How Many Bank Accounts Should You Have & Which Ones?

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2 months ago

How Many Bank Accounts Should You Have & Which Ones?

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2 months ago

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Everyone knows that access to banking is important, but even those that may have a bank account may not know exactly how they should be handling their finances or which accounts they would benefit most from. Of course, there’s no better time than the present to take the time to learn more about banking and what you should be doing with your money to benefit most from your financial activities.

If you’re looking deeper into banking opportunities and need some advice on how many accounts you should have open, let’s dive into the guide below to answer the question, how many bank accounts should you have and which ones are they?

How Many Bank Accounts Should You Have?

The difficulty with this question is that there’s no correct answer. It all depends on how you organize your finances and what works best for you. That being said, we can determine what the bare minimum should be, and what considerations you should make when you’re trying to figure out how many bank accounts you personally need.

If you want to make sure that you have the complete coverage that you need when it comes to banking, you should have, at the very least, one checking account and one savings account. A checking account gives you the ability to pay for your bills, your essentials, and other items that you may need on a day-to-day basis. Meanwhile, a savings account gives you the ability to store away money and receive interest on your savings (depending on the type of accounts that your bank has to offer).

Of course, that doesn’t mean that you can’t have more than one account. Some may decide to have multiple checking accounts for different payments and multiple savings accounts for multiple savings goals. The number of accounts you decide to open will ultimately depend on your money management style.

But with that in mind, exactly what type of accounts are there to choose from?

Breaking Down the Different Types of Bank Accounts You Can Open

So, exactly which accounts should you be focused on when you are trying to develop the right strategy for managing your personal finances? Let’s dive in…

Checking Accounts

While checking accounts may not be so tied to checks anymore (since debit cards or ACH transfers are typically used more to pay for expenses), checking accounts are still a main staple in today’s personal finance world.

Your checking account is where you receive your paychecks or deposit money, and it is the main source of funds that you draw from when you want to buy something or pay bills. If you have no other account with a bank, you should have at least one checking account. Otherwise, you’re going to find it hard to build wealth as being unbanked closes you off to the way that society operates today.

The good news is that you also have quite a few options, whether you’re interested in going the traditional bank route or even opting for more modern online bank options where you can open up a checking account with ease.

Related: The 10 Best Free Checking Accounts

Savings Accounts

Aptly named, saving accounts help us to store funds away that we may need later on and even earn interest (although most interest-yielding savings accounts offer very low interest rates that don’t keep up with the rate of inflation).

It’s important to look around for savings accounts as you can often find many higher-yielding savings accounts at certain banks, even though it’s not a bank that you may currently be with. With that in mind, you also need to pay attention to account restrictions as this will play a role in how often you can move your money around on a monthly basis.

Related: 10 Best High-Yield Savings Accounts

Money Market Accounts

Money market accounts offer the best of what checking and savings accounts have to offer.

Money market accounts often offer higher interest rates than a savings account but less than certain investment accounts like certificates of deposit. Additionally, money market accounts allow you to withdraw money and may even offer you a debit card you can use, which is why having a money market account offers a great checking/saving hybrid alternative to traditional banking methods.

However, like savings accounts, there may be certain restrictions that you need to be aware of as it can impact your ability to manage your finances. Whenever you approach a money market account, always do your due diligence to make sure that it offers features that will support you.

Related: Best Money Market Accounts

Business Checking and Savings Accounts

For those working a regular 9-to-5, a normal checking account and savings account will suffice. However, if you own your own business, trying to keep your personal and business funds separate as well as effectively report your income when tax season rolls around can be a real pain.

If you own your own business, it’s important to open a business checking and business savings account. A business checking account will help you track all income from your business and make it easier to pay yourself (if you’re operating a business where you earn a salary rather than a sole proprietorship, for example).

A business savings account is perfect for an emergency fund to help you deal with any unforeseen expenses or support your business during times of financial hardship.

Related: 10 Best Business Checking Accounts For A Small Business

International and Foreign Currency Accounts

Do you operate a business outside of the United States or accept and send money in another currency? If so, you can open up an international or foreign currency account.

As the name suggests, a foreign currency account allows you to hold and send foreign currencies from the bank that you have regular checking and savings accounts with. This won’t apply to everyone, but it’s worth knowing if you do happen to fall into the above category.

Investment Accounts (Worth Mentioning But Won’t Apply)

Many banks offer a host of investment accounts that you may want to look further into if you grow your wealth. Keep in mind that these accounts aren’t a part of the many accounts that we talk about opening in this guide. However, because they are accounts that are offered at financial institutions, we felt that they were worth mentioning.

Some investment accounts that you may encounter at your local bank include:

  • Brokerage accounts
  • Retirement accounts (Roth IRAs and Traditional IRAs/401(k)s)
  • Certificates of Deposit (CDs)

If you are currently looking to build your wealth, you can learn more about these accounts and how they work with your local bank. Just remember, even though these investments are safer than some alternative investments, it’s best to do your research and only invest what you can afford at the time. You typically can’t pull any money out of retirement accounts or CDs without triggering financial consequences in the process.

External Savings/Investing Accounts

There are quite a few innovative financial opportunities in this day and age that you should consider pursuing. Take, for example, savings/investment apps like Acorns and Stash. Both of these allow you to set deposit money on a schedule that works best for you, round your purchases up and deposit the remainder, and work with an investment strategy that fits your financial needs.

If you have trouble saving or want to dip your toes into investing, these accounts are perfect for you.

Related: Best Micro-Investing Apps

Cryptocurrency Accounts

Cryptocurrency has taken off in recent years, with assets like Bitcoin becoming household names. Although the majority of cryptocurrencies are treated like tradeable assets, some people may have stablecoins (coins with a stable value) or even use their cryptocurrency to buy stuff.

If you’re someone who invests in cryptocurrency and wants to use it to pay for bills or purchase daily essentials, consider opening up a crypto debit card or crypto credit card to make use of the funds that you’re holding in an exchange. Just make sure that you remember crypto assets are taxed anytime they’re being spent or exchanged!

As you can see from the above, there are plenty of bank accounts that you may wish to consider opening in order to improve your personal finance journey. The exhaustive list above will provide you with further insight into some of the bank account types that you may find at established local financial institutions as well as modern online banking solutions.

Related: The Best Crypto Investing Sites

Questions to Ask Yourself When Opening Up New Bank Accounts

We can’t tell you how many bank accounts to have, but we can help you ask yourself some essential questions that will determine which accounts you open and how many of them you may wish to have. Here are a few questions to help you get started.

  • What Are My Financial Goals?: You may not think that financial goals are necessary when it comes to basic checking and savings accounts, but they absolutely are. How much are you going to be setting aside in your savings each month? What are you saving towards? Does your savings account or your chosen investment accounts help you grow your wealth effectively? No matter what it is you’re looking to achieve with your money, set goals beforehand so that you know exactly which accounts you need to meet your goals in the future.
  • How Many Accounts Do I Need to Manage My Money?: Some people may only need one checking account and one savings account. However, that’s not to say that you can open more. For example, you may want two checking accounts and two savings accounts. Your two checking accounts can help you use one account for bills and one account for other expenses (with only one debit card tied to an account to defend you against losing all of your funds if someone should get your information). Meanwhile, you can use one savings account to create an emergency fund and another savings account to work towards some of your larger financial goals. Ask yourself, how many accounts do I need to manage my money? Then, create a plan of action to help you manage those accounts successfully.
  • How Can I Keep Track of All of These Accounts?: Having multiple accounts sounds like a great idea until you have to keep track of all of your accounts on top of transactions, log-in information, and so on. If you plan on using multiple banks or multiple accounts at your favorite bank, sign up with a service like Mint so that you can link all of your accounts to one dashboard and track your financial activity with ease. Budgeting your money won’t be possible if you can’t manage your accounts!
  • What Are the Advantages and Disadvantages of This Chosen Account?: Every bank account comes with its advantages and disadvantages. Knowing what these are and how they will determine your experience is something you can’t overlook if you want to get the most out of your banking journey. No matter how appealing a certain bank account may seem, compare it to both alternative bank accounts at other banks as well as online bank accounts. Certain banks may offer perks that your bank doesn’t, such as a reward for opening up a new account or much higher interest rates than you could find with your bank. Eventually, you’ll find the perfect bank account to store your cash in.

If you’re still unsure at the moment, the best thing to do is just to get started with one checking and one savings account. Then, once you’ve done more research and feel prepared, you can begin looking into other options to find bank accounts that will help you handle your personal finances with greater ease.

It’s Not a Matter of How Many Bank Accounts You Have, But What You Do With Them

The number of bank accounts that you have open depends on your financial goals and whether or not opening new bank accounts would help you manage your money with less difficulty. No matter what that may mean to you, you can use the guide above to get a better feel for where you should get started, what options are available to you, and what questions you need to consider to make the most of your banking journey!

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