Multiple savings accounts are useful for budgeting

Why you need 3 savings accounts


Multiple savings accounts can get expensive at traditional banks that have minimum balance requirements and account fees. Many online banks, however, allow customers to set up dozens of accounts for free with no minimum balances. Most people need at least three, with regular (preferably automatic) transfers from their checking accounts into each:
  • An emergency fund for job loss and other major financial setbacks
  • A "needs" account to cover necessary expenses that aren't monthly (such as property taxes or annual insurance premiums) or that are inevitable but often unpredictable (such as car repairs or medical deductibles)
  • A "wants" account to pay for the fun stuff, such as vacations, holiday spending or a down payment on a new car
Multiple savings accounts are useful for budgeting in much the same way as the envelope system, where people divide cash into envelopes to cover expenses such as rent, food and entertainment. The savings accounts, like the envelopes, tell you if you have enough to cover that specific goal, but also allow you to shift money around when required, said Rachel Schneider, a senior vice president for the nonprofit Center for Financial Services Innovation and co-author of the book "The Financial Diaries: How American Families Cope in a World of Uncertainty."
Comment: What we do - using Capital One 360 and Wells Fargo (our primary bank).

  • We have a CO360 checking account that we use for all handwritten checks
  • We have six CO360 savings accounts label as below. (We no longer have Allstate for our insurance - did not change the name. The Allstate and Taxes is an escrow account for property taxes, homeowners & auto insurance)
  • We have a Wells Fargo savings account with several thousand 

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