Most of us would have started our personal finance journey by opening a simple savings account. Savings accounts form the bedrock of personal finance, offering savers a convenient and safe way to store their funds, enjoy liquidity, earn interest, and achieve various financial goals. While most of us think just one savings account is enough to meet our requirements, in some cases, opening multiple savings accounts in one bank can be more beneficial. In this article, we debunk why opening multiple savings accounts is a good choice while outlining some handy ways to manage multiple accounts and maximise their benefits.

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According to financial advisors, having multiple savings accounts is a good idea when you have different savings goals. Maintaining separate savings accounts for each goal is a smart move because different goals require different target amounts and have varying timelines for their fulfilment. The act of maintaining multiple savings accounts, each dedicated to a specific goal, can help you prioritise how much and how often you wish to save towards them.

For instance, let us say building an emergency fund and planning a vacation are your two primary short-term savings goals currently. For each goal, you establish the following saving targets:

• Saving Rs. 2,50,000 for your emergency fund
• Saving Rs. 1,00,000 for your vacation

You can further fine-tune these targets by outlining a time frame for achieving your goals. In other words, you can ascribe a specific time frame to each of your goals. So, you can aim to build an emergency fund of Rs. 2.5 lakh within the next 10 months and save Rs. 1 lakh for a vacation within the next 5 months. To achieve these goals within the given time frame, you will have to contribute a monthly sum of Rs. 25,000 and Rs. 5,000, respectively, to each of your savings bank accounts dedicated to these goals.

Alternatively, it is possible to lose sight of individual goals and their requirements if you save money for all your goals in a single savings account. There, the focus is more on the total balance than how much you have saved for each goal. In simple words, multiple savings accounts dedicated to different life goals make it easier to track your goals as well as your savings progress. Maintaining multiple savings accounts helps take a more strategic approach to savings.

Learning how to strategically manage multiple savings accounts can help you get the most out of them. With a few organisational tips and thorough planning, you can master the art of maintaining multiple savings accounts. Here are a few tips to help you better manage multiple savings accounts:

• Dedicate accounts for different goals
  As mentioned earlier, multiple savings accounts work best when each is dedicated to a particular goal. First, decide how you wish to use each savings account. For instance, you can dedicate one savings account to your emergency fund, the second to all your short-term goals, like vacation planning and gadget purchases, and the third to long-term goals and investments.
• Decide how much you wish to save
  Next, it's essential to decide how much you wish to save in each savings account. This depends on your monthly budget as well as the target amount required for the goal and the time frame within which you wish to achieve it.
• Automate your savings
  Once your salary is credited, manually allocating funds to different savings accounts can be challenging. To avoid this hassle, you can set up an auto-transfer mandate for each account to transfer a specific amount every month into each of your savings accounts. This will help simplify the task of managing multiple savings accounts.
• Check fees
  While multiple savings accounts can help you methodically reach your savings goals, each account also comes with certain fees. If you have a regular savings bank account, you will have to pay penalty charges if you fail to meet the minimum balance requirement of the account. Additionally, banks charge debit and credit card charges, chequebook charges, and Internet banking fees on savings accounts. The cumulative maintenance fee burden can eat away at your efforts to grow your savings corpus. That’s why it's essential to pick accounts with the lowest minimum balance requirements and service charges.
• Seek out competitive interest rates
  To grow your savings faster, look for savings accounts that offer competitive interest rates. Different types of savings accounts offer different interest rates. The average rate of interest on regular savings accounts varies from 2.50% - 6%. Conversely, high-yield savings accounts, typically found at online banks, can offer much higher APY, increasing the growth potential of your savings.

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Opening multiple savings accounts can be beneficial in the following ways:

• Goal segregation
  Be it building an emergency fund, saving for the down payment on a house, planning a vacation, or saving to buy a new car—most of us save for multiple goals simultaneously. Maintaining multiple savings accounts can help with goal segregation. You can assign one goal to each account and save accordingly. You can even monitor your progress on a goal to see if you are behind and then decide on ways to rectify the situation.
• Better organisation
  Multiple savings accounts ensure a strategic and organised approach to savings. Having multiple accounts lets you keep your finances organised, curb overspending, and allocate funds appropriately. Also, multiple savings accounts make tracking your progress and planning easier.
• Possibility of enhanced interest earnings
  You stand to earn interest on each of your savings accounts. By spreading your money across different savings accounts, especially ones with higher-than-average interest rates, you can maximise the growing power of your savings.