Here are Three Reasons to use Multiple Savings Accounts. Most people use only one savings account and one checking account and use those for everything. However, you can actually manage your money better by using multiple savings accounts.
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Three Reasons to use Multiple Savings Accounts
- Make Saving Automatic
- Track Your Saving
- Control Overspending
Now let’s take a closer look at the ways using multiple savings accounts can help you manage your money better.
Make Saving Automatic. With multiple savings accounts you can set up dedicated direct deposits (say that three times fast) for each account. Say you have a Car Repair fund and want to save $50 a month there for the next two years. You also have a Vacation fund and want to save $100 a month there for the next 7 months. If you just used one savings account it can be a hassle to remember to change the amount that you are saving. However with multiple savings accounts, you simply set up the direct deposit (or transfer from another account) for $50 monthly, ending 24 months from now. You also set up the other transfer for $100 monthly for the next 7 months. Your savings goals will be taken care of and the savings will stop when you want it to stop.
Track Your Saving. If you are saving for multiple goals using one account, it can be difficult to easily see when you reached a certain goal. Of course you can total all the savings goals and see what you still need to save to get there. However, there is a better way. Break your savings goals into each specific goal you are saving for and set up an account for each one.
Control Overspending. You can actually control your accidental overspending my using multiple savings accounts. When you have a few smaller accounts with low balances it signals your mind that you have less. You will be less tempted to spend $500 on your vacation if the fund only has $300 in it to cover those bills. It makes you think about still needing $100 to meet your Car savings goal, so you will pause on spending extra money on fast food.
Having multiple savings accounts can help you manage your money better. You just need to set up the accounts and let the technology do the rest.