How many bank accounts should I have? We make it make sense

#MakeIsMakeSense is a weekly series from the Star that breaks down personal finance questions to help young Canadians gain more confidence and understanding around financial literacy.

With a plethora of options at your finger tips, what, and how many bank accounts should you have?

This week, our question comes from 24-year-old Natasha. She asks, “How many accounts should a young adult have on their financial journey? Should your emergency funds be in your savings and sinking funds in checking? These plus a TFSA and RRSP equates to four. Or more simply, where should you be keeping your money?”

To #MakeItMakeSense, we brought in money expert Jessica Moore to break it down and give us tips on how to best organize your funds in multiple accounts.

How many bank accounts should I have?

When it comes to bank accounts, there is no right or wrong answer, Moorhouse says. But it starts by figuring out your goals, which can do anything from what you’re saving to what you want to invest in.

This can be outlined using tools like spreadsheets or templates online. You could have two accounts or ten accounts. It all depends on what each individual’s budget and goals look like, Moorhouse says.

For instance, if one of your goals is retirement, opening up a Registered Retirement Savings Plan (RRSP) may be a priority, along with a Tax Free Savings Account (TFSA) or both.

“It’s really about giving a specific purpose for all of your accounts… What do you want that account to be used for?” said Moorhouse.

How can I best organize my accounts? What about emergency and sinking funds?

To answer this question, we take a look at Moorhouse’s personal banking situation. She has different RRSP and TFSA accounts intended for long-term goals, but also pre-sales money into separate savings accounts for her emergency fund, shopping fund and travel fund.

“Take a look at all those types of things that you want to allocate money toward and really they should all be in separate savings accounts,” she said.

Sometimes you can combine accounts for annual bills like property tax and home insurance, she adds. You can also take a percentage of your paycheck and put them into one account specifically for these annual expenses.

“You’re only ever going to withdraw money when you’re paying that specific bill that you already know what the amount is in advance. So it’s OK for it to be married in one place.”

For expenses like travel and shopping, these can be put into separate bank accounts so you don’t lose track or get confused of what money was meant for which expenses.

“If you want to really keep things organized, you want to keep things in different bank accounts and have different kinds of pots for them,” she said.

When it comes to checking accounts, Moorhouse says she tells clients to look at it like a funnel account where money flows in from their income, then is distributed out to pay fixed expenses or placed into various savings accounts.

You can also have multiple checking accounts. The limit of how many will just depend on the institution you are with, she explains

Moorhouse says to stay organized, you can keep funds in different bank accounts.

What happens if I want to switch banks?

Switching banks is a frequent concern Moorhouse’s clients have. Fortunately, it’s actually easier than it seems, with many options to suit an individual’s needs.

She points to her younger sister who had never opened up a bank account on her own. Moorhouse says she recently guided her through the process and helped her find a new one with no monthly charge.

“Especially for people who are younger that aren’t earning that much money, you’re paying $20 a month for bank fees and that can actually make a really big impact,” she said. “I remember being in my 20s thinking like ‘That’s a meal.’ So it makes a big difference.”

A lot of Moorhouse’s clients worry about moving banks will affect their credit score or receive worse customer service. Some have also raised concerns about the safety of digital banks.

To address those concerns, Moorhouse says that as long as they’re CDIC insured — which every bank has to be — they’re safe.

To move banks, people can simply pick which place, set it up at the new institution, then transfer the money over from their old bank and close it down, Moorhouse says.

“Don’t be afraid to switch banks. I’ve switched banks so many times over the past decade… and it’s not a big deal,” she explained.

Additional tips on staying on top of our bank accounts

Moorhouse says when creating an organizational system for your accounts, it’s also an opportune time to audit your accounts and the products you use at bank institutions.

“I think especially for younger people, to really take a look at where you’re banking (is important) because where you are is most likely because your parents set you up there and it was where it made the most sense for them,” she said.

For example, Moorhouse says most young people like to do things digitally, so having a brick and mortar bank may not be something they need.

By taking the time to evaluate all your different accounts and the institutions you’re using, Moorhouse says you can ask yourself questions if they are serving you, if you are happy with them, if you are earning enough interest and more.

Got a question or scenario that you’d like to see tackled? Reach out to Madi via email [email protected] and we’ll #MakeItMakeSense.

Jessica Moorhouse is an Accredited Financial Counselor Canada®, host of the More Money Podcast and founder of financial education company MoorMoney Media Inc.


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