When Hoarding Your Pennies, How Many Savings Accounts Should You Have?

a woman is pictured behind a jar full of coins
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Saving money is not a singular pursuit.

Take a minute to think about everything you’re saving for. A down payment on a home. Cash for that overseas vacation. Funds to tap in case an emergency arises.

Chances are you’re stacking money for several things at once, and those are just the short-term goals. We won’t even get into long-term objectives right now, like saving for retirement.

You probably park your short-term savings in a regular ol’ savings account … or several. Some folks are fans of splitting their money into separate accounts for each goal, while others hoard all their savings in one place.

Financial personalities and habits tend to determine how many savings accounts a person has, says Holly Peterson, financial consultant and owner of Elite Retirement Strategies in Pocatello, Idaho.

“Some people are more financially responsible when they have multiple savings accounts set up for different goals or purposes,” she says. “Other people get overwhelmed moving money around and give up on the whole idea of saving. There is no ‘one-size-fits-all’ recommended method.”

So whether you have one account or a dozen, you’re not doing it wrong. Let’s explore these two approaches to managing various savings goals and how you can be a successful saver with whichever route is best for you.

Separating Savings for Better Financial Clarity

Designating specific accounts for specific savings goals helps many people keep their money organized.

Fo Alexander and her husband Ben, of Greenville, South Carolina, have seven different savings accounts. One is for their emergency fund. Another covers future home repairs or upgrades. Two accounts are for general savings. The other three are business related.

Alexander, founder of the blog and podcast Girl Talk With Fo, said having multiple accounts means they don’t have to guess or do math to know exactly how much money they have saved for a specific purpose.

“We wouldn’t manage [our money] any other way,” she said.

5 Benefits to Having Multiple Savings Accounts

  1. The money you save for each goal is in its own pot. You know exactly how much you have saved toward each goal, so when you withdraw money for, say, your vacation, you don’t have to worry that you’re dipping into your new car fund.

  2. Seeing how close (or far away) you are from achieving each savings goal can give you more motivation to save than if you just saw one lump sum in a solo savings account. Alexander put it this way: “Knowing that you're saving for a house versus just saving gives you more incentive to reach your goals.”

  3. Different financial institutions offer different perks. You might enjoy the amazing customer service at your local credit union so you have an account there, but you also like having your emergency fund stored at an online bank where you aren’t as tempted to make withdrawals. Some banks offer cash bonuses to open new accounts, another lucrative perk.

  4. You and your partner or spouse might want to maintain separate savings accounts for personal goals. Multiple accounts might also make sense if you want separate savings for each of your children.

  5. Most savings accounts restrict how often you can withdraw money from your account. If you plan on making more than the maximum monthly withdrawals, having multiple accounts would be an advantage.

Make Multiple Accounts Work For You

When juggling several accounts, it can help to nickname each one.

“Putting a name to your savings increases your likelihood of success,” Alexander said.

She also recommends automating your savings allocations if you can’t keep up with making manual transfers. Before she was married, she used to have her employer transfer a percentage of her paycheck into specific accounts.

Now Alexander and her husband set time aside every other week to discuss their finances and put money into savings according to their goals.

Sticking With the Simplicity of One Account

Not all savers go the route of having multiple accounts.

Evan Sutherland, of Pullman, Washington, keeps all his savings in one account and uses a detailed budgeting system to stay on top of multiple goals, like saving for holidays, vacations and semiannual bills.

He and his wife, Nikayla, who collectively run the blog Budgeting Couple, use the popular budgeting software EveryDollar and create digital sinking funds to set aside money for specific savings goals.

A sinking fund is a pool of money you regularly add to over time to make a large expense more manageable or to make up for irregular income or expenses.

Among the different things they’re saving for, the Sutherlands regularly put money aside for vacations.

“Instead of having a travel savings account and sticking $80 a month into the travel savings account, we just budget for $80 per month,” he said.

By keeping track of how often and how much they’ve contributed to their travel sinking fund, they know how much money they can pull out for their next vacation. Sutherland said having multiple accounts on top of the budgeting system he uses would be redundant.

5 Advantages to Keeping All Your Savings in One Account

  1. You only have to keep track of deposits, withdrawals and account information for one account, saving you time and extra work.

  2. If your bank charges a monthly maintenance fee, you only have to pay that for one account rather than for several.

  3. Some savings accounts have requirements, like keeping a minimum balance. It could be easier to meet those requirements if your savings are in one account.

  4. You’ll miss out on potential earned interest by dividing your money into accounts that have different interest rates. You’d have better returns if you saved your money in one high-interest account.

  5. Even when your financial goals change, your savings account will always serve a purpose. If you open multiple accounts for non-recurring goals (like saving for a wedding), those accounts will be empty and useless once you’ve reached your target savings and withdrawn all the money.

Getting By With One Account

Sutherland’s savings approach shows you don’t have to open separate accounts to save up for separate goals. The key to working with one savings account is to have your own tracking system so you know how much of your money goes to each savings objective.

Sutherland recommends using budgeting software that allows you to set up sinking funds. If you’re not sure which software is right for you, check out our review of the eight best budgeting apps we could find.

You also don’t have to save for all your goals simultaneously. If you’re engaged and budgeting for a wedding but also want to buy your first home in a couple years, you can focus on the immediate goal first and then tackle saving up for a down payment after you say “I do.”

“There are many different methods available for saving money — but in the end, the best method for you will be different than the best method for someone else,” Peterson, the financial consultant, advises.

No matter how you do it, the most important thing is that you make saving money a priority.

Nicole Dow is a senior writer at The Penny Hoarder. She is saving to pay off debt and buy a house.