.

If you have multiple goals, you'll need to compensate for those by playing with the numbers and timeline to make sure you can save enough and meet your monthly expenses at the same time.

Find Out What Your Bank Offers

Second, you should find out if your bank lets you open multiple savings accounts. Look for monthly fees, required minimums, transfer fees, transfer limits, or any other factors that might cost you extra if you use multiple accounts.

If your bank doesn't have what you need, look for another bank to move some money into. Online banks can also have what you need; in fact, they might offer the easiest approach to using more than one savings account. For example, Ally Bank allows you to open an unlimited number of sub-savings accounts in addition to your primary account. Online banks also offer subaccounts, which have several benefits:

  • No monthly fees, in most cases, which can wipe out any interest you earn or take from your savings
  • No account minimums, allowing you to start small
  • Competitive interest rates, helping you grow your savings

Automate as Much as Possible

Third, once you've identified your goals and figured out how much you can save, consider the automatic transfers mentioned previously. This is important when implementing your strategy because it makes sure you're paying yourself.

Life happens, you may get busy, and moving funds to a different savings account might not be at the top of your priority list. To ensure you keep saving, link your primary checking account to your savings accounts and schedule automatic transfers for each pay period.

It can also help to create a plan to stop all of your automated transfers in case a life event changes your situation. You can keep a list of all of your automated transfers or create a checklist you can follow to make sure you keep your finances organized if a stressful event occurs.

Refine Your Strategy

A good rule of thumb when planning and implementing a financial strategy is that it's best to look over your plan every two or three months or anytime you experience a change that might affect your finances. Many people experience events that can change how they save, how much they save, or what they are saving for. With that in mind, you might have to adjust your payments over time, but that's okay as long as you keep working at it.

To help you address any life events, you can prioritize your goals. That way, if something happens, you can reallocate money to fund your high-priority goal; you'd “borrow” from your lower-priority accounts. Diverting funds from your other accounts isn't ideal, but reality occasionally forces your hand—being able to take it in stride by having a plan, making adjustments, and keeping it going is what will get you to your financial goals.

Frequently Asked Questions

How many savings accounts should I have for budgeting?

You should have as many savings accounts as you're comfortable having. You could have one for each goal or only one savings account.

How many savings accounts can you have?

The number of savings accounts you're limited to depends on your bank. Some might not have a limit, while others might only let you have one. If you need more than one, talk to your bank or shop for a bank that lets you have multiple savings accounts.

Should I keep all of my money in one bank?

The money you have in your bank account is ensured up to $250,000 per institution by the Federal Deposit Insurance Corporation (FDIC). You can keep more than this in a bank account at one bank if the bank allows it, but the entire amount won't be federally insured. Check with your bank to see how much you can keep in your accounts.

How much does the average person have in their savings account?

According to the Survey of Consumer Finances done in 2019 by the Board of Governors of the Federal Reserve, it depends on the consumer's age. Those 65-74 years old average about $61,000, 55-64 about $58,000, 45-54 have around $48,000. Ages 35-44 have about $28,000, and those less than age 35 have about $11,000 saved.

Article Sources

  1. Federal Deposit Insurance Corporation. "Deposit Insurance."

  2. Disneyland Resort. "Help with Tickets – Frequently Asked Questions."

  3. Ally. "Should You Open Multiple Savings Accounts? Learn the Pros and Cons Here."

  4. Board of Governors of the Federal Reserve System. "Survey of Consumer Finances, 1989 - 2019."