Do you have multiple bank accounts? If so, you’re not alone. According to a report by Javelin Strategy & Research, the average number of bank accounts per person in the US is 5.3. This includes checking, savings, money market, and CD accounts.
Having multiple bank accounts can be a smart way to manage your money, save for different goals, and take advantage of perks and promotions. But it can also be challenging to keep track of all your accounts, balances, and transactions.
Moreover, the banking landscape has changed significantly in recent years, with the rise of mobile banking and the decline of traditional banking channels. According to Forbes, the use of mobile banking has increased from 9.5% in 2015 to 34% in 2019, while the use of bank tellers and telephone banking has decreased. This means that more people are managing their bank accounts online, on their phones, or on their computers.
That’s why we created this ultimate guide to help you manage multiple bank accounts like a pro. In this guide, you’ll learn:
- Best practices for managing multiple bank accounts
- Why you should use multiple bank accounts
- What accounts you should have
- How to track all of your assets in one place
Let’s get started!
Five Best Practices for Managing Multiple Bank Accounts
Having multiple bank accounts can be beneficial, but only if you manage them well. Here are some best practices to follow:
1. Create a Consolidated Financial Dashboard
One of the biggest challenges of having multiple bank accounts is keeping track of all the information. You may have to log into different websites, apps, or statements to see your account balances, transactions, and fees.
This can be time-consuming and frustrating, especially if you have accounts across different banks or financial institutions.
A better way to manage multiple bank accounts is to create a consolidated financial dashboard. This is a tool that allows you to see all your financial accounts in one place, including your bank accounts, retirement accounts, online banking, and more.
One of the best tools for creating a consolidated financial dashboard is Kubera. Kubera is not like a traditional personal finance app or budgeting app. It’s a modern, all-in-one tool that helps you track everything you own, from cash and checking accounts to 401ks, collectibles, and digital assets.
With Kubera, you can easily link your bank accounts and other financial accounts and see them all on a simple dashboard. You can also see your net worth, portfolio value, asset allocation, and more. Kubera even lets you track your DeFi and crypto assets, as well as your foreign currency accounts.
Creating a consolidated financial dashboard with Kubera helps you save time and hassle, but also gives you a clear view of where your money lives and how it’s growing.
2. Track Account Balances
Another best practice for managing multiple bank accounts is to track your account balances regularly. This can help you avoid overdraft fees, low balance fees, or missed payments.
You should check your account balances at least once a week, or more often if you have a lot of transactions. You can use your consolidated financial dashboard to see your balances at a glance, or set up alerts or notifications from your bank or app.
Tracking your account balances can also help you build smart money habits, such as spending less than you earn, saving more, and investing wisely.
3. Don’t Keep Too Much Cash
While having multiple bank accounts can help you organize your money, you don’t want to keep too much cash in them. Cash is a low-risk, low-return asset that can lose value over time due to inflation.
Instead, you should set financial goals for each of your accounts and use them accordingly. For example, you may have a checking account for your everyday expenses, a savings account for your emergency fund, and another savings account for your short-term goals.
Once you’ve hit your savings goals, you should look into other ways to grow your money, such as investing in the stock market, real estate, or other assets. Investing can help you diversify your portfolio, increase your wealth, and lower your financial risk.
4. Eliminate Unnecessary Accounts
As your financial situation changes, you may find that you don’t need some of your bank accounts anymore. For example, you may have opened a new account to get a sign-up bonus, but now you’re paying monthly fees or getting a low interest rate.
If you have any unnecessary or redundant accounts, you should consider closing them or transferring the money to another account. This can help you simplify your finances, save on fees, and earn more interest.
However, before you close any account, make sure you check the terms and conditions, as some banks may charge a penalty or require a minimum balance or duration. You should also update any automatic payments or deposits that are linked to the account.
5. Rebalance, As Needed
Finally, you should review and rebalance your bank accounts as needed. Your money goals may change over time, and so should your bank accounts.
For example, you may want to save more for retirement, pay off debt, or buy a house. These goals may require you to allocate your money differently across your accounts.
To rebalance your bank accounts, you should create a financial plan that reflects your current and future goals. You should also consider your income, expenses, cash flow, and risk tolerance.
Then, you should adjust your accounts accordingly, such as transferring money, opening new accounts, or closing old ones. You should also update your consolidated financial dashboard to reflect the changes.
Rebalancing your bank accounts can help you align your money with your goals and optimize your financial performance. And you can use Kubera's rebalancing tool to set target allocations and get real-time rebalancing recommendations with ease.
Why You Should Use Multiple Bank Accounts
Now that you know how to manage multiple bank accounts, you may wonder why you should use them in the first place. Here are some of the benefits of having multiple bank accounts:
Keep Your Money Organized
One of the main reasons to use multiple bank accounts is to keep your money organized. Having separate accounts for different purposes can help you budget better, track your spending, and save more.
For example, you can have a checking account for your bills and expenses, a savings account for your emergency fund, and another savings account for your vacation fund. This way, you can easily see how much money you have for each category and avoid mixing them up.
Having multiple bank accounts can also help you see your financial situation at a glance. You can use your consolidated financial dashboard to see your net worth, cash flow, and asset allocation. This can help you make better financial decisions and plan for the future.
Be Purposeful About Each Account
Another benefit of having multiple bank accounts is that you can be more purposeful about each account. You can set specific goals for each account and use them accordingly.
For example, you can have a savings account for your emergency fund and aim to save 3 to 6 months of living expenses. You can also have another savings account for your short-term goals, such as buying a car or a laptop, and save a certain amount each month.
Having clear and specific goals for each account can help you stay motivated, focused, and disciplined. It can also help you avoid spending money on things you don’t need or want.
Perks, Points, and Promos
Another reason to use multiple bank accounts is to take advantage of perks, points, and promos. Many banks and financial institutions offer various incentives and rewards for opening and using their accounts.
For example, you may get a sign-up bonus, cash back, free ATM withdrawals, or other benefits. You may also earn points or miles that you can redeem for travel, gift cards, or other rewards.
According to a survey by Yahoo Finance, 56% of respondents said they have different types of accounts across various banks. Some of the reasons they cited were better interest rates, lower fees, and more features and services.
Sometimes, opening a new account to take advantage of these deals can be worth it, as long as you meet the requirements and avoid the pitfalls. However, you should always compare the costs and benefits of each account and make sure you can manage them well.
Shared Accounts
Finally, having multiple bank accounts can be useful if you have a partner or a spouse. Many couples have both separate and shared accounts for different purposes.
For example, you may have a joint checking account for your household expenses, a joint savings account for your long-term goals, and separate accounts for your personal spending and saving.
Having multiple bank accounts can help you and your partner align on your mutual goals, communicate better, and respect each other’s financial preferences. It can also help you avoid conflicts and misunderstandings over money.
What Accounts Should You Have?
So, what accounts should you have if you want to manage multiple bank accounts like a pro? The answer depends on your personal situation, goals, and preferences. However, a general rule of thumb is to have at least one checking account and one savings account.
Some experts recommend using the “envelope method” or the “Hi-5” method, which suggests having at least five separate accounts for different purposes. Here are the five accounts you should have, according to this method:
1. Income Account
This is the account where your direct deposits and paychecks arrive. You can think of this as your main hub or source of income.
From this account, you can create automatic transfers to your other accounts, such as your spending account, your savings account, or your investment account. This way, you can automate your money management and save time and hassle.
2. Spending Account (Primary Checking)
This is the account that you use for your everyday expenses, such as groceries, gas, utilities, and entertainment. You can also use this account to pay your monthly bills, such as your rent, mortgage, or credit card.
This account is usually linked to your debit card, which you can use to make purchases, withdraw cash, or pay online. You should keep enough money in your spending account to cover your budgeted expenses, but not too much that you could be earning interest or investing elsewhere.
3. Spending Reserve
This is the account that you use for extra money that you want to set aside for occasional or irregular expenses. You can use this account from time to time for costs that are outside of your normal living expenses, such as gifts, travel, or hobbies.
This account can act as a buffer or cushion for your spending account, in case you need more money than you budgeted for. You can also use this account to save for things that you want but don’t need, such as a new gadget or a spa day.
4. Emergency Savings Fund
This is the account that you use for your emergency fund. Your emergency fund is the money that you save for unexpected and urgent situations, such as a medical emergency, a loss of income, or a major life event.
Your emergency fund should be enough to cover 3 to 6 months of your living expenses, depending on your situation and risk tolerance. You should keep this money in a separate account that is easily accessible, but not too tempting to touch.
The best type of account for your emergency fund is an interest-bearing account, such as a high-yield savings account or a money market account. These accounts can help you earn some interest on your money, while keeping it safe and liquid.
5. “Rainy Day” Savings Account
This is another savings account that you use for your “rainy day” fund. Your rainy day fund is the money that you save for unexpected costs that don’t constitute an emergency, but still require some extra cash.
For example, you may need to pay for a car repair, a home improvement, or a vet bill. These costs are not life-threatening, but they can still disrupt your budget and cash flow.
Your rainy day fund should be enough to cover these types of expenses, which may vary depending on your lifestyle and needs. You can use a similar account as your emergency fund, such as a high-yield savings account or a money market account.
However, you should keep your rainy day fund separate from your emergency fund, so that you don’t dip into your emergency savings for non-emergency costs. You can also set a different savings goal for your rainy day fund, such as $1,000 or $2,000.
6. International Accounts (Optional)
If you travel frequently, work abroad, or have family or friends in other countries, you may also want to have some international or multi-currency accounts. These are accounts that allow you to hold money in other countries and currencies, without having to pay high fees or exchange rates.
For example, you may have a US dollar account, a euro account, and a yen account. You can use these accounts to send and receive money, pay bills, or shop online in different currencies. You can also use these accounts to save money in other currencies, which can help you diversify your portfolio and hedge against currency fluctuations.
There are different types of international or multi-currency accounts, such as online banks, digital wallets, or prepaid cards. You should compare the features, fees, and exchange rates of each option and choose the one that suits your needs and preferences.
Track All of Your Assets in One Place
Keeping your money in multiple bank accounts is an important financial tool, but it’s not enough to build and protect your wealth. To achieve your financial goals and secure your financial future, you need to track your entire financial situation and your overall net worth.
Your net worth is the difference between your assets and your liabilities. Your assets are everything you own, such as your cash, bank accounts, investments, real estate, collectibles, and digital assets. Your liabilities are everything you owe, such as your debt, loans, mortgages, and taxes.
Tracking your net worth can help you measure your financial progress, make smarter financial decisions, and balance your assets to meet your long-term financial goals.
However, tracking your net worth can be challenging, especially if you have multiple bank accounts and other assets. You may have to use different tools, websites, or apps to see your financial information, which can be confusing and time-consuming.
That’s why you need a tool like Kubera, which gives you a modern, all-in-one way to track everything you own, from cash and checking accounts to 401ks, collectibles, and digital assets.
With Kubera, you can easily link your bank accounts and other financial accounts and see them all on a simple dashboard. You can also see your net worth, portfolio value, asset allocation, and more. Kubera even lets you track your DeFi and crypto assets, as well as your foreign currency accounts.
Kubera also helps you protect your wealth and your legacy, by allowing you to designate beneficiaries and trusted angels. This in turn ensures the safe transfer of your portfolio, and important financial documents to your beneficiaries, in case something happens to you.
Finally, Kubera also lets you simulate future financial scenarios based on current assets, investments, and savings. By inputting different growth rates, inflation rates, and time horizons, you can visualize how your net worth might evolve over time. This feature assists in making more informed financial decisions, setting realistic savings goals, and adapting investment strategies to future expectations.
Kubera is the ultimate tool for managing multiple bank accounts and tracking all of your assets in one place. It’s the best way to see your financial big picture and grow your wealth over time.
Sign up for a trial today and see for yourself how Kubera can help you manage your money like a pro.
