Why Multiple Bank Accounts with One Bank Makes Saving Easier
As the Federal Reserve continues to increase interest rates, you may start to see bigger returns on savings. The downside is that you may also pay more to borrow money. Regardless of what the Reserve does, the real catch to building savings and avoiding debt is to have multiple bank accounts and financial investments such as savings accounts, certificates of deposit, and financial investments in the first place.
How We're Failing at Saving
Most find it difficult to save, especially when they're young. A recent survey found that 57 percent of Americans have less than $1,000 in savings. It's an improvement over 2016 when 69 percent reported having that amount. What's worse, though, is that the percentage of Americans with nothing in savings increased slightly from 34 percent in 2016 to 39 percent in 2017. But 46 percent of young millennials, aged 18 to 24, had a $0 savings balance in 2017, which is up from 31 percent in 2016.
The good news is that the number of Americans who had more than $1,000 in savings increased in 2017, with 25 percent of Americans reporting that they had more than $10,000 in savings, up from 15 percent in 2016. And 13 percent of young millennials managed to keep $10,000 in savings, up from 8 percent in 2016.
Multiple Bank Accounts, One Financial Hub
Having all of your financial accounts under one roof can make it easier to plan and save effectively and efficiently. If you're into simplicity, or you're a bit disorganized, this may be the route for you. By scheduling everything in the same place, you'll only have to visit one bank, you can make transfers between accounts at the same bank hassle-free (without waiting a few days for authorization), and you only need to remember one set of log-in information.
If you're struggling with saving, here's how multiple bank accounts with the same financial institution might help with your own savings barriers:
- Unexpected Emergencies: In The Secret Shame of Middle-Class Americans, author Neal Gabler explained how he's among the 47 percent of Americans who can't scrape together $400 for an emergency. The sobering piece, written for the Atlantic, had many heads nodding. Many households mix savings with spending money. Diverting some of your paycheck into a savings account will keep it out of sight, out of mind, and out of your spending loop. Your money will earn interest so when life throws lemons at you, you can afford to pay the lemonade stand.
- Health Spending: They say if you have your health, you have everything. But oftentimes, paying for healthcare can be the thing that costs the most. According to the latest data from the Centers for Medicare & Medicaid Services, the average American spent $10,348 on healthcare in 2016. If you have a High-Deductible Health Plan — defined by the IRS as a deductible of $1,350 for individuals, $2,700 for families — you qualify to open a Health Savings Account (HSA).
- Feeling Financially Secure: It's not enough to have multiple accounts in one bank or financial institution. When your accounts are centralized, a financial advisor can help guide your overall financial portfolio. Households often struggle with the wide array of financial products available in the marketplace. Twenty-three percent said they don't try hard enough to understand their finances.
Remember, you can't get through that bucket list without putting pennies in the bucket first.