How many bank accounts do you need?

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If you rely on just one bank account for everything, you’re making budgeting harder than it needs to be.

Mixing expenses, savings, and investments in a single bank account makes managing money harder. You lose track of what’s meant for bills, what should be saved, and how much you have left to invest, isn’t it?

Why Should You Have Multiple Bank Accounts?

1. Better Budgeting & Expense Management

Using separate accounts for income, spending, and investments/savings/emergency funds,  ensures that every rupee serves its purpose. This prevents accidental overspending, makes tracking easier, and keeps your finances structured.

2. Unlocking Exclusive Bank Benefits

Different banks offer unique perks like higher interest rates, zero-balance accounts, cash-back, better loan deals, and free debit or credit cards. Holding multiple accounts lets you maximise these benefits.

3. Enhanced Accessibility & Security

If a bank faces technical issues, downtime, or financial instability, you’ll still have access to funds from other accounts. Deposit insurance (DICGC) covers only ₹5 lakh per bank, so diversifying accounts helps protect larger savings and reduces risks from hacking and fraud.

But, how many accounts should I have?

It usually depends on your income, goals and other circumstances, like sources of income, profession, expenses and so on.

But here are the most basic ones:

1. Salary/Income Account

Purpose: This is your primary account for receiving income—whether it’s your salary, freelance payments, or passive income. If you have a side hustle or passive income, you’ll need a second account since employer-provided salary accounts usually don’t accept other income sources.

What to do with it: Use this account only to receive money and immediately route it to other accounts based on your budget—expenses, savings, and investments.

Benefit: Since this account isn’t used for frequent transactions, it becomes easier to see exactly how much you’ve earned and where did you spend it ( categorically)

‍Pro Tip: Choose a zero-balance or low-minimum-balance account because you’ll be redirecting money to different categories as soon as it arrives. 

2. Checking/Spending account

Purpose: This is the account you use for everyday expenses—groceries, bills, rent, subscriptions, and any other spending. Choose an account with zero or low transaction fees, especially if you make frequent digital payments.

What to do with it: Transfer only the amount you’ve budgeted for expenses from your salary/income account. This ensures you don’t overspend and keeps your discretionary and essential expenses organized.

Benefit: Since all your spending happens from one place, tracking and reviewing your expenses becomes effortless. You’ll know exactly how much you’ve spent and how much is left for the month.

Pro Tips: 

• Use Neo-banks (Eg: Fi Money, Jupiter)—they categorize spending into shopping, bills, dining, etc., so you know exactly where your money is going.
• Maximize rewards on everyday expenses— by using credit cards that offer cashback/rewards on rent, groceries, online payments, UPI payments and more.
• Pay bills using a credit card—This helps you review all expenses in one place before clearing dues, improving financial awareness.

3. Savings/Investment account

Purpose: This is where you park money that’s meant to stay untouched—whether it’s for short-term goals, growing your wealth by investing or saving for emergencies.

What to do with it: As soon as you receive your income, transfer a fixed amount to this account based on your savings plan and automate investments where possible, so your money gets deployed without relying on willpower.

‍Benefit: Keeping your savings separate from daily spending prevents accidental use and helps you stay consistent with investing, rather than letting money sit idle or spending it unintentionally. 

Pro Tips: 

• Invest your emergency fund in liquid mutual funds to keep it accessible while earning better returns than a savings account.
• Liquid funds offer higher interest and better security—your money is safer from fraud since hacking a Demat/MF account requires changing the linked bank account, adding an extra layer of security!
•  If you prefer lower risk, opt for FDs or set up an RD—both offer better interest and security than regular savings accounts.

And if you struggle with discipline, make sure this account is not linked to UPI ;)

4. Joint account

Purpose:  A joint account makes managing shared expenses easier and more transparent, reducing the need for constant transfers.

What to do with it: Use it for rent, groceries, bills, EMIs and savings for shared goals like a home, vacation, or emergency fund.

Benefit: No more back-and-forth transfers or tracking who paid what. Bills get paid on time, both partners have equal access, and in the unfortunate case of  one partner passing away, the surviving partner gets immediate access without legal delays.

Pro Tips: 

• Automate rent, bills, and EMIs to ensure payments are always on time. 
• Get an add-on credit card so both partners share the limit and responsibilities and build credit score together.

Final Takeaway

Managing money is easier when your accounts are structured for specific purposes.

With separate accounts you can stay in control, avoid accidental overspending, maximize returns and ensure your money is secure and accessible always ( at least some parts of it). 

Instead of tracking and managing every expense manually, let your bank accounts do the work for you!

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