How Many Bank Accounts Do You Really Need?
If you’ve got a single savings account to go with your regular checking account, that’s all you need… right?
The truth of the matter is that you may be better off with multiple bank and checking accounts, depending on your lifestyle and financial goals.
Here’s a breakdown of the number and type of accounts you may want to have open.
How Many Bank Accounts Do You Really Need?
1. Separate Accounts For Married Couples
Every married couple is different. While you share your life, your love, your time, and a lot more with your spouse, you may prefer to not share a checking account. Sometimes, relationships work better when each partner has a separate checking account to use for personal spending.
That way, you don’t run the risk of your debit card being declined on necessary expenses. Also, opening separate accounts can bring peace to the relationship, diffusing arguments before they crop up.
That being said, it’s still a good idea for couples to have a joint account for monthly bills and household expenses. Couples can divide up how much each is responsible for paying for bills and expenses and contribute that amount throughout the month.
2. Taxes Account
If you’re an independent contractor, that means you’re responsible for paying your own taxes. Doing so is a lot easier if you have an account dedicated specifically to this task. Use last years’ tax bill to determine how much your bill is likely to be this year.
Once you have that figure, split it up into monthly amounts you put back from your payments. Setting aside a little bit more than necessary is a good idea, as the IRS will send you a refund if you pay more than you have to for a given tax year, which is preferable to learning you owe more than you thought.
Taking this one step further, it’s also best to make estimated quarterly payments to the IRS. That way, self-employed individuals don’t have to worry about avoidable penalties and fees for neglecting to make quarterly payments.
3. Large Expense Account
Maybe you want to take a vacation next year. Or perhaps you’d much rather go ahead and pay your insurance premiums by the year rather than the month to save some money.
Either way, you can create a savings plan specifically for either scenario with a financial institution like GBTI Bank.
Besides putting back money towards a large expense, you can also take advantage of earning interest, allowing you to reach that goal faster.
Creating an account specifically for large expenses may also take the headache out of keeping track of your financial goals and saving up for your financial goals. Without the account, you may forget to put money back, but automatic deposits make that easier.
4. Business Account
Much like independent contractors, business owners should also keep their personal finances and expenses separate from business finances and expenses. Business accounts can be broken down further.
For instance, it’s not a bad idea to have a business account specifically for your monthly operating budget and another for cash reserves, just like you would have an emergency savings account for yourself.
5. Emergency Savings Account
Of course, you cannot go wrong with a basic emergency savings account. There is no telling what life will throw at you in the future, but having as much money as possible tucked away in an emergency savings account can bring great peace of mind.
Aim for having at least three months’ worth of your current expenses in your account, more if you can spare it. Look for savings accounts that offer high-interest rates, so you can earn money for your hard work and dedication.
6. House Or Car Purchase Account
Are you ready to buy a house or car in the next few years? If so, you’ll want to start saving up a large down payment. Accomplishing this is easier when you open an account specifically for that purpose.
Just like with saving up for a vacation or insurance coverage, opening an account specifically for buying a car or house makes the process that much easier. Again, earning interest on the amount you put back helps you reach your goal faster and makes the process easier.
7. Spending And Bills Account
Do you sometimes find that you accidentally spend the money you set aside for paying bills? If so, separating your spending money from your bill money could put a stop to that.
Sure, you may find it frustrating that you can’t buy a cup of coffee when you’re out of spending money, but that’s preferable to the late fees that come with not paying your utility bill.
8. Retirement Account
Your future self will surely thank you for having the foresight to save up for retirement. See what options banks offer for retirement accounts, making sure you take in mind what fees you have to pay and penalties you’ll incur for early withdrawals.
Take a long, honest look at your life and financial health, noting which account options will serve you best. The right combination of savings accounts can bring you better financial peace of mind and help you reach your financial goals faster.