Multiple Savings Accounts: to be or not to be?
September 3, 2015
The issue of financial management makes all commercial organizations as well as simple citizens concerned. Smart financial strategy includes not just deliberated budget planning and staying away from debt but also saving a certain percentage of income. This secret of the richest people exists from immemorial times and it is to save at least 15% of regular income and to look for effective ways of capital increase. Developing frugal habits is essential for gaining wealth howbeit the process of money saving should be individually organized depending on many factors. Generally, financial advisors recommend passing the savings on to a bank account; however there are several ways to set it up. There is an option to open a savings account attached to a current account or to open multiple bank accounts. While the first approach is relatively popular the second one requires detailed consideration.
How to Avail of Multiple Savings Bank Accounts?
An opportunity to open a bank abroad account online appeared not so long time ago. Due to it consumers have an opportunity to open multiple savings accounts in the shortest time and with no hassle. There is an option to open even multiple accounts consisting of savings accounts from different financial services providers. So why does it make sense to organize multiple savings accounts?
- Savings’ separation
It is a good strategy to separate savings towards goals being able to choose the best terms and rates. Thus, you may have money on a savings account always available which makes sense when organizing an emergency fund. And contrariwise you may benefit with higher interest on your capital in case of fixed deposit.
- Easy management of funds for different purposes
It is a smart decision to have several funds like emergency, retirement as well as fund for education, wedding, baby birth or any solid purchase. Opening more than one account allows managing each fund in the most convenient and effective way.
- Necessity to deposit a large amount of money
There is a limit on insurance coverage protecting any savings account. Sometimes there is a need to diversify personal funds in order to protect each dollar and multiple savings accounts occur to be the most relevant solution.
- You don’t want to put all eggs into one basket
Volatile modern economy strongly influences the stability of financial organizations. Thus, any of them may go into liquidation. Of course being insured you will get all your money back but having your capital diversified increases the chances to have access to a necessary sum at any given time.
- Receiving bonuses
Online banks offer higher deposit interest and solid bonuses for opening foreign account with them unlike standard credit organizations which have to cover cost of stuff and premises upkeep. Besides, you may get bonuses and benefits from different online banks when opening multiple accounts.
- You want to pick the best financial service provider
There is a chance to proceed with different online banks and financial service providers in order to choose the most appropriate one. But don’t forget that frequent signing contracts with different organizations may affect your credit score.
- Making frequent money withdrawals
Basically, bank account abroad owners are able to withdraw money up to 6 times per month. Having multiple accounts solve this problem allowing you to withdraw money 12 times per month in case you have opened the two accounts.
Multiple Bank Accounts Disadvantages
Though multiple bank accounts are beneficial in cases mentioned above they may not do a big favor in others. Find out 7 reasons not to choose multiple accounts:
- Balance restrictions
Consumers are required to deposit the minimum amount starting from 2 thousand dollars and to have the minimum balance left in order to fulfill the savings account contract with online bank.
- Limit for benefits
Even if you open multiple bank accounts within one financial organization it doesn’t mean that this institution provides the most attractive terms for other products comparing to other participants of the market. Some banks may offer better loan terms while others may offer lower account maintenance fees for clients with multiple accounts.
- Risk of losing interest
Some banks suggest higher interest rates when depositing much money on their savings account when the total gain may be smaller if diversifying this sum between several accounts.
- Risk of losing money
High level of financial literacy plays a big role in wealth building. If you are far from building bright financial strategies then it is better to have one account. Confusing with endless calculation may cause money loss.
- Managing several accounts may be tangled
Having several accounts requires additional calculations of how much money to put on them each month and how close the account is towards its final goal. These are not difficult calculations but they require some time and may be tangled.
- Difficulties with automatic transfers
It may be impossible to set automatic transfers for multiple accounts if you want money from each paycheck be transferred on each of these account without your participation.
- High account maintenance fees
Opening a low-balance bank accounts offshore may cause overpayment in fees. Solve this issue with banks before opening multiple accounts.
Creating the Money Saving Strategy
Saving money is an important step when moving towards strong financial standing but creating the smart saving strategy requires deliberated approach. Correct decision on how to save money depends on realities of your financial life but there are some common helpful tips. Budget reorganization As simple individuals as commercial organizations live on restricted budged which is usually designed to cover urgent needs. The most difficult here is to reorganize your budget to start regularly saving a fraction of income so that balance of your life or business wouldn’t be broken. The issue requires expenses review and cut. Decide which items of expenditures are vital and which could be excluded. Once you succeed to organize a new balance it would not be difficult to maintain it. Choosing the goals It is not rational to put some money aside just to know that you have them. It is a golden rule of millionaires – money should work on you. Of course it makes sense to organize an emergency fund so that you could have access to this fund anytime; or to set up a retirement fund and to put this money on a high-yield long-term savings account. There may be many different purposes for saving money starting from buying a new camera and ending with baby birth. But don’t allocate more money than it is necessary on them. Remember that money saving will make you a millionaire only if you successfully invest it. Investing the saved money Storing money on bank accounts is a stable investment strategy but here you may forget about high yield. It makes sense only for a long term. But what for you need millions of dollars if you are 70? There are different investment options starting with currency operations and ending with launching startups. Make the deep market investigation and decide which options are the most suitable for you. And finally start rowing money with a shovel!