A savings account can help you save money for a goal, such as a down payment on a house, a vacation, or an emergency fund. Many people have multiple goals that they want to save for at the same time. In that case, having a separate savings account for each objective may be a better strategy than having a single account.
Know How Much You Have Saved for Each Goal
If you’re saving for two or more goals and putting money into one savings account, that can make it hard to know how much you have saved for each purpose. You may see a large account balance and think you’re doing a good job, but that may not be true.
If you have a separate account for each goal, you may realize that you need to step up your savings in one area to meet your target. Being able to easily monitor your progress in multiple areas can help you stay on track and make adjustments when needed.
Avoid Temptation to Spend
If an account is clearly earmarked for a specific goal, that may make you stop and think twice before you use the money for something other than its intended purpose.
Reasons to Open Savings Accounts at Different Financial Institutions
Many banks and credit unions offer bonuses as an incentive for new customers to open accounts. You may be able to receive hundreds of dollars simply for opening an account and maintaining a minimum balance. If you open several accounts at different institutions, you may qualify for a bonus with each account. That can help you save at a faster rate with little additional work.
Another benefit of having accounts at different financial institutions is that it can make it harder to spend money on something other than its intended purpose. You will be able to link your accounts and make bank-to-bank transfers, but those typically take a few business days to be processed. Having that roadblock may help you stay on track. If you’re forced to wait to spend money on something it’s not meant for, you may decide that the thing you wanted to buy is less important than your long-term goal.
Consider Automating Your Savings
Setting up automatic transfers can help you save money for each of your goals. You can schedule transfers to your savings accounts each time you get paid. You will be able to choose the amount and frequency so you can save for each objective at a pace that is comfortable for you.
Having money automatically moved to other accounts can help you avoid the temptation to spend it on other things. If the money isn’t in your checking account, it will be a little harder to access, which can help you stay focused on your goals.