Most people keep a lump sum of their savings in just one savings account. But while it definitely helps you save money, opening multiple savings accounts allows you to plan better and become more flexible when it comes to unexpected occurrences. Can keeping multiple savings accounts help you reach your financial goals? Here are the pros of maintaining more than one savings account.
You have multiple financial goals.
You probably have more than one financial goal at any given time. You’re saving up for a house, a vacation, retirement, and the list goes on. It makes perfect sense to have multiple savings accounts to address all these targets. It’s a good idea to have at least three savings accounts. First, have an “emergency” fund for illness, job loss, et cetera. Second, open a “needs” account for necessary expenses like rent, utilities, annual insurance premiums, and the like. Finally, have a “wants” account for fun stuff such as vacations, gadgets, a new car, and many more.
You motivate yourself to save
By being specific about the things you are saving up for, you become more focused. When you see how close you are to reaching your goal, you’ll feel even more motivated to save and reach the sweet award. You can assess your saving habits and adjust accordingly.
It gives you a buffer in case of emergencies.
Unforeseen events happen. You could get sick or land in an accident. By having a savings account for emergencies, you'll feel secure that you have that emergency money when you need it. You should consider getting insurance as well. Insurance is like an emergency fund that ensures you have money when you need it the most. FWD’s KanGuard protects you from extreme accidents -- and it only costs PhP150 a month.
You can avoid the temptation of splurging.
A sale at the mall does not constitute an emergency. But it can be tempting to dip into your emergency fund to buy that pretty dress or those trendy basketball shoes. Don’t give in. Allocate your money into your emergency fund first. Don’t blow your savings on binge-spending at the mall.
You reach your goals faster.
Some people spend all their money, then save the leftovers. But that won’t help you fulfill your investment plans. The fastest way to save your money is to deposit it in different savings accounts as soon as you get your paycheck. Save first and then spend later. You’ll be surprised at how fast you can reach your financial goals if you keep multiple savings accounts.