How many bank accounts should I have? (credit cards, loans, debt)

[ilovemycomputer90]

Hello. I was wondering how many bank accounts I should open up. Saving and spending my money wisely has become a bit of an odd obsession for me lately. Right now I have a "savings plus account" which requires a $100 minimum balance. I currently have about $1000 stashed away. I also just started a checking account. I started the savings account over a year ago because I started my first job. I put a majority of my paychecks into the account, but took large sums out for various reasons over the year (car repairs, high school prom, etc.)

But I'm not sure if I should open up another savings account. I'd like to have one where I just put money into it and don't touch it. But I would also like to have a savings account where I could put money in to save up for big purchases (car repairs, college, vacations, electronics, etc.) Is this a wise idea? Or should I just put all that money into the checking account? I'm try my best to keep my finances in order, but I am having trouble getting it organized. Any advice would be appreciated. Thanks.

[jkcoop]

You sound like my teenage son

He has a checking account and a savings account. He deposits all his paychecks into his checking, then transfers most of it over to his savings account. He keeps track of it all using some free program he found and within his savings account online there he can set savings goals and it keeps track of his progress (we have Wells Fargo).

Too many accounts might mean you start incurring fees. I would just have the two, but set your goals and stay organized using some sort of program.

[GJBenn85]

You should have two, one checking and one that is an interest bearing savings account. Keep in mind savings accounts including money markets have withdrawal restrictions, typically limited to 3 checks and 3 electronic outgoing transfers per month. Do not transfer out of the savings in constant small amounts or you will spend a lot of money on fees that are typically at least $15 per occurrence.

I suggest you open an online savings account as it will have a higher interest rate and it is more difficult to transfer out, meaning you will not be as likely to transfer for impulsive purchases. You can link it to your standard checking account but it will take 3-4 days for the transfer to occur versus nearly instantaneously if you have the savings account at the same bank as your checking account.

[texdav]

My wife and i have one chacking account and several savings accounts. We have a vaction acoount;normal savings and a vehcile account that we dump vehicle payment into after paying off a vehicle towards the next one.We have two vehicles and this allows us to have interest payments that are lower than savings accounts.

[NYSinger]

It all depends on how you want to organize yourself! I have one checkings for the paychecks and the bill paying, one savings for an 8-month emergency fund only for use in case of a job loss (complete, yes!), and one savings for a downpayment on a home. Right now our focus is on the home, we are not saving for any other big purchases, but after we buy our home, I'd like to keep one savings for the EF, one savings under house repairs (inevitable roof repairs, furnace, new appliances, any emergency house repairs etc.), then one savings for the things you mentioned: things to save for, like a downpayment on a new used car, replacing windows, etc.

It helps for me to separate it so I know exactly how much is for each category. Check out ING DIRECT or Emigrant Direct for online banking. The web site Compare Mortgage Rates | CD Rates | Credit Cards Home Equity Loans Mortgages Best Rate Calculator Bankrate.com will give you an idea of the best interests available. Good luck! Great for you to be interested in saving, it is an obligation in life!!

[ilovemycomputer90]

Originally Posted by NYSinger

It all depends on how you want to organize yourself! I have one checkings for the paychecks and the bill paying, one savings for an 8-month emergency fund only for use in case of a job loss (complete, yes!), and one savings for a downpayment on a home. Right now our focus is on the home, we are not saving for any other big purchases, but after we buy our home, I'd like to keep one savings for the EF, one savings under house repairs (inevitable roof repairs, furnace, new appliances, any emergency house repairs etc.), then one savings for the things you mentioned: things to save for, like a downpayment on a new used car, replacing windows, etc.

So checking should be used for bills and everyday expenses (food, gas, etc.). Then I guess I could start another savings account and just transfer the money to the checking account when necessary. The emergency fund is a great idea. I've had a couple of unexpected car troubles over the year. Thankfully I've always had enough money in the bank to pay for the repairs. I'll have to consider starting an EF.

Now for the savings account that I don't want to touch...should I just use those funds for college, retirement, or for a future down payment on a home or apartment? Of course its up to me to decide how to use the money, but I would like anyone's advice.

Originally Posted by NYSinger

Good luck! Great for you to be interested in saving, it is an obligation in life!!

Absolutely!

[NYSinger]

I say start by saving for 8 months worth of your total expenses only to be touched in case of an income loss, then open up a new account for saved items like down payment. Start saving for retirement in a ROTH IRA if you can. Only $100 a month can make a difference.

[suzie02]

Originally Posted by ilovemycomputer90

Now for the savings account that I don't want to touch...should I just use those funds for college, retirement, or for a future down payment on a home or apartment? Of course its up to me to decide how to use the money, but I would like anyone's advice.

An Emergency Fund is for emergencies only. And as soon as the emergency is over it should be replenished quickly. To calculate how much you should have in an EF figure out how much your monthly expenses are and then multiply it by 8. If you have an old car that may need repairs then either open a separate account or add the expected cost to the EF.
If you keep a good ER throughout your life you will not have to go into debt if you lost your job.
I don't know how old you are but I think it is great that you started saving early.

[JetJockey]

I have 9 accounts. My checking (where my paycheck goes) and my savings with my 'regular' bank. I also have an ING account which has a checking and savings as well. My savings account on ING is broken up into a few different accounts for medical, general emergency, dog stuff, vacation (saving for Oktoberfest next year!) and house. The money starts out in the general emergency fund and then gets separated into the other accounts accordingly.

I also have an account with a credit union for my car payment. The money gets transfered into that account and then pays my car. I have 3 months worth of car payments in there at any given time so I never lapse.

May sound confusing, but it works well for me