How Many Savings Accounts Should I Have?
The number of savings accounts someone should have depends on a person’s financial situation. Most people will benefit from having an emergency fund and at least one other savings account. However, there are good reasons to have multiple savings accounts, depending on your personal savings goals.
How Many Savings Accounts Should You Have?
The right number of accounts for you depends mostly on what you’re saving for. If, for example, you want an emergency fund but plan to invest the rest of your spare cash through a brokerage account, one savings account is all you need. If, on the other hand, you have multiple goals, consider opening a separate account for each.
Why Should You Have Multiple Savings Accounts?
Not everyone needs multiple savings accounts, but they’re a good idea for anyone who has more than one goal for the money they save. Having multiple accounts could make it easier to set a budget for meeting each of those goals and reduce the temptation to withdraw money prematurely.
Your savings goals might include:
- Emergency fund
- Rainy day fund
- New car
- Down payment for a home purchase
- Home improvements
- Large purchase such as furniture or expensive electronics
- Vacation
- Expenses you pay infrequently, such as property tax, car registration and professional fees
- Children’s education
- Retirement
Here are types of savings that might benefit from being in a dedicated savings account.
Emergency Fund
An emergency fund is savings set aside expressly for financial emergencies or large unexpected expenses. Financial experts recommend having three to six months of monthly expenses in an emergency fund to start and eventually build up to six to 12 months’ worth.
Rainy Day Fund
A rainy day fund covers smaller expenses you haven’t budgeted for, such as a last-minute wedding gift or a small household appliance to replace one that’s on the fritz.
Sinking Funds
A sinking fund is for planned significant expenditures that are not part of the regular monthly budget. Examples include property taxes, insurance premiums and holiday gifts. The idea of a sinking fund is to put a small amount of money away each month for these future expenses so you have the money when the bill is due and you can avoid incurring debt to pay it.
Other Savings Goals
Any time you set a new savings goal — especially a significant one — you might want to consider keeping it in a dedicated account. Savings goals may include anything for which you might want to save, such as a home or auto down payment, vacations, college or home improvements.
Benefits of Having Multiple Savings Accounts
Dividing your savings into multiple accounts provides several benefits a single account can’t.
Protect Your Savings From Your Spending
One of the primary benefits to have multiple savings accounts is to protect your savings from your spending. Using an online bank account or opening a savings account at a different bank than your checking account makes it more difficult to access your money since it can take multiple days to transfer money back to your checking account. This can help reduce impulse spending.
Keep Your Finances Separate
While it might be easier to set up an automatic transfer to just one account each month, your savings goals might be challenging to track when the money is all in the same account. Having separate accounts — such as one for an emergency fund and another for a down payment on a home — makes tracking your goals easier and keeps your other funds safe should an emergency arise.
Take Advantage of FDIC Insurance
The FDIC will cover up to $250,000 in combined account totals in the same ownership category for the same depositor. If you have more than that in a CD, savings account or a money market account at the same bank, you should move some of that money to another bank to ensure that it’s protected.
Drawbacks of Having Multiple Savings Accounts
Juggling multiple accounts has some drawbacks you should consider before you move your money.
Maintenance Fees
Some banks charge monthly fees on savings accounts. Although it might be possible to have the fees waived, it could be difficult to maintain the minimum balances needed to qualify when you’re spreading your savings across accounts.
Harder To Earn Top Rates
Some banks offer tiered interest rates that increase with higher balances. If you don’t have enough funds in your account, you may not qualify for the best rates.
Difficult To Track
Some people struggle to stay on top of their finances. If you’re one of them, the burden of keeping tabs on multiple accounts might outweigh the benefits of having them.
Types of Savings Accounts
Once you have an idea of your financial goals, you should consider whether you’d benefit from any (or all) of the following savings account types.
High-Yield Savings Account
A high-yield savings account has a higher interest rate than what you would find for a traditional savings account. High-yield savings accounts are ideal for short-term savings goals since you can easily access the money when necessary.
Money Market Account
A money market account may feature a higher interest rate than most traditional savings accounts, but it also may require a larger minimum balance. However, if you do find a money market account with a minimum balance requirement you can meet, it might be another good option for short-term savings.
Certificate of Deposit
A CD typically offers a higher interest rate than a traditional savings account. Still, you lock the money into the account for a set period and generally face a penalty for early withdrawal. A CD is a good option for long-term savings that you know you will not need immediately, such as a home down payment or emergency fund savings beyond the initial three months’ worth.
Takeaway
Having multiple savings accounts requires more work, but it could be a helpful way to limit spending and stay on track to save for various financial goals simultaneously. You’ll have a better idea of how much you’ve saved for each goal, and you can often take advantage of higher interest rates.
If you decide that having multiple savings accounts makes sense for your finances, consider fees, APYs and balance requirements before selecting a financial institution and an account.
FAQ
Here are quick answers to common questions about savings accounts.- Should I keep all my savings in one account?
- Keeping all your money in one account may keep things simple but having multiple savings accounts has many benefits. If you don't always stay on top of your budget, keeping savings for individual financial goals -- especially emergency savings -- in separate accounts can help ensure you don't use the money for other purposes.
- Is there a downside to having multiple savings accounts?
- Managing multiple savings accounts can be trickier than managing one account since it takes time to monitor each individually and watch for inaccuracies, fraudulent transactions and fees.
- How much in savings does the average person have?
- The 2022 Planning & Progress Study by Northwestern Mutual puts the average personal savings at $62,000, down 15% from its 2021 study.
- Should I keep all of my money in one bank?
- Anyone whose qualifying account balances exceed the FDIC's $250,000 per ownership category, per institution insurance limits might wish to utilize more than one bank to ensure complete FDIC protection.
- Can I have two savings accounts at the same bank?
- Yes. Most banks allow customers to open multiple savings accounts.
- How much is too much in a savings account?
- Keeping more than $250,000 in savings accounts at a particular bank is risky because FDIC insurance only covers $250,000. Otherwise, there's really no such thing as too much savings. However, it makes sense to consider alternatives once you've established an emergency fund and are making good progress on your other savings goals. Investing your excess savings in a brokerage account, for example, can earn you a better return on your money.
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Barri Segal and Daria Uhlig contributed to the reporting for this article.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
- FDIC. 2023. "Deposit Insurance FAQs."
- Northwestern Mutual. 2022. "Planning & Progress Study 2022."
- Vanguard. "What's the right emergency fund amount?"
- Forbes. 2023. "How Many Savings Accounts Should I Have?"
