What is an ideal number of bank accounts?

There are two basic bank accounts a majority of the population use: checking and savings. Checking accounts are mainly for daily transactions, such as grocery shopping and paying monthly bills. For most, it's tied directly with their checks from work, and in some instances, workers may opt to have their checking account set up with the employer's direct deposit system.

Savings accounts are exactly what their name implies. These accounts are meant to help build up savings, whether for retirement or as an emergency fund. Individuals decide how much of their monthly income they want to save, outside of any 401k and individual retirement accounts they may also have.

This poses an interesting question: How many bank accounts are needed, and does that number change over time?

What is an ideal number?
If you're curious whether you have too few or too many accounts, you'll first have to put yourself in one of three groups. According to Time Money's Taylor Tepper, those three groups are: a single, recently graduated 20-something, a married couple with at least two kids and a retiree.

A family enjoying a picnic.

Families are most likely to have multiple bank accounts.

Accounts for millennials
The recently graduated millennial, who is new to the workforce, only needs the bare minimum when it comes to accounts, according to Alex Matjanec, co-founder of My Bank Tracker.

"A typical young adult needs just two bank accounts: a checking account and a saving account," Matjanec told Time Money.

The checking account should handle the day-to-day lifestyle of young workers. If you fall within this group, you may want to consider an account with minimal or no monthly fees. These fees can add up over time and will make a dent on in your account, especially if your post-college job salary is on the low end.

When it comes to a savings account, you'll have to compare various offerings. Matjanec recommended you opt for a high-yielding savings account. The purpose of this account is to help you save for those unexpected situations, such as a hospital stay or a period of unemployment. Ideally, you should have enough saved for about six months of essential expenses, which can include housing costs, utilities and groceries.

With the rise of online banking, millennials and younger employees can easily keep track of their accounts and not feel overwhelmed.

For the family
It's all about specialization if you're married and have kids. Financial management starts to grow for families, and at times may get more difficult, according to Bankrate. Time Money recommended couples have a joint savings account, but separate checking accounts. In an interview with Time Money, Richard Barrington said couples should set long-term savings goals and ensure they're in agreement. As a result, couples may find it beneficial to setup multiple savings accounts.

For instance, if you and your spouse want to save for a housing down payment, you'll want to inquire about a certificate of deposit. This will help you save and gain high interest rates for a set period of time while protecting your money against economic uncertainties.

You can even create savings accounts and CDs for every new savings goal, as recommended by Money Crashers. For a family, goals may include housing renovations and future college tuition costs. As with millennials, a savings account should also be created for emergency situations.

"It's all about specialization if you're married and have kids."

The retiree
Up until this point, you've been growing wealth, and as a result, the number of bank accounts under your name. Come retirement, it's all about downsizing. At this point in your life, you've likely paid off your mortgage and any car payments. You may or may not be receiving monthly 401k, pension or IRA payments.

As a result, you can close many of the previously opened savings accounts, but still maintain one to handle emergencies. When it comes to the checking accounts, Ryan Wibberly - CEO of CIC Wealth - recommended couples have a joint account, just as they should for a savings. Both accounts should also have a transfer-on-death designation. This will ensure any money is immediately transferred to a beneficiary.

After all, your retirement years are yours to enjoy. You shouldn't spend those days worrying about finances and passwords for all the accounts.

In some ways, young workers and retired couples and individuals are alike, as they don't need need too many bank accounts. Families are constantly growing, and multiple accounts can handle that expansion.

Back to Blog