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Master Your Money with Multiple Bank Accounts

a man jumps into the air celebrating his mastery of money

When it comes to handling our finances, finding the right approach can make a huge difference in achieving our money goals and securing a stable future. While many of us stick to the old habit of having just one bank account, there's an alternative that's gaining popularity and offers some fantastic advantages: having multiple bank accounts across different banks.

In this blog, we'll explore why having more than one account can be a game-changer for your financial journey. It's not about fitting into a rigid banking mold anymore; instead, it's about gaining the flexibility, organization, and control that come with managing money in a smarter way. Whether you're a finance whiz or just starting out, we'll show you how spreading your money across different accounts can lead to a stronger financial future.

Read on to learn some advantages/benefits of having more than one bank account.

Maximize rewards and bonuses

Banks want you as their customer, and they frequently offer rewards and bonuses to convince you to choose them. One bank may offer a $200 bonus for opening a checking account, while another could offer reduced fees when setting up bill pay, and another could offer a debit card guaranteeing cash back with every purchase. These exciting offers can put money in your pocket!

By keeping all your money in a single bank, you could miss out on several bonuses and advantages. Opening multiple accounts allows you to enjoy various benefits associated with each account.

While you’re considering adding a new bank account to your financial options, make sure to find the interest rate or promotion that work best for you. Also, be mindful of the minimum balance requirements and any monthly fees associated with the account.

Tailor bank accounts to achieve your savings goals

Whether you are saving for a dream vacation or a down payment on a house, having multiple savings accounts makes it simple to track and achieve your financial goals. While considering adding another account, remember that each bank account should align with your specific saving goals and personal timeline.

A great example is a home renovation. If you have a short-term goal of renovating your outdoor deck or upgrading kitchen appliances within the next few years, a standard savings or money market account could be a nice fit. These accounts allow you to earn some interest without locking up your funds. You have access to the money whenever you need it.

On the other hand, if you are pursuing a long-term home remodeling project down the line, this calls for an account that earns more money and sits undisturbed until your big project. These options include certificates of deposits (CDs), high-yield savings accounts, or high-yield money market accounts because they offer higher interest rates and allow your money to grow faster.

It’s essential to compare rates offered by different banks to find the best fit.  If you have multiple savings objectives, consider creating accounts tailored to each one so it is easy to monitor and achieve your goals.

Organize, budget, and thrive

Separating money into different bank accounts can help you maintain a clear overview of your finances, making it easy to stay organized, manage your expenses, and avoid overdrafts.

Multiple accounts can act as virtual envelopes for different spending categories. For example, you can have one account for bills, another for everyday costs like groceries and gas, and a third for nonessential purchase. Many people also have accounts for emergencies and savings. This makes it easier to monitor and control your spending in each category.

In terms of budgeting, separating money into different accounts can prevent you from accidentally overspending in one category and eating into funds meant for other important expenses. It also keeps you from being tempted to dip into your savings for everyday expenses, encouraging better financial discipline. When you don’t “see” the extra money in your account, you’re less tempted to overspend.

Tip: One easy way to divide your finances into multiple accounts is by arranging for your paycheck to deposit a certain percentage into designated accounts. This way, you won’t have to worry about manually splitting your money later on.

In addition, if you are a business-owner, self-employed, or have a side gig, it’s helpful to open another bank account for your business finances. Keeping personal and business-related expenses separate makes it easier to track your side income and operational costs. This ensures you can receive business payments and cover expenses without intertwining them with personal finances, ultimately simplifying accounting and tax management.

Safety net for emergencies

If you currently have just one bank account, we suggest opening a second account for emergencies Everyone should have an emergency fund in their back pocket. It’s that simple.

In this lifetime you can expect the unexpected. Unforeseen events are inevitable, and emergencies can and will happen.

You could experience job loss, car trouble, a health crisis, unexpected home repairs, or a global pandemic. To be ready for life’s uncertainties, consider two great options: savings or money market accounts. These options are easily accessible, can earn money, and are safe from market drops and fluctuations.

While we hope you won’t need to dip into it, having emergency funds provides peace of mind. If something unexpected were to happen, you will have financial liquidity. In other words, life can throw curveballs, so be prepared.

Stretch and secure FDIC coverage

Speaking of emergencies, you may have heard the term FDIC coverage in the news over the past few months. FDIC stands for Federal Deposit Insurance Corporation, and FDIC coverage is a way to protect yourself in case something happens to your bank.

If you have accounts across multiple banks, you can maximize the amount of money that is protected by FDIC coverage. For instance, FDIC provides investment coverage up to $250,000 per depositor—per banking institution. Therefore, if you happen to have $500,000 in a single savings account, your funds would be at risk.

Even if you have less than $250,000, it’s still wise to distribute your money across multiple bank accounts. Having access to another account guarantees your ability to retrieve funds when you need them.

Bottom line

So what does this mean for you? Having multiple bank accounts offers practical solutions, making your financial life easier and more successful.

Although there is no correct number of bank accounts to have, the key is finding the right combination that aligns with your financial objectives.

By maximizing rewards, customizing accounts to your goals, and staying organized, you gain greater control and security. Moreover, spreading your funds across different banks ensures FDIC protection and quick access in emergencies. This smart and flexible approach gives you more financial freedom and opens up new opportunities for your money.

TIP: If you have beneficiaries, remember to include all bank accounts in your trust. This ensures that your assets are distributed according to your wishes and prevents your money from being subject to probate, which is both time-consuming and costly.

Accounts With Academy Bank

If you would like to find out more about opening or adding an account at Academy Bank, check out our website or call your local banking center for personalized assistance.

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