There are so many opinions surrounding the number of savings accounts we must have. Some may prefer not more than one or two bank accounts to avoid the hassle of handling multiple accounts. Some others prefer multiple accounts suggesting how each of these accounts caters to different kinds of expenditures or financial goals in life. Though there is no thumb rule to suggest how many accounts you must ideally have, it all boils down to your financial goals and how you envision your finances in future.
So, next time, if someone tells you that the purpose of having savings accounts is limited to saving your earnings or paying your regular monthly bills and home loan instalments, it is time to look beyond what these accounts are touted as.
Let us look at how having more than one savings account eases our journey toward financial independence in the long run.
Helps in budgeting
If you find it difficult to strictly adhere to your budget, allocating your earnings to more than one account can help. Firstly, let us divide your expenses. You have your short-term, perennial expenses like utility bills and travel expenses. These are lifetime expenses that also underscore our standard of living to some extent. Next in line are the various kinds of loans that must be repaid through equated monthly instalments (EMIs). Leaving aside these expenses, we must allocate something to our sporadic needs like shopping during festivals or succumbing to the greed of updating your gadgets or buying a new one or going for weekend travel or throwing a dinner party for friends once in a few months.
All these expenses require money and our need to budget the amount in a way that overindulging our senses must not interfere with our need to save. If you keep a single account for all the aforementioned expenses, you will never realize the regularity of your expenses, thus, causing you to lose all that you have saved to date. Having more than one account that caters to short-term and long-term expenses allows you to keep a track of every penny spent on them. This also refrains you from going overboard with your tendency to spend frivolously.
Fulfil your financial goals
There may be so many things that you may be gunning for. Common examples are buying a home, saving for children’s higher education, daughter’s marriage, taking your spouse out on a world tour, and more. Saving regularly may not be enough to pay for these expenses, which means that you must invest accordingly. Keeping a separate account to cater to your investments (regular and lump sum) helps you to track how much you invest and how much more you must invest to attain your goals within a specific period.
Apart, relegating a separate account to your financial goals helps you compare investments and contrast earnings from them. Save enough, invest wisely and check if your earnings are in sync with your financial goals. Also, you can rethink your investments depending on market trends and risk appetite.
Peace of mind
Having enough money rings in the much-needed feeling of security. However, a lot depends on how you look at your money. Knowing how much money you have and where you have invested it helps. However, keeping all your money in one account makes it difficult for you to track your regular and infrequent expenses, thus, causing you to suffer unforeseen losses and penury in the long run.
Having separate accounts translates to spending responsibly while ensuring targeted savings and investments to meet your financial goals. Apart from the benefit of making smart investment options, there is an innate sense of security that can be difficult otherwise.