How Many — And What Kinds — Of Bank Accounts Should You Really Have?

Have you ever wondered if you had the right number — and type — of bank accounts? Well, you’re not alone.

If you’re like me, you have a daily checking account, a savings account, and maybe an account at another bank to avoid overseas ATM withdrawals fees. Add to that another savings account for a big-ticket item, like that house we might finally buy, and you might be left confused. And things get even more complicated if you’re a full-time freelancer or own your own business.

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We sat down with some experts and asked their advice on just how many bank accounts you should have — and why.

Keep It Simple

“Most people will be well-served with one checking account and one savings account. The value of simplicity can’t be overstated,” says Julie Ford, a CPA and Certified Financial Planner at Ford Financial Solutions LLC. “I prefer online banks like Capital One 360, which tend to have no fees and offer high-interest checking and savings.”

Brannon Lambert, a CFP at Canvasback Wealth Management LLC agrees.

“I’m a fan of keeping things as simple as possible, regardless of the situation. Little benefit is gained by making things more complicated to manage,” he says. “You want a checking account for monthly expenditures and a money market account to hold your savings. You don’t want to keep your extra money in the checking account because it makes it too easy to spend. You may utilize a third account if you want to segregate funds for a specific purpose like a down payment on a home or large purchase.”

If you’re married, you might consider joint accounts, Ford notes.

“If you’re married, you’ll be just fine with one checking account and one savings account. Your checking account should have enough cash in it to help you sleep at night and allow you to easily pay bills and credit cards off in full each month,” Ford says. “Your single savings account should hold your emergency savings fund of at least three months of essential living expenses and debt payments.”

You may opt for separate accounts if you’re married, Lambert notes, but that will require additional accounts to manage.

“If you each want to have your own checking account for personal spending, you could do that, but I would still keep a family checking account to pay for all household expenses and monthly bills,” he says.

When Should I Have Additional Accounts?

There are some scenarios that might require additional savings accounts, Ford says. If you don’t have a steady income because you’re a full-time freelancer, you may need to “fake” a steady paycheck.

“Use a dedicated savings account to receive your income. Then, pay yourself a steady amount monthly with a transfer from this savings account to your checking account,” she says.

If you’re expecting a big tax bill this year, set aside money into a savings account dedicated to taxes each time you get paid. Trust me, you’ll thank yourself in April.

Saving for a large annual expense like a vacation, summer camp or annual insurance premiums? That also might merit an additional savings account. Simply make a monthly transfer into the target account each time you get paid.

“If you have a habit of carrying a credit card balance every time you take a vacation, you need to try this method,” Ford says. “Set aside money in advance of your travel so you can pay your credit card bill in full after your trip.”

Other potential reasons to open additional savings accounts: If you want to set aside money for charity, if you provide or plan to provide financial assistance to parents or other family, or if you’re a homeowner.

“Keeping extra cash in your checking account or in a separate savings account will protect your other savings goals when the unexpected strikes,” Ford notes.

If You Own a Business

Keeping your business and personal expenses separate is of utmost importance here, which may require additional accounts.

“Keep your business and personal checking separate, even if you’re a sole proprietor,” Ford says. “Initially, a single business checking account will serve most people just fine. Eventually, you might find use for a savings account to separate cash reserves for the business from your operating budget.”

If You Live Paycheck to Paycheck

Opening several accounts may also be beneficial if you have a tendency to spend the entirety of your checking account.

“If you’re living paycheck to paycheck because you have a tendency to spend whatever is in your checking account, then having several savings accounts could be beneficial, especially for large annual expenses,” Ford notes. “Figure out what your largest annual expenses are and save monthly into a dedicated savings account for these items.”

Lambert, however, suggests simplicity here.

“(I’d suggest) two accounts max here,” he says. “Obviously, you need a checking account, but I would also have a savings account, even if there is very little money to put there. If you do find yourself with extra cash at any point, you will want to put that away for emergencies in your savings account ASAP. Otherwise, your checking will be your primary account. If your bank charges fees to have a savings account, then just stick with the checking account for now until you can afford both.”

Final Thoughts

As with many financial decisions you’ll face, there is no one-size-fits-all answer.

“It’s really a matter of preference and what will keep you accountable to your spending, saving, and giving goals,” Ford says. “Depending on your life circumstances, additional savings accounts will keep you well organized.”

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