How to use multiple savings accounts to grow your money and reach your goals

Think savings accounts are one-and-done? Here’s the case for using multiple bank accounts to reach your financial goals.

More than 20% of working Americans aren’t saving any money for retirement, emergencies or other financial goals, according to a survey by Bankrate.

It seems that many people would like to start saving money, but when it comes to how, they’re stuck.

Conventional wisdom says to open a savings account and divert a certain percentage of money there on paydays or on a certain day of the month. Opening one savings account is a smart first step, but you can go even further as you optimize your savings strategy.

Here, experts break down why opening multiple savings accounts may be the secret to kicking your savings into high gear as you reach your savings goals. With their guidance, you’ll be able to answer: How can multiple savings accounts help you save more?

Why you should consider opening multiple savings accounts

Most people save for many different goals, and it takes extra work to track your progress toward each of your financial goals if all of your savings are accumulating in one place.

With one savings account, you may wonder whether the money in it will help you afford a new car, your next vacation or both. When you have multiple savings accounts tied to the financial goals that matter most in your life, all the guesswork is removed.

Here’s how opening multiple savings accounts can make saving money simpler:

You’re able to clearly define and achieve your financial goals

Before you can make any savings progress, you need to identify your goals. Opening a savings account for each goal empowers you to save for what you really want in life, whether it’s a down payment for a house, international travel or a college education fund for your children.

You can gain momentum as you see your savings grow

One big reason multiple savings accounts work so well is they help you stay motivated to reach each of your savings goals, says Taylor Schulte, CFP®, a financial blogger and podcaster. Your savings become more tangible when you know you have $2,000 in your emergency fund, $1,000 ready for that new set of wheels and $500 for your tropical getaway (versus $3,500 total). Watching each account grow every month can help you stay excited about saving.

How many savings accounts should I have?

The number of accounts that’s right for you depends on the number of savings goals you have. If you’re new to saving money, start small so you’re not overwhelmed.

When deciding which of your financial goals deserve their own savings account, put an emergency fund at the top of your list, Schulte says.

“Start with one goal—like an emergency savings account—and save the minimum amount needed,” Schulte says. Schulte and other experts suggest keeping at least three to six months of living expenses in your emergency fund. This way, you’ll have money in the bank if you lose your job, take a cut in income or face unexpected medical bills. And by keeping your emergency fund separate from your other savings accounts, you’ll be less tempted to “borrow from it,” Schulte says.

“Then, move on to the next,” Schulte says. “Trying to save for too many things simultaneously could prevent you from making any of them a reality.”

Frugal living expert Lauren Greutman agrees that you should prioritize your emergency fund first. Once it’s in a good place, she recommends opening multiple savings accounts for your top four or five financial goals.

“I have savings accounts set up for an emergency fund, vacation fund, car fund and Christmas fund,” she says. “Each of these accounts has an end goal, and when I contribute to each account, I like to see how far away I am from that savings goal.”

Follow these three steps to reach your goals with multiple savings accounts.

Follow these three steps to reach your goals with multiple savings accounts.

How to organize your savings accounts to grow your savings in 3 steps

Before you open multiple savings accounts, make sure you have a strategy. Follow these steps to keep on top of your multiple savings accounts and manage your savings goals like a pro:

Step 1: Prioritize your financial goals

As the experts noted above, you’ll want to start with your emergency fund. Schulte recommends making sure that your retirement fund is on track as well before opening multiple bank accounts for shorter-term goals.

Once those critical savings goals are on track, it’s time to get out a pen and paper. Write down your other savings goals, such as buying a new car, funding your child’s college tuition or making home repairs. Pare your list down to your top four or five priorities, and move on to the next step.  

Step 2: Set up a savings account for each goal

According to Greutman, online savings accounts are the best savings accounts for multiple goals. “Online savings accounts are a great way to continue saving money without the hassle of driving to a physical bank,” Greutman says.

For example, the Discover Online Savings Account offers a high interest rate and no account fees.1 Plus, at Discover, there is no limit on how many online savings accounts you can open, and with a higher interest rate, you can watch those savings grow.

“Having more than one savings account is a good idea because it creates a specific plan for your money.”

Taylor Schulte, CFP®, financial blogger and podcaster

Step 3: Automate monthly transfers to your accounts

Modern banking features like direct deposit and automatic transfers make saving across multiple bank accounts easier than ever before. Each time you receive a paycheck, allocate a percentage of it to each of your savings accounts. For example, each month you could automatically transfer 2% of your paycheck to your home repair account, 3% to your new-car account and 5% to your child’s education fund.

Many employers that offer direct deposit also allow you to have your paycheck deposited across multiple bank accounts. If that’s not an option for you, then you can deposit your paycheck into one checking account. From there, you can funnel it to your multiple bank accounts through automatic monthly transfers.

Start using multiple bank accounts to build toward your financial goals

At the end of the day, how much you save matters—and so does where you save. “Having more than one savings account is a good idea because it creates a specific plan for your money,” Schulte says.

If you’re trying to accomplish multiple savings goals, opening multiple bank accounts with higher interest rates may be the right plan for you. With this expert-endorsed strategy, you’ll be more focused and motivated than ever as you progress along your savings journey.

Ready to start saving money using multiple savings accounts? Learn more about the benefits of adding a Discover Online Savings Account to your strategy.

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1 Outgoing wire transfers are subject to a service charge.