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How to use multiple accounts to achieve your savings goals

Splitting your savings among different accounts can help boost your progress. Here’s how to do it.

Yahoo Personal Finance· Getty Images
Ivana Pino
·Senior Writer
5 min read

When saving for the future, where you put your money matters. But you don’t have to limit yourself to just one account.

In fact, using multiple savings accounts can be an effective strategy that helps you stay organized and accountable to your financial goals.

Parking your money in several different accounts can make sense if you have multiple short- and long-term savings goals, including:

  • A down payment on a home or car

  • Building your emergency fund

  • An upcoming vacation

  • Starting a family

  • Saving for your child’s college education

  • Starting a business

Multiple accounts can help you prioritize those goals and designate a specific amount to set aside for each one. You’ll also be able to easily see how close you are to reaching your individual goals within your desired timeline.

Some banks, such as Ally, allow you to create savings "buckets" within the same account to track different goals. Most banks, however, simply allow you to open multiple accounts. Depending on your ideal time frame for each goal, you might consider a different type of account for each one.

Your emergency savings, for example, should be easy to access because you never know when you’re going to need it. In this case, a traditional savings account or high-yield savings account may be ideal.

On the other hand, if you’re saving up to buy a home in five years, you might consider putting your savings into a certificate of deposit (CD). CD rates tend to be higher than traditional savings accounts. However, they also require you to keep your money on deposit for a set period of time (known as the term) or else face an early withdrawal penalty.

A money market account can be another savings vehicle to consider. These accounts combine the features of a high-yield savings account with the accessibility of a checking account and may come with check-writing privileges and/or a debit card.

There are a few benefits to opening multiple savings accounts:

When you have just one savings account, it can be tough to keep track of how much money should be allocated toward, say, your emergency savings vs. a dream vacation. Creating a designated bucket for each of the goals that matter to you ensures that you can cover an unexpected cost without setting yourself back in other areas.

If you’ve had the same savings account for a while, you could be missing out on higher rates elsewhere.

The annual percentage yield (APY) on a savings account represents how much interest you can expect to earn on your balance in one year. Savings account APYs are set by individual banks and credit unions and can fluctuate over time. By having more than one savings account, you may be able to take advantage of higher APYs across different banks or account types.

Many financial institutions also incentivize new customers with introductory promotions, including cash bonuses. These offers typically run for a limited time; if you open an account during the promotional period and meet the requirements, it can give your savings balance a boost.

Deposits at banks and credit unions are insured by the Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA), respectively. Insurance covers up to $250,000 per account holder, per institution, per ownership category. This means that if your financial institution fails, you won't lose your money.

However, if you have more than $250,000 in your savings account, it won’t be fully protected. Spreading your savings across multiple accounts at different institutions can help ensure every dollar is covered.

To make multiple savings accounts work for you, it’s important to be methodical and organized. Here are some tips to keep in mind:

If all of your accounts are held with the same bank, you may be able to view all of your account balances in one dashboard. However, if this isn’t the case, you’ll need to get a bit more creative to track your balances and progress. This could mean creating a detailed spreadsheet and setting aside time each month to update your tracker. Or if you’re looking for a more hands-off approach, a budgeting app such as Monarch Money or EveryDollar can do the heavy lifting for you.

Keep in mind that your bank may have certain rules in place to avoid a monthly fee, such as maintaining a minimum balance. Some banks may also charge an inactivity fee if your account goes unused for too long. So before signing up for a new savings account, read the fine print to find out if there are any special requirements, and be sure you can meet them.

To help stay on track with your savings, consider automating your contributions to each account. In most cases, you can set up recurring transfers from your checking account to your savings account(s). This ensures that even when your accounts are out of sight and out of mind, your balance is still growing consistently. Just be sure you maintain a buffer in your checking account balance so you don’t accidentally overdraft.

No, there is no limit on the number of bank accounts one person can have.

Yes. In most cases, you can have more than one savings account at the same bank. However, your bank may have individual rules around exactly how many accounts they allow per customer.

To ensure your money is insured by the federal government, it’s important to keep your total balance across all deposit accounts with the same financial institution below $250,000.