What is your ideal number of different savings or checkings accounts to have? How did you come up with that number?
Based on my experience, I have found that I needed multiple savings and checkings accounts to keep funds organized.
4 REASONS TO HAVE MULTIPLE SAVINGS AND CHECKINGS ACCOUNTS
- Have 1 checkings account. This is a convenience factor because a checkings account is one of the easiest ways to get cash quickly. Compared to a savings account where you might have withdrawal limitations and the need to transfer funds, a checkings account is a lot more convenient to access.
- Have 1 emergency fund savings account. This fund is to be left alone unless you have, well, emergencies. I always heard that you should keep 3-6 months of living expenses so it is a rule I followed as I am sure most of you have or try to have. If your living expenses are $2,000 a month, then you should have between ($2,000*3)=$6,000 to ($2,000*6)=$12,000 in your emergency fund.
- Have 1 goal fund savings account. If you are planning to take a family vacation or planning to buy a new piece of furniture, then this is what the goal fund is for. You want to keep this fund separate from your emergency fund. You should aim to put a small percentage of your paycheck into this account. If possible, automate the withdrawal from your paycheck. Start with 1% of your paycheck and then slowly increase. Small steps.
- Have 1 side hustle savings account. Put all your side hustle money into this separate account. You could combine the side hustle savings account with your goal fund savings account because having so many different accounts could be hard to track at first. I would only keep the side hustle and goal funds separate if you intend to reinvest your side hustle money back into your side hustle. For example, if you bring in $2,000 from your side hustle, then only use part of that $2,000 to buy your next inventory. Try not dip into any of your other funds to fund your side hustle.