Savings accounts are an excellent location to save your money. They safeguard your funds. They are extremely liquid and easily accessible. Furthermore, they ensure that your money is not sitting idle. Savings accounts provide interest on your savings, which helps your money grow over time. Varying banks have different interest rates. Senior folks and women may potentially qualify for a higher interest rate.
Despite how beneficial they are, many people just have one savings account. However, having various savings accounts might provide you with additional rewards. Having your money in various accounts allows you to simplify your savings, be more financially disciplined, better track your spending, and get multiple perks from different institutions.
It, if you haven’t already created a savings account other than your primary one, here are five reasons why you should do so right away.
1. Improve Your Savings Management:
You can manage your money more effectively if you have many savings accounts. You can save in several accounts based on your financial and personal objectives. You may, for example, utilize one account for a specific goal, such as travel, retirement, or a child’s education, and the other for your everyday spending. You might also have a primary account for normal expenses, a salary account for your pay, and a joint account with your spouse that both of you can use. In addition, if you have a critical financial need that need quick liquid cash, you might keep a separate savings account as an emergency fund. There are no limits on the number of accounts you may have.
2. Helps Put More Money Aside:
Savings accounts allow you to automate your savings. Automatic transfers from your primary account to your secondary savings accounts are possible. This allows you to save more money. For example, you may schedule a transfer for the 5th of every month. This ensures that your money is saved at the start of the month. The leftover amount can then be used for your monthly needs. This assists in avoiding overspending. Furthermore, if you solely save in one account and have a considerable amount accrued, you may be tempted to spend it. Having smaller sums in various savings accounts, on the other hand, curbs this urge.
3. Improve Your Progress Monitoring:
When you have many savings accounts, you can better track your progress. Individual savings objectives, such as retirement or a property purchase, can be tracked. A single savings account with lump-sum savings might be deceiving at times since it is difficult to determine how much money you have saved for a certain purpose. In most circumstances, your objectives overlap, and you have fewer cash than you believe for a certain aim. When the time comes to make the transaction, you may discover that you do not have enough money. You could even have to
apply money put aside for goal A to goal B. However, with various savings accounts, you never lose sight of your goals. If you go behind schedule, you can take corrective action and strive to save more. Similarly, if you have already met one goal amount but are falling short on another, you can redirect your savings to another. This way, you prevent financial mismanagement and keep focused on your ultimate goal.
4. Tax savings:
As previously indicated, every savings account pays interest. This interest is credited to your account. The interest you earn in India is taxed. The bank deducts tax at the source under the Income Tax Act of 1961. This is deducted when the interest generated in an account reaches Rs. 10,000. As a result, if you utilize a single savings account to save for your future requirements, you will most likely have a greater bank balance and, as a result, a higher interest rate. When you pay taxes on it, your profits are reduced by the amount of tax you pay. However, by maintaining multiple savings accounts, you may receive interest on all of them while avoiding the tax on them.
5. Take advantage of unique features and higher interest rates:
Most businesses have agreements with specific banks. As a result, as an employee, you may not have a vote in where your pay account is opened. You will miss out on expanding your money if this bank does not give a better rate of interest. You can, however, create a second account for your other savings and demands. You may evaluate numerous banks and choose the ones that provide the best advantages and interest rates. This will allow you to save more money and attain your financial objectives sooner than expected.
6. Your savings are protected:
In the event that a bank fails or closes, the Deposit Insurance and Credit Guarantee Corporation (DICGC) pays the equivalent of your savings deposit or up to Rs. 5 lakhs as insurance money. The DICGC insures all commercial banks, international banks, local banks, and regional rural banks. Furthermore, both the principle and interest amounts are protected up to Rs. 5 lakhs. So, if you spread your savings across many banks, your money is guaranteed up to Rs. 5 lakhs. If you have more money in a single bank account, you risk losing your savings if the bank fails.
How to Benefit from Having Multiple Savings Accounts
To save more and reach your objectives faster, seek for institutions that provide high interest rates. Once you’ve decided on a bank, you may create a savings account and begin saving. You may automate your savings, load your savings account with dollars at a consistent rate, and live a life free of financial stress. However, make careful to maintain track of your money, so that you have a fair idea of where you stand at all times.
Saving money wisely will help you get to your target faster and more smoothly. Multiple savings accounts might help you organize your funds and eliminate errors. This not only ensures better money management, but it also allows you to enjoy life without worrying