Five Amazing Benefits of Having Two Savings AccountsShare on:
5 Benefits of Having Two Savings Accounts
We understand that your checking account is the fun one.
And it makes sense, because your checking funds your day-to-day purchases - ATM withdrawals, gasoline fill-ups, that $7 cup of morning coffee, that online shopping spree, and your extensive weekly grocery list. But don't let your checking account have all the fun. Because as far as we're concerned, the savings account is the undersung hero of your finances. It's the account that helps you save for vacations, manage major expenses, and establish peace of mind.
And what's better than one savings account? You guessed it; two savings accounts! Skeptical? Check out the five benefits of having two savings accounts.
1. Save for Fun and Leisure - Without the Guilt
While it's definitely important to routinely save for important life stages like your retirement or for an emergency fund, savings account don't have to be all work and no play. With two separate accounts, you can easily manage your priorities. Go ahead and set up a savings account for that emergency fund, but then feel free to use an alternate account for fun and leisure.
Need a couple thousand dollars for a vacation in the Bahamas or a cruise with friends? You can create an account for that, and keep it separate from other savings. Want to save money for your specialty hobbies (while still maintaining your emergency fund)? You can do that, too! Watch your extra money from work bonuses or savvy shopping rack up in your fun-times-savings-account, while keeping your other savings separate. This way, you can look forward to the future without feeling like you're neglecting other crucial savings goals.
2. Helps Clarify your Vision of the Future
Research has suggested that one of the best ways to get into the habit of saving money is simply to develop a clear vision for your future.
This make sense, doesn't it? It's difficult to save money if it seems like you're always sacrificing in the present moment - and you're not even sure why. Managing your savings accounts consciously can help you overcome this psychological hurdle. To do this, sit down and highlight some specific and actionable goals. Take, for example, winter heating bills in colder climates. If heating your home from October to April causes you stress, you can help mitigate that feeling by breaking big costs down to digestible chunks.
Once you have your goal in mind, it's easier to visualize the end product of that goal (having money set aside for heating costs!). It's also easier to break down that bigger goal. If you know you want an extra $1,000 in the bank by next November to offset the cost of oil, make a commitment to yourself to set aside a certain quantity a month.
Now, repeat those same steps for everything coming up in your future:
- Identify a vision for your future - feeling less stressed about bills or saving up for a new car.
- Do the math. How much do you need total? How much would that translate to monthly?
- Set up a savings account for each goal.
- Watch your visions turn into reality as you save!
3. Increase your Sense of Control Over your Finances
3. Increase your Sense of Control over your Finances
When it comes to finances, one of the absolute worst feelings is sensing that you lack control of your monthly income and expenditures. If you're looking at your statement balance at the end of everything month and wondering, "Where did it all go?" then you're not alone. According to a recent survey from Bankrate, 39% of Americans don't save money because "expenses" get in the way.
Although managing expenses requires an in-depth look at finances, managing your savings accounts can be just the push you need to feel more in control of your money. By opening multiple savings accounts, you can visualize where your savings is going to each month. It demonstrates tangibly that you are ultimately in control of your money.
Having multiple savings accounts can also help you manage financial obligations like self-employment or freelance taxes. Many people who operate side-hustles in addition to their main job open a separate savings account just used to collect their quarterly taxes. This way, when quarterly taxes are due, there's already high estimated amount ready to go.
4. Easily Automate for Streamlined Saving
While it's wonderful to retain personal control of your accounts, there's a certain amount of freedom that comes from automating those processes. Most employers offer direct deposit to their employers. If you look closely at the direct deposit sign-up's, there's usually an option to have your paycheck split into multiple accounts. Many people overlook this information, despite the fact that automatic deposits into savings accounts can be an incredible resource for you—and your goals.
If your goal is, for example, to set up an emergency savings account to give yourself greater peace of mind, it can make a world of difference to automate this process. Set it up so that a portion of your paycheck automatically goes to your Emergency Funds savings account. If you don't have direct deposit, talk to your bank about setting up recurring transfers from your checking to your separate savings accounts.
There's no need for splitting paychecks and transferring from checking to become a full-time job. Automating your savings prevents the process from becoming a burden, and allows you to focus on more important things —like planning for your next vacation, or scoping out presents for holiday shopping.
5. With the Right Institution, It's Convenient & Simple
Depending on the financial institution you partner with, opening multiple savings accounts can be an incredible convenience. For example, institutions sometimes impose limitations on the amount of transfers you can make from a savings accounts to other accounts. By opening two savings accounts, you can double the amount of transfers you're allowed. When it comes to picking an institution for your savings accounts, make sure that they prioritize the ease and simplicity of your transactions. A great credit union will allow:
- No monthly service fees.
- Free online banking so you can remotely manage and track your savings.
- Competitive dividend rate so you can earn interest as you save.
- A nominal fee for opening a savings account (some institutions only require a $5.00 deposit)
- Convenient 24/7 access to your accounts.
Opening two savings accounts is a great way to help you gain control over your finances. Whether you're looking to throw an amazing holiday party, bolster an emergency fund, or save money for upcoming bills, having multiple avenues of savings can help you feel prepared for anything. If you want to talk to somebody about how to get started, contact us today at Bellwether Community Credit Union.
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