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Personal Finance

I Have 5 Savings Accounts…Here’s Why You Should Have Multiple Savings Accounts Too

I Have 5 Savings Accounts, Here's Why

I remember the days of my teenage years – I loved money, but I absolutely HATED the idea of saving it. My motto was simple, I earned my money, and I planned to enjoy it as soon as possible, because I could always get more. I have to be honest, if I could travel back in time, I would do so just to slap some sense into my own naïve self! Seriously, what was I thinking? Thank goodness times have changed and I’ve actually gained some financial literacy. In fact, nowadays, I’m addicted to saving my coins. Now I have 5 savings accounts, here’s why you should have multiple savings accounts too…

Why I Have 5 Savings Accounts

Over the last year or so, I’ve become pretty serious about my finances. If you’ve read some of my previous posts like “How to Improve your Relationship with Money” and “5 Things I Did to Save Money”, you know that eliminating my debt has been my top priority. Although it’s very important with regards to me reaching the financial freedom I desire, it’s not the only piece of the puzzle.

In fact, as I explained in my post “How to Re-program Your Money Mindset” I mentioned that if you wanted to see a true change in your financial situation, you have to shift your perception of it. Being debt free is only one element of my financial independence, but having adequate savings is another. (Investments is also an element, but I’ll save that for a later post). Shifting my money mindset has allowed me to get real about my money and making it work for me in the short and long-term.

Security

So, when I was able to think really think about my money and my future, the reasons for having multiple savings account became pretty clear. My first reason for having five accounts is security. One of the key things that I learned in business school about assets is to DIVERSIFY. When you have all of your money tied up in one spot just isn’t smart and can be very risky. Because if that one account or asset is compromised, you lose and you lose EVERYTHING that you have. These days, identities are being stolen left and right and credit card fraud is on the rise. Now, imagine that someone was able to retrieve your bank information for the one savings account you have…is your heart racing as fast as mine is right now?

Different Financial Goals

The next reason why I have multiple savings accounts is because I have multiple financial goals. In the next year alone, I want to save for an investment property, move into a new apartment, travel overseas, and double my emergency savings. That’s doesn’t even take into account financial obligations outside of my daily living expenses that tend to arise on occasion, like needing new tires, or medical bills. Trying to keep track of my progress and finances for all of these goals can be difficult when they’re all tied to the same account. Having multiple accounts gives me flexibility while also allowing me to keep better track of what I’m saving and where I’m actually saving it.

Moral of the story here is that if you have multiple savings goals and want to keep better track of your money, I’d highly recommend having multiple accounts. Think of these accounts as buckets, they can change over time as your life’s needs and priorities change.

The Benefits of Having Multiple Savings Accounts

Moral of the story here is that if you have multiple savings goals and want to keep better track of your money, I’d highly recommend having multiple accounts. In doing so, you should be specific and clear about what your financial goals are and then create accounts for each one of those goals, contributing as little or as much as you want to.

If you struggle with saving money or just want to get on the fast track towards meeting your financial goals, here are some benefits to consider.

  1. You can better monitor your progress.
  2. When you have better visibility, you can take more accountability for your spending and identify bad habits or purchases.
  3. You’ll be able to stay motivated and build momentum towards reaching your financial goals because you’ll be able to see your progress towards your specific goals.
  4. You can take advantage of the different perks each of your accounts have.
  5. You’re taking a step towards better protecting your money.

I have 5 Savings Accounts, Here's Why

 

So, there you have it! How many savings accounts do you have?

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2 Comments

  • Reply
    marvette critney
    December 6, 2019 at 10:50 pm

    Great advice. I also have multiple savings accounts for various things. As a homeowner and real estate broker, I have a house -savings account for house related emergencies. I advise all my clients to establish the same. I have a travel savings acct, misc account, investment savings account- if I come across something extra I want to invest in outside of my normal investments) and I have my standard savings acct as well.

    • Reply
      Monique Elise
      December 10, 2019 at 2:18 pm

      These are great! Thanks for sharing xoxo

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