Much of your happiness in life may be tied not to how much money you have, but how you use the money you have. To that end, you may wonder how to allocate your funds to different accounts. But how many accounts do you need? The answer depends on your financial goals and spending habits.
Of course, a checking account where you keep enough money for regular monthly expenses is a must. You may need to occasionally tweak the amount you keep in this account, as irregular expenses may crop up, such as yearly credit card fees.
Because life doesn’t always go as you financially planned, maintain a savings account for emergencies. Say that you unexpectedly lose your job or need emergency car repairs or medical care. Using funds in a savings account is better than having to use a credit card, which comes with interest payments. Sit down with a financial advisor Ridgewood NJ to determine how much you should have in an emergency savings account. Having enough for three months of expenses is a good place to start, but adding more when you can is always a good idea.
Money Market Account
A money market account is a different type of savings account. Depending on your options for savings accounts, you may prefer the interest rate of a money market account. When deciding between a money market account and a standard savings account, look into how many withdrawals and transfers you can make in a single month. Also, ask about minimum balance requirements and other fees.
If you have your own business or are a gig worker or independent contractor, consider opening a business account. It is best to keep personal and business finances separate, especially for tax purposes. This account is where you can transfer money earned through your business and keep track of business spending.
The number of bank accounts you have can change from time to time. Work with a financial advisor to ensure that you have the right accounts for your current lifestyle.