Savings and investments become our priorities when we start earning and learning more about accumulating wealth for future goals (and sudden emergencies). Setting up a savings account is the first step for everyone, and it is here that a pertinent question arises- how many savings accounts should you have? Let us look at the answer in this article.
Can You Have Multiple Savings Accounts?
From a zero-balance savings account to regular savings accounts in other banks, you can technically have multiple savings accounts without issues. There is no official limit to the number of accounts you can have. However, it doesn’t mean that you’ll go around opening accounts at every financial institution you come across, right?
Most people usually stick to around 3-4 savings accounts since they are relatively easy to manage. You can only have one zero-balance savings account, and the others will all have minimum balance requirements. They may mark your accounts inactive if there is no activity for a sizable period. You will also have to pay charges for not maintaining the minimum balance at times. Banks also impose multiple charges on these accounts, and the balance will decline if you keep them idle without any reason.
If done right, however, there are several benefits that multiple savings accounts may offer. Here’s looking at them below.
What are the Advantages of Opening Multiple Savings Accounts?
There are several benefits of opening more than one savings account (at least). For starters, setting up multiple accounts will help you track your financial goals more effectively. Automated transfer of money to other accounts from your primary account will help you cut down on impulsive spending. It will help you accumulate more money for future needs, while easily tracking progress and holding yourself accountable for savings.
Debit cards linked to some savings accounts have daily or monthly limits on fund withdrawals, like a zero-balance savings account, for example. If you have multiple accounts, they will come in handy if you need funds urgently (with multiple debit cards at hand). You can also use different savings accounts for different financial goals, investment payments, and savings targets. It will help you efficiently streamline your financial objectives without overlaps or confusion. Another thing to remember is that DICGC insures depositors for a maximum of Rs. 5 lakh in case of any bank reconstruction, merger, amalgamation, liquidation, etc. In such scenarios, having multiple accounts helps since the coverage extends to all the accounts and deposits you have in one bank. If you have accounts in multiple banks, then the coverage will separately cover each of them. It gives you that extra layer of security in unforeseen bank failures or other such scenarios.
How to Allocate Funds Across Multiple Accounts
Here is a sample blueprint for allocating money across multiple savings accounts:
Primary Account
One primary account is a must, where you will keep most of your funds for meeting monthly expenses. It can be linked to EMI payments, rentals, investment payments, shopping, and automated bill payments.
Zero-Balance Account
This can ideally be your salary account. You can regularly transfer a fixed amount from this account to the primary one to meet diverse expenditures every month. These accounts do not require you to maintain any minimum balance (which is a huge plus point), and there are several services available absolutely free of cost as well.
Joint Account
It is also a good idea to have a joint account with your spouse/parents. This will help you both save for shared objectives and build financial assets together. This account can be used to keep emergency or rainy day funds for at least 3-6 months or more. Nominate your spouse/children/siblings for these accounts, depending on your circumstances.
Children’s Savings Account
These are practical choices for teaching your kids about money management and inculcating saving habits in them from an early age. These accounts often have several unique features that make them excellent choices for you. Maintain at least one such account with your child and use it to save up for his/her future needs.
Senior Citizen’s Savings Accounts
Senior citizens sometimes opt for special accounts offered by banks with higher interest rates on deposits and FDs linked to the same. These accounts have features and perks tailored to this section of consumers, something that is often worth considering.
The money you keep in each of your accounts is completely your decision. It should be sufficient to ensure mental peace, without attracting you towards impulse buys. Bank balances may sometimes come down alarmingly at the end of the month or after major purchases, have a system in place to ensure a decent amount in every account. This will help you take care of unforeseen expenditures or financial emergencies more effectively in the future.
How to Manage Multiple Savings Accounts Smartly
Like everything else in life, managing multiple savings accounts is also an art that you can master. Just follow these tips for this purpose:
- Keep a list of all your accounts at hand.
- Maintain separate kits for each account, with the chequebook, all financial papers, passbook, etc.
- Use finance and budgeting apps to see your accounts on a single platform.
- Keep tracking your accounts regularly, checking the balance, transactions, etc.
- Focus on your primary accounts first and keep in touch with all your banks.
Conclusion
You can thus have multiple savings accounts without any worries. However, it is more important to focus on allocating funds smartly across these accounts, using them to meet future goals not just for yourself, but the entire family.