How Many Bank Accounts?

Some people get by with a savings account and a checking account. When they start a business, they have two more accounts: business savings and business checking. I read in an article (or perhaps a blog) that a family should have seven to nine accounts. That would include a savings / checking account for each spouse, a joint savings / checking for joint expenses. There can be additional savings accounts for those who save for annual or quarterly taxes. A savings account where monthly pre-authorized payments are deposits for a family vacation.

When we invest, we are reminded of the old adage, "Don't put all your eggs in one basket". Therefore you don't invest your entire nest egg in one corporation: you don't buy shares with all that cash, for if the stock market fluctuates, as it will, your entire nest egg will go on a roller coaster ride. This would quite enjoyable in a bullish market. However, when there is a bear or a series of bearish trends and the market bottoms out, we tend to lose sleep when our savings have acquired a paper loss.

Therefore, if we extend this strategy of diversification to banking, we are not required to maintain all bank accounts and credit cards in one bank. Ideally, we should keep accounts for a long-period rather than opening and closing accounts to get the latest smartphone deal that is a freebie. Therefore, you will have a relationship with not one, but more financial institutions. When you are in a cash crunch situation, you will have a variety of banks to choose from.