Saving money is not a singular pursuit.
Take a minute to think about everything you’re saving for. A down payment on a home. Cash for that overseas vacation. Funds to tap in case an emergency arises.
Chances are you’re stacking money for several things at once, and those are just the short-term goals. We won’t even get into long-term objectives right now, like saving for retirement.
You probably park your short-term savings in a regular ol’ savings account … or several. Some folks are fans of splitting their money into separate accounts for each goal, while others hoard all their savings in one place.
Financial personalities and habits tend to determine how many savings accounts a person has, says Holly Peterson, financial consultant and owner of Elite Retirement Strategies in Pocatello, Idaho.
“Some people are more financially responsible when they have multiple savings accounts set up for different goals or purposes,” she says. “Other people get overwhelmed moving money around and give up on the whole idea of saving. There is no ‘one-size-fits-all’ recommended method.”
So whether you have one account or a dozen, you’re not doing it wrong. Let’s explore these two approaches to managing various savings goals and how you can be a successful saver with whichever route is best for you.