Why having at least two saving accounts will help you attain your financial goal?

Thu, Dec 20, 2018 7:00 AM on Exclusive, Latest, Recommended, Stock Market,

We come from a culture where issues on money, finances or banking are rarely discussed openly. In fact, parents even hesitate talking about the financial status of the family to their children. However, as we grow up, we come across a number of queries on Dos and Don’ts on money management. One of such Dos and Don’ts we have is regarding bank accounts.

Is it okay to have multiple bank accounts? Is it okay to have a single bank account? How might I be benefitted with multiple bank accounts? Will I be in a disadvantage if I hold multiple bank accounts? Will it increase my cost if I open multiple bank accounts?

The answer on how many bank accounts one should have depends on individual to individual. Usually, our income, purchasing power, spending habit, plans and financial goals affect the number of bank accounts one should have. Despite having said that, this article will revolve around the advantage of having at least two bank accounts.

Remember your first saving account? Majority of us might have had opened our first saving account either because our boss asked us to or probably because our parents believed we needed one.

Remember your first job? Remember your first pay cheque or your first salary? Remember how excited you were? Remember you spent all of your money in excitement? Remember you promised yourself to save the next month? Remember you could not keep up with the promise? 

Usually, starting off with two bank accounts helps you keep a check and balance between your financial goals and spending habits. For instance, when you have one saving account, your company deposits your salary in the same account; you withdraw from the same account. You keep on using same account for the purpose of both savings and spending so; you will not have a preplanned saving goal in that account.

On the contrary, when you have two saving accounts, you can always allocate one account to meet your financial goals. Similarly, the second account can be used to make your regular expenses. For instance, you are a fresh graduate, new in the job marketplace and earn Rs 20,000 as salary. In such case, if you can meet your expenses with Rs 12,000 monthly; you can save at least Rs 8,000 monthly. If you add up, the same amount throughout a whole year can be at least Rs 96,000.

Now, when you keep both the 12000 and 8000 sum in the same account, you are likely to use the 12000 in the first half of the month, and then use 8000 sum in the second half of the month. Here, you will assume that you will start saving from next month’s salary. However, when you have a separate account for the sum of 8,000 and you are almost about to spend the sum of 12000, you are likely to control your spending. Besides, when you realize sum of 12,000 will not be able to meet your expenses, you might go a step forward and look for extra source of income. The same financial goal account can further be used for investment purpose such as buying shares, insurance policies, buying debentures, applying in IPOs and many more.

Thus, having two accounts where one is attributed to attain your financial goals and the other one is to meet your regular needs will also minimize the habit of unnecessary expenses. When you have set a certain goal of expenses and savings, you are likely to improve your spending habits and keep track of expenses that are not necessary at all.

However, creating multiple saving accounts should not imply that one should open a number of bank accounts with minimum amounts in each bank account. This will rather increase the cost of maintaining these accounts. On the contrary, you can have two accounts each attributed for its own purpose.

When you decide to open an extra saving account to meet your financial goal, make sure, you do not incur unnecessary expenses to maintain that account. For instance, if this account is specifically to serve your financial goal, it is fine if you don’t issue ATM card and mobile banking. Such benefits will increase your expenses and limit your saving capacity. Moreover, it is not rational, if you issue ATM card for this account as you might be spending even from this account.

In addition to this, the online banking system has further made it easier as you can transfer money from one bank account to another without visiting the bank. So, as soon as you receive your salary, make sure to tap on your mobile banking and transfer amount from your regular saving account to your financial goal account. 

As you take on the journey of your financial goal, what else is required other than the two saving accounts is YOUR FINANCIAL DISCIPLINE.