How Many Bank Accounts Should You Have?

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Holding multiple bank accounts is necessary. But, how many bank accounts should you have? Start with 2 bank accounts to make the most out of your income. One of them is for your income and expenses while the other is your savings account. As you begin leveraging multiple financial instruments, you can grow to 3 or 4 bank accounts for specific purposes.

Now, having 2 bank accounts makes complete sense. But do you NEED more than 2?

When I started out, I had 6 bank accounts. That sure required a lot of management, but my purpose was to understand the banking experience with all of them. Within 3 months of use, I cut out 2 of those banks for good!

After managing multiple banks for individual assets and liabilities, let me distill everything I’ve learned, and tell you exactly how many bank accounts you need for your financial situation.

How Many Bank Accounts Should You REALLY Have?

You have three major parts in your financial life:

  1. Income
  2. Investments and savings
  3. Expenses

Each of these three areas deserves a dedicated bank account to make management easier for you. Let’s talk about each of them in detail before explaining the need.

1. Income Bank Account

Your income and expenses should not take place from the same account. This can help you save a LOT more very easily! Think of it this way. If you don’t see the money in your account, you’re much less likely to spend it right?

So, when you get your salary or professional income credited to your account, calculate the total monthly expenses and move them to your expenses account right away. Everything else, goes to your investment and savings account.

Let’s assume a $4,000 monthly income. Considering a 50% average household expense, you’ll transfer $2,000 to your investment and savings account, and the remaining $2,000 goes to your expenses account.

2. Investments and Savings Account

Your investment and savings account will never include any sort of expense. All the money credited to this account is either saved or invested.

The $2,000 you transfer here can be split between investing in equity, debt, fixed deposits, corporate bonds, or government bonds depending on your risk appetite.

The typical advice here is to have 6 months of expenses worth of savings in liquid money. For the sake of this example, the amount will be $12,000. You can simply keep cash in high-yield savings accounts or create a bank fixed deposit for the amount.

All additional money must be sent out to higher growth options like equity funds, or direct stocks. If you aren’t prepared for the risk that comes with equity, you can always go for high-yield bond funds.

3. Expenses Account

Any money that is here is the only money you use for expenses. In the first month you try this, you’ll get a fair idea of how much money you actually spend.

You can adjust the transfers accordingly.

So out of the $2,000 you transfer here, maybe you need only $1,900. Keep the $100 in the expenses account. The extra money at the end of every month will help you fund any small expenses that weren’t accounted for.

For emergency expenses, you can always use part of the money that you saved up as the 6 month of expenses. Then fund it back ASAP so you aren’t short there.

What Is The Use Of Having Multiple Bank Accounts?

Now, having multiple bank accounts come up with a lot of benefits. In my life, switching to using multiple bank accounts has made the difference between not knowing where my money was going, to having a 390,000 net worth.

1. Multiple Bank Accounts Make Money Management Easier

You can easily see why multiple bank accounts will make managing your expenses and savings easier. When you dedicate a bank account only for a specific purpose, you can have a clear picture when you’re grabbing onto some money from your savings or investments.

2. Your Savings Increase

Over the period of one year, I went from negative 2,000 to positive 10,000 in savings. My income was on the lower side but just creating separate bank accounts helped me easily fix the additional expenses that I took on without ever noticing!

Try it out for 6 months and you’ll know exactly what I mean.

3. Can Track Your Expenses Better

When you fund your expenses using a dedicated expense account, you know that the money you’re spending is guilt free spending. And, overall you become accustomed to spending lesser psychologically.

Think of it this way. If you feel you have lack of money all the time, you are very likely to spend more when you have it (because what if you don’t have it tomorrow?). That’s how the brain is. We can’t do much.

But, if you give your brain the satisfaction of spending guilt-free, you make yourself free from the unnecessary expenses your brain forced you to take on out of insecurity!

4. Get More Out Of All Bank and Shopping Offers

All banks have specific offers and holding multiple bank accounts can give you access to so many shopping offers that will end up saving additional money, or getting you better services at certain retailers.

You can decide which bank account should be the expenses account, which one gives you the most interest on savings and investments, etc.

Finding the best bank accounts will take time but you’ll find deals you would have missed out if you held only one bank account for everything.

5. Never Run Out Of Cash

Any money that’s added to your income (your bonuses, your annual appraisals, etc) continue to stay in your income account. You never touch the income account. Whatever amount gets automatically transferred to your expenses account is all you should spend.

And so, you start building savings effortlessly. It’s a “set-and-forget” scheme where you can gain the added benefits of having a lot of cash while spending without a worry!

Is Having Many Bank Accounts a Good Decision For You?

It’s a great decision for anyone stepping into the world of personal finance to hold multiple bank accounts for different parts of their financial lives.

If you have the habit of increasing your expenses as your income grows, this is yet another great way to curb this!

And if anything, the added savings and investments will only give you a great sense of confidence that you won’t have to resort to social security even when things are going rough.

The COVID pandemic did teach us how easily companies can let go employees when the time isn’t right. For those who had built up their savings would have been much better off than those believed they had a job forever!


Consider this as your first step into the world of personal finance. There’s a lot more that goes into managing your money like a professional. It takes time. But the first step is to start separating your financial life.

As you begin managing your money better, and growing it faster, you can start investing in different businesses through stocks, and even add passive interest income to your life with the use of monthly dividend funds. We’ll talk about all this in the upcoming articles.

But for now, go ahead, and open up 3 bank accounts. You deserve a much more comfortable financial life after all!