How Many Bank Accounts Should I Have?

How many bank accounts should I have

You’re on the path to getting your finances in order, but you often ask yourself, “how many bank accounts should I have?''. Well, it’s not an uncommon question, neither is it a trivial one.

One can argue that the number of bank accounts you have is one of many keys behind financial organization and success. However, having too many accounts without any organization can get confusing and can even cost you! Americans paid $12.4 billion in overdraft fees in 2020 alone – ouch!

Being organized will save you in many ways, like helping you end the paycheck to paycheck cycle, pay off debt faster and achieve your overall financial goals. It can also help you stay on top of your financial record keeping.

So how exactly does owning multiple bank accounts help you to achieve these goals? And how many bank accounts can a person have? Let’s dig in and find out!

Aligning your bank accounts with your goals

So, to answer your questions of "how many bank accounts should I have," you need to figure out your financial goals first. The best way to organize your bank accounts is to give each account a job that's tied to your financial goals. Typically and for the majority of people, your paycheck comes into your checking account.

From there, it can serve several different purposes such as paying rent, groceries, gas, car payment, etc. In addition to having a checking account, some people might also have a savings account for all their savings goals. And while this setup of one checking account and one savings account is OK, it may not be optimal depending on your objectives.

You see, having multiple bank accounts and aligning each bank account with your goals can help you really hone in on achieving your specific goals. As a result, you’ll have greater clarity and see more wins than you’ve ever seen before.

Types of bank accounts you should have

So, how many bank accounts can one person have? Well, there are endless options for the types and number of bank accounts you can have. Understanding your needs first will help you determine what strategy is best for you.

Below will cover your question of "how many bank accounts can I have?":

1. Checking account

The basic account a bank will start you off on is typically a checking account. This can be your primary everyday account where your paycheck comes in. Checking accounts give you the fastest and most convenient access to your cash and are primarily used for bill payment and for day-to-day financial transactions.

Unlike a savings account, checking accounts let you make as many transactions as you need within a given month. Savings accounts often have limits. Most banks will offer multiple options for checking accounts.

Some come with minimum balance requirements, others with a monthly service fee, and others with a limit on the number of checks you can use each month. Are you wondering, "how many checking accounts should I have?" Well, it depends on your financial needs. Here are a few examples of why you may consider having more than one checking account:

You own your own business

If you own your own business, you will definitely need a separate checking account for it. It's essential that you keep your personal finances and your business finances separate. This will help you keep your business expenses and income separate much easier.

Separate checking accounts for bills and spending

Also, some people will get separate checking accounts for their bills and their spending. This way, they are sure they have enough to cover their monthly expenses along with whatever fun money they allocated for the month without mixing the two together.

This can keep you from busting your budget and overspending on non-essentials because you will see how much money you have for each category. However, it is more to keep up with so be sure to keep that in mind when deciding if this method is right for you or not.

So consider these situations when you ask yourself "how many checking accounts should I have" so you can adjust accordingly. Whatever the case, shop around and find a bank that meets your needs.

2. Savings accounts

Now you may also be wondering, "how many savings accounts should I have?" Well, savings accounts come in various shapes and forms. As you go through your search, you’ll likely come across the following:

Regular savings account

This is the most basic account you can have to store your savings. Banks and credit unions offer savings accounts that will allow you to park some funds in the account, earn a little interest and withdraw the money when the need arises.

Savings accounts sometimes come with restrictions, such as limiting the number of withdrawals you can make. However, other types of savings accounts exist which may work better for your needs.

Online savings account

In the past decade alone, the number of online-only banks has risen. These banks typically offer sweeter deals by way of higher interest rates and low monthly fees (if any at all). With online savings accounts, you’re mostly getting the convenience of quick service at the touch of a button without having to stand in lines to speak with a teller.

To start, you can link an existing checking account with your savings account. You’ll also be able to make deposits through other accounts as well, and you’ll have the ability to deposit checks right from your phone.

Traditional banks caught on to this trend and have since created their own online savings options. However, the higher interest rates offered by online savings banks are still worth looking into.

Certificate of deposit (CD)

A certificate of deposit serves the same purpose as a savings account but has one extra catch – your money is locked into the account for 6 to 18 months or more, depending on the terms you select. If you cash the CD, you'd be subject to a penalty on the interest you've earned.

If you need quick access to your cash, a CD might not be the best option because of the penalty. But if you’re looking for a higher interest rate without the need to access your funds, then a CD may be exactly what you need.

What to use your savings account for

Now that you know the types of savings accounts you can have, you may still be wondering what exactly you would use them for.

Here are some examples of accounts you could have tied to your savings goals:

Assigning a savings account for each goal helps you easily track your progress and to keep the lines clear on what the funds are for. Additionally, savings accounts come with the added benefit of earning interest. Even though it may just be a small amount, you don’t want to miss out on that perk!

Again, when asking yourself, "how many savings accounts should I have" determine your goals and go from there!

3. Retirement investment accounts

When you are determining "how many bank accounts should I have," you should always consider your retirement accounts too. Investment accounts come in all shapes and sizes, and careful consideration should be taken when choosing one.

The main purpose of investment accounts is to help you achieve your retirement savings goals or to assist with long-term goals. They essentially help you put your money to work. When it comes to retirement accounts, there are 3 main types:


A 401(k) is an employer-sponsored investment plan that gives you, the employee, a tax break on any money you put in it to save for retirement. The beauty with a 401(k) is that the money is automatically deducted from your paycheck, so you don’t have to actively manage the process. The money is invested into funds that you choose ahead of time.

Some benefits of a 401(k) include the fact that some employers will match your contributions – which is a seriously sweet deal! Additionally, contributing to your 401(k) will lower your taxable income meaning less money going to the IRS.

If you’re ever short on cash and are considering making a withdrawal from your 401(k), don’t bank on it. Withdrawing money in advance of your retirement age will result in a serious penalty plus income tax. Additionally, if you leave your employer, you can take your 401(k) with you and roll it over into an IRA.

Not all employers offer a 401(k), and if you fall in the bucket, don’t despair! Equally good alternatives exist for you to stay on top of your retirement plans.

Individual retirement account (IRA)

As mentioned above, if your employer does not offer a 401(k), then you’ll want to set up an IRA account. A 401(k) is employer-sponsored, whereas an individual can open an IRA. Both offer tax advantages, but the 401(k) includes other perks, such as the employer match on contributions.

One of the main advantages of an IRA is that it offers you a wide range of investment options, so you can work with a financial advisor to choose the optimal mix for your needs.

403(b) or 457(b)

For employees who work in tax-exempt institutions such as non-profits, public schools, or even church ministers, a 403(b) plan is the typical retirement plan offered up. This plan is available to teachers, school admins, nurses, doctors, government employees, and professors, among others.

While a 457(b) is for state and local government employees, including police officers, firefighters, and other civil servants. Mutual funds and annuities are typically the investment options of choice under this option.

4. Non-retirement investment account

If you’ve set up your retirement account and still have extra cash lying around, then a non-retirement investing account may be a great option to consider.

A regular investment account comes with many benefits, including the ability to access your funds without being penalized and the ability to save beyond your 401(k) or IRA.

These account types can be set up with a brokerage like Vanguard or Fidelity or with a Robo-advisor.

5. College saving (529b) / Custodial accounts

If you have kids, a 529 plan or custodial account is perfect for helping you save for their education. 529 plans are valid for education expenses starting from elementary school all the way through college and beyond. When a child reaches college and beyond, these funds can go towards books, tuition, room and board, and school supplies.

The major benefits of the 529 account are that taxes are deferred as the money invested grows, and any withdrawals made that go towards school expenses are tax-free.

Should you have bank accounts at different banks?

So, since we answered "how many bank accounts should I have" let's cover if you should use multiple banks. The answer is, it depends on what's best for your financial needs. Having all your accounts at one bank is clearly a simpler and cleaner path.

Transferring funds between accounts is quicker, and it is also much easier to view all your information in one place. On the other hand, having accounts at different banks could be really handy in various situations.

If you’re married and have a joint account, keeping that account at a bank different from your personal account could help from an organizational point of view. Or are you working on your financial discipline? Don't want to be able to easily transfer money between accounts? Then having separate banks might make sense.

Other reasons for using a different bank include if you want to track freelancing income or if you run a small business and want to track your business finances separately. And sometimes, having accounts at different banks could actually help you keep more money in your pocket.

Customize how many bank accounts you have to fit your needs

So, how many bank accounts can a person have? Basically, as many as they need! As you can see, you can have multiple bank accounts to help you take control of your financial future.

Not only is doing this a smart move, but it can also help you to gain real clarity on where exactly your finances are going and how far you are from achieving certain goals. If you still depend on one account to meet all your needs, what are you waiting for? Try multiple accounts today!

Learn more about building a solid foundation for your finances with our completely free course. Be sure to follow Clever Girl Finance on your favorite social media platforms such as Instagram, Facebook, and YouTube for top financial tips and advice!

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