I’m a big fan of streamlining and efficiency, except when it comes to my bank account. Actually, I should say bank accounts.
Yes. In a day where one bank can easily fulfill all your needs from a checking account to your mortgage, I willingly choose to use multiple banks, sometimes with multiple accounts at each bank, to store my money.
I do know that sounds ridiculous and maybe even annoying. But, I can assure you it’s not!
Here’s why I use multiple banks and you should too:
1. Multiple bank accounts make you more organized
Having more banks and more bank accounts keeps me more organized, which saves money and time. Admittedly, it sounds pretty confusing, but it’s true!
I have a total of 2 checking accounts, 5 savings accounts, 5 investment “savings” accounts, a 401k and a Roth IRA. And each one has a specific purpose.
At any single moment I can check an account and know exactly how much money I have for each category. This is especially helpful when saving up for future expenses, like the home insurance I only need to pay once a year, but that not saving for would put me into major debt the month it’s due.
A major bonus of the banks I use for my various savings (Capital One 360 and Betterment) is that you can rename your accounts, so there’s no need to keep track of which account number is tied to what category. The actual names of my different accounts are listed in the account “rundown” below.
I have 1 “main” checking account that I use for my paycheck and all bills. After the bills are paid, the money goes to its proper secondary account.
- Bank of America – “main account”
- USAA Bank – international travel (no ATM fees!) and travel discounts
- Bank of America – overdraft protection account
- Capital One 360 x 4 – investment planning, safety net, travel, personal development
Investment “Savings” Accounts
- Betterment x 5 – main account, travel, safety net, car maintenance fund, house insurance
2. Using multiple banks forces you to save money
Using multiple banks has been the key to reaching many of my financial goals over the past few years (along with careful planning of course!). They help to automate my savings and also limit spontaneous spending.
Based off of my budget, I set certain amounts to be automatically transferred to different bank accounts on pay day. I don’t ever see the money sitting in my checking account, which makes it so much less tempting to spend and means the money actually makes it into savings.
But how do I prevent myself from spending from my savings accounts? I’ve made it difficult to gain access to the money quickly.
Again, this may sound weird, but you don’t want instant access to spend all your money at once. In my experience, if you make it easy to bail yourself out from overindulging on wine and Amazon, you absolutely will waste your savings.
While all of my bank accounts are linked online, it will typically take 3-4 business days to transfer money from my savings to my checking account. Of course I keep a small savings account at Bank of America that is tied to my main checking account, but I limit the balance to ensure it’s there for emergencies and overdraft protection only.
If I only have immediate access to a few hundred dollars, I can’t blow my entire travel savings spontaneously buying new furniture in an effort to replicate my favorite rooms on Pinterest.