Looking at how many savings accounts you should have
How many savings accounts do you have?
One?
Two?
Five?
You might think you only need one or two, but having multiple savings accounts can be helpful. Here’s what to consider.
One or More Savings Accounts
You probably already have one savings account. Just how many more you need mostly comes down to personal preferences. However, setting up multiple savings accounts to fit your savings goals is a good way to go. For example, maybe you have one for your emergency fund, one for your vacation next year, and one for that new car you’ve been eyeing.
Start with an Emergency Fund
The one caveat to “make as many or as few savings accounts as you like” is the emergency fund. You must have an emergency fund in a high-yield savings account. You don’t want to get caught flat-footed when life deals you an unexpected expense. At the bare minimum, you want to have enough in that fund to cover three months’ worth of expenses.
Where to Save
When considering savings accounts, make sure you shop around for the best interest rate. If you find a better rate at a new bank, you should move on. Otherwise, you’re leaving money on the table. A good place to start is online banks and credit unions. They almost always have accounts with higher interest rates than big banks do.
Written by Chris O’Shea, Savvy Money.
