Young woman holding a hand full of cash and wearing a hat

How many bank accounts do you have? One? Three? Did you know that having multiple different bank accounts can actually help you manage your money more efficiently?

Gone are the days when the standard was to only have one checking account and one savings account. There are three types of bank accounts you should have to help you budget.

Why Have Multiple Bank Accounts?

Having multiple bank accounts can make budgeting and managing your finances easier and more streamlined. While it may sound slightly excessive, it serves to keep your money organized, help avoid overspending and reduce finance-related stress.

How Many Bank Accounts Should I Have?

Here’s the thing…there’s no magic number. What works for me may not work for you. At the very least, a checking and a savings account is a good idea.

Being able to separate your money makes it easier to save money and not accidentally spend the money you were intending to save because it’s all lumped into the same account. Remember, you can always add more accounts as you go.

The number of bank accounts you can have will likely be limited by the institution you’re banking with, but if you want to open more and you’ve already reached your threshold, you can open more accounts at any bank.

3 Types of Bank Accounts You Need

There are many different types of accounts you can have, and even more if you’re looking to begin investing or own your own business.  Here are three types of bank accounts that will help you reach your financial goals.

1. Checking Account

Start with one main checking account. Think of this as your main operating account – a hub of sorts from which all other banking flows. This main account can be at your local brick-and-mortar bank or an online bank.

Keeping your main checking account at a local bank can offer the convenience of being able to visit a physical location and talk with someone in person if needed. With an online bank, your interactions will be limited to phone or email.

Both types of banks offer the option to withdraw cash from an ATM (fees may apply) and use a debit card.

This main account would be a great place to have all income deposited into and pay your regular monthly bills.

If you use the cash envelope system, this account would be a good place to withdraw cash to fill your envelopes.

If you and your partner/spouse keep your finances separate, then you may benefit from each having your own main checking account plus a joint checking account where you can pool your money for any shared expenses.

This will likely be a very low-interest account, and unless you are steadily keeping a large amount of money in here, don’t expect to earn much in the way of interest.

2. Savings Accounts

The next important bank account you should have is a savings account.  You can choose a savings account at the same local bank you have your main checking account or a high-yield savings account at an online bank.

Local Savings Account

We treat this main savings account just like our main checking account.  We have certain bills that are paid on a less-frequent basis drafted right out of this savings account and transfer funds into it each month from our main checking account to cover the cost.

In addition, this savings account is a great place for your short-term saving goals, i.e. quarterly bills, sports fees, holidays, or any other additional expenses you are saving for.

Another function of this account is to keep a small amount of extra savings because it is very liquid.

Keeping your main checking and savings accounts at the same bank makes it very easy to access or transfer funds back and forth when needed.

Much like your local checking account, you won’t see a huge return from interest on this account, but these accounts are not set up to make you money, simply to make handling your money more convenient for you.

High-Yield Savings Account

A high-yield savings account is necessary for any long-term savings goals or accounts that carry a higher balance.

High-yield (or high-interest accounts, as they can also be referred to) are usually online accounts. By keeping their operations online, these banks are able to drastically cut costs by not having to pay for physical locations and all the related expenses. They are then able to pass those savings along to the consumer (that’s you) in the form of higher interest rates.

High-interest savings accounts are the perfect place to stash your sinking funds, your emergency fund, or any larger sums of money you don’t plan on accessing on a regular basis.

By parking these funds in a high-yield savings account, your money has time to accrue interest instead of sitting in your local savings account, earning next to nothing.

It’s not exactly going to make you a millionaire, but if you’re going to have a substantial amount of money sitting in an account for a substantial amount of time, you may as well earn something, right?

Another advantage of a high-yield savings account is the absence of physical branches may lend itself more to an “out of sight, out of mind” mentality.  And since you will have to wait a few days when transferring your money out of the account, you’re less tempted to take the money out.

This makes it the perfect home for sinking funds such as Christmas money or home maintenance and even savings accounts for children.

3. Money Market Account

Obviously, it’s a personal preference where you want to store your emergency fund, but a money market account can also be a great place to keep it. You may find some money market accounts require a higher balance to be maintained, and be sure to check for any fees you may incur if your balance dips below a specific amount.

With a money market account, the interest rates will be more comparable to a high-yield account versus your local accounts, and most money market accounts also offer check-writing privileges as well.

This makes it a perfect option because you will be able to write a check to cover your emergency if necessary.

How Many Different Bank Accounts Should You Have?

How do you determine the number of accounts you actually need? This will be different for each person based on their specific financial situation.

If you have multiple savings goals, you may want to open separate high-yield savings accounts for each goal, or you may want to stick with one single account that offers the ability to virtually split your money into sub-accounts.

Essentially, all your money is still held in the same account, but the bank offers you the ability to divide it up online, so it appears to reside in different accounts.

Ally bank offers this functionality with its “buckets” feature. Instead of having separate accounts for each category, buckets allow you to organize your funds and easily move money back and forth between each “bucket” since you’re not actually transferring the money, just labeling it differently.

If you’d prefer to keep all your savings in one place, another option would be to manage your balances with a spreadsheet or printable tracker, as you’ll find in my printable budget bundle.

This is a great solution if you take more of a hands-on approach to managing your finances. It gives you a good visual to quickly see where your accounts stand at any time without having to log in to your bank account (especially handy if you keep savings at multiple different banks).

A real benefit to separating your savings using one or some of the methods above is preventing your short-term and long-term savings from mixing together. When the money is all pooled together, it can be easy for the lines to get blurred and possibly spend some of the money you have allocated for emergencies.

Everyone will have different banking needs, which will require different bank accounts, of course, but opening these three types of bank accounts is a great place to get started with a multiple-account type of system for managing your finances.

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Kristin Stones is the owner of Cents + Purpose, an online community dedicated to sharing practical personal finance content. Her mission is to equip women with the necessary tools and knowledge to take back control of their money and live a more purposeful life. She creates actionable content to help her audience achieve financial wellness using her simple approach to managing money - all learned through her personal experience of paying off almost $55,000 of debt in under two years.

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