OPEN MULTIPLE SAVINGS ACCOUNTS
free you from regularly deciding when and how much to save. And the setup takes just a few minutes. You need to know three things: which two accounts to use, how often transfers occur and the amount. Experts recommend you save about 20% of your after-tax income. So if you take home $5,000 a month, aim to put away $1,000. If that’s initially out of reach, start with a smaller amount and work your way toward that 20%. You need to receive your pay as direct deposits, and your company must be on board. Some employers don’t let you split direct deposits.
If split deposits are available, there’s another perk. Some banks offer sign-up bonuses when you open a new checking account with direct deposit. Just make sure a new account is a useful addition and that you don’t get stuck with fees or high minimum balance requirements. Having one savings account might not be enough, especially if you like focusing on specific financial goals. That’s where single-purpose accounts can shine.
Having multiple accounts is easier than it sounds. Start with a second savings account for one purpose, such as stockpiling an emergency fund. Then create a recurring transfer, even if it’s a small amount — say, $50 — to gradually reach your goal. Tracking progress is easy; just check the balance.
“I used to have just two accounts, checking and savings,” says Muriel Vega, a tech writer in Atlanta, “but they weren’t really working for me.”
Eight years ago, she opened a second savings account to use as an emergency fund. When her freelance assignments started ramping up, she opened a business checking account and a savings account to set aside money for business-related taxes. She also has a separate checking account to pay home and utility bills and a savings account for vacations.
“I have seven accounts now. That’s three checking and four savings,” Vega says. Most of her savings accounts are at two online banks that have attractive features such as competitive savings rates and no monthly fees.
On the day she gets paid, she has several automatic transfers ready to send funds to her various accounts. The result: no micromanaging of money required.