Most people understand the value of a savings account. If you keep your money in one, it will accrue more interest than if you put it in a checking account. However, some individuals don’t realize that having multiple savings accounts can be a sound financial strategy.

In this article, we’ll discuss a couple of reasons why having multiple savings accounts makes sense.

1. Multiple Goals

Before we talk about some reasons why having multiple savings accounts is a smart move, we should mention that you might want to hold off on opening them if you’re actively trying to pay off several creditors. If you’re looking into a multiple loan payoff calculator because you have more than a few outstanding debts, make that financial priority #1 before opening another savings account.

Assuming you’re not overburdened with debt at the moment, one of the main reasons why you might want to open multiple savings accounts is because you probably have several distinct goals. If so, why not have a savings account for each of them?

Conventional wisdom says you can open a savings account and divert cash from each paycheck into it. However, you can divide that money up even further and divert it into several savings accounts if you have a few distinct goals you’re trying to achieve. 

For instance, maybe you’ll have one savings account that you’ll use to buy a new car when you build up enough money. Another one might be for a lavish vacation you’re planning.

As you watch each account grow, instead of just one, you can feel like you’re getting closer to several financial goals at the same time.

2. An Emergency Account

You might choose to open multiple savings accounts and designate one as your emergency fund. While another account might be intended for use as a vacation fund, your emergency fund should be there so you can use that money for sudden medical bills, car repairs, or to travel to visit an ailing relative.

Multiple savings accounts will each earn more interest than a checking account, but you’ll probably feel better if you know that one of them is there to help you out if the unexpected occurs. You never know when some emergency will arise or life will throw you a curveball. 

Having that emergency fund waiting in a savings account should make you feel insulated against the world, and whatever might come your way. If nothing goes wrong, you can sit on that money while it earns interest. For this reason, it makes sense to seek out the bank that offers the highest interest rate on savings accounts.

3. Experts Suggest Opening Multiple Savings Accounts

Many financial experts recommend the idea of opening more than one savings account for these very reasons.

If you have several savings accounts and name each one after its purpose, it can instill a sense of confidence and encourage you to save more. You’ll probably enjoy watching as your vacation account gets closer to your goal, or you get closer to the time you can turn in your used vehicle in favor of a new one.

Setting up one savings account as your emergency fund is also something many financial advisors recommend. That account can be a bulwark against life’s unexpected events. Knowing that money is there and accruing interest in the meantime should allow you to face day-to-day life with a lot more confidence.

If this idea sounds good to you, you can determine what bank offers the best interest rates on its savings accounts. Once you have chosen a bank, you can open several accounts without delay.