Having numerous bank accounts does not equal more money nor does it make you richer than someone with one or two bank accounts. If you are to have more than one bank account, there must a reason for it. You have to weigh the reason behind you having more than one bank account before going on with it. As such, you have to ask yourself, how many bank accounts should I have in 2022?
This is one question that you have to ask at one point or the other. This may not look like something you should give a second thought to. But hear this, it can actually make a difference in your bank account balance. There are some factors you have to consider when deciding on how many bank accounts you are to open as well as what kind they should be. You will have to weigh the different bank account options as well as how well you will be benefiting from them.
Having more than one bank account has some advantages. However, you must first do your research and find out the best bank that will suit your needs before you make any decision. At the end of the day, it all boils down to personal preference. While some people think it’s best to have two bank accounts for saving and spending, others don’t mind having one or multiple as the case may be.
How Many Bank Accounts Should I Have In 2022?
Before you go ahead and open more than one bank account, you have to align your bank accounts with your goals. For instance, if you are someone like me who does a lot of impulse buying, you can open a bank account that will help you save for the rainy day. At the same time have an account that you can spend from. This will help you have a separate account that you can use for your savings and one that you can use for your spending.
Do you need a bank account that will help save for retirement or college tuition in the future? Then, you can weigh the options available, and find the one that best fits your needs.
When you are looking into this type of bank account, you have to consider features like
- No fees on ATM withdrawals within its network (which can very expensive.
- Low-rate loans and mortgages
- High-interest rates on savings balances, etc.
By carrying out these researches, you may end up saving some money at the end of the day.
These types of accounts make managing your money quite easy. They also offer you convenience as well as a simple and seamless funds allocation from one bank to the other. With just a few clicks, you will be able to transfer money easily between accounts. This is because the banks already have your information as such it makes the process quite easy. This comes in handy especially when balancing your checking account. This is because withdrawals from this type of account are free but not always available at every branch.
So the question of how many bank accounts you should have, depends on what specific needs you may have in the future. If you are just starting out, it will be best to start with one bank account (checking) which can cover your day-to-day expenses. Then you can work your way to up to two or three different types of bank accounts as you set your plans towards retirement, tuition or college, etc.
Types of Bank Accounts You Should Have
A checking account is one of the basic accounts that you should have. You can use it for your day-to-day expenses like groceries, gas, and other living needs. A checking account offers you the fastest and more convenient means of accessing your money. With a checking account, you can make as many transactions as you need within a given month. But your savings account might have limits. A variety of checking accounts options are being offered. They include minimum balance requirements, monthly service fees as well as the number of checks you use each month. These are some of the features you will find in banks for checking accounts.
Savings account comes in different shapes and forms. It can be in form of a bank account, savings bond, or even an investment. The perk with this bank account is that it has some kind of interest rate return. The idea behind a saving account is to save money and watch your balance grow over time. However, most people use these as emergency funds when unexpected expenses crop up. There are also different types like certificates of deposit (CDs) which you make deposits into over a given period usually say six months, one year, or two years. This is in order to get higher rates on your returns. However, if you need access to the cash before the term ends. But there may be penalties assessed by taxing authorities. Thus, you have to read the terms and conditions beforehand.
Retirement Investment Accounts
Retirement investment accounts come in all shapes and sizes. Ranging from traditional bank accounts to IRAs and Roth IRAs, retirement investment accounts.
The advantage that comes with the nondeductible account is that it offers a tax-deferred status. This means that your earnings will not be taxed until you withdraw them during retirement. However, if you need to get access to the cash before the term ends, there may be penalties assessed by taxing authorities. As such, you have to read the terms and conditions beforehand.
The most common type of deductible account is 401K or 403b plans. Why? Because they give room for contributions straight out of your paycheck with no taxes deducted now. Even at that, these funds can only be invested in certain types of stocks, bonds, and mutual funds approved by federal law.
Non-retirement Investment Account
After building your retirement account, the bank can offer various other account types. This will help you meet your needs, including money market accounts, checking and savings accounts, certificates of deposit (CDs), annuities, and individual retirement accounts (IRA). Each of these account types has its own advantages and disadvantages depending on your goals.
College Saving (529b) / Custodial Accounts
Where you have children, you’ll be needing a custodial account. This is a bank account for the child. It is an option you can consider, if your children are below the age of 18 and not married or have children themselves. The bank on its end can offer 529b plans (a college saving plan). These work by investing your contributions in stocks, bonds, mutual funds, and other investment vehicles with tax benefits. This helps in paying for higher education expenses.
Also, you can set up a custodial account as part of your estate planning process. By the time death calls, anything left over will be given to it instead of going through probate court.
Having Bank Accounts at Different Banks
This totally depends on the bank you are with. It also depends on the bank you prefer. You can choose any bank that offers better value for your money. Before you commit yourself contractually to a new bank, you have to ensure that its benefits outweigh any limitations they have.
At the end of the day, it is what works best for you that you should go for. Having more than one bank account can help you save money on interest rates, avoid fees for insufficient funds and overdrafts and even add a little extra cash to you. However, you have to manage these accounts responsibly in other to get the desired benefits from your additional financial institution.