Money Management

Does it make sense to have multiple savings accounts? Here’s why I put my money in five different ones. 

When it comes to managing my money, I try to keep things pretty simple. I’ve automated a lot of the process, making sure cash is moved into my brokerage account on payday and setting up automatic bill payments.

But, although I am all about simplification, I actually maintain five separate savings accounts. While this seems like a lot, there are good reasons for this decision.

Here’s why I maintain five separate accounts

There’s a really simple reason why I keep five separate savings accounts. Each one of those accounts is intended for a different purpose.

See, I have savings accounts for:

Emergencies: I keep about six months of living expenses in an emergency fund to cover surprise expenses or to help me pay the bills in case illness or a job loss prevent me from working. Vacations: I like to go on trips often, so I have a dedicated savings account earmarked just to fund my journeys. That way, I don’t have to borrow or pay for big trips out of a regular paycheck. Car repairs or replacement: I know something will eventually happen to my vehicle, so I maintain an account to help me cover repair costs and help me one day purchase a new car when my current vehicle gets too old. Home repairs: As a homeowner, I know that appliances break and other issues arise. I want to be ready.Big purchases: I periodically save for large purchases, such as for new furniture or landscaping work. I have this money ready to go in a savings account.

By maintaining entirely separate accounts for each of these different purposes, I can easily track whether I have enough money to cover the things I need. I don’t want my emergency fund mixed in with my vacation account because it would be more difficult to tell if I have enough for my trips without making myself vulnerable to surprise expenses.

I’m also less likely to spend my saved money on something else. Since I know my account is there to help me if something goes wrong with my car or if I’m ready to book a vacation, I’m not going to withdraw that money for other things. The account has a clear purpose, and unless I’m taking money out to fulfill that purpose, I will leave it alone.

If I had one big savings account, or even kept the money in my regular checking account, I’d be far more likely to just use it for whatever I needed at the moment. But by giving the account a job, I stop myself from this kind of careless spending.

Could opening multiple savings accounts work for you?

Opening multiple savings accounts is a good idea for most people because there are lots of things you probably want to do with your money. You’re more likely to accomplish them if you can track how you’re doing at achieving your goals and stop yourself from carelessly spending that hard-earned cash.

Most banks make it easy and free to open savings accounts, so you have nothing to lose by trying out the idea of putting money into multiple accounts. You may just find that this approach works as well for you as it does for me.

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Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 11x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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There are fewer stocks to buy today than in years past. Read on to see why that’s not optimal for investors. 

You’ll often hear that building a diversified portfolio is the key to growing a lot of wealth in your IRA or brokerage account. And while you don’t necessarily need to put money into hundreds of stocks to achieve that goal, it helps to invest in a few dozen.

It also helps to have choices as to where to put your money. But these days, investors have fewer choices than they did in the past. And that’s not such a great thing.

There are fewer companies to invest in today

In 1996, there were more than 8,000 companies trading on a public exchange. Today, there are just 3,700.

And it’s not because there are fewer companies in business today than there were in the mid-1990s. Rather, it’s that more companies are opting to stay private, which means they don’t issue stock for investors to buy shares of.

Why might more companies be going this route? Companies commonly issue stock to raise capital for various purposes, like expansion and research and development. Companies that have other ways to raise capital, such as through private investors, may not feel that same need.

Also, there’s a benefit to not being a publicly traded company. Businesses in that boat are beholden to certain rules. They need to disclose financial data on a regular basis and adhere to other requirements. Privately traded companies don’t have to do all of those things.

This isn’t to say that privately held companies don’t have to follow general accounting rules and report all of their income for tax purposes. But they also don’t have to make their financials public for all of the world to see.

Investors don’t get as many choices

The fact that the number of publicly traded companies has shrunk by more than half since the mid-1990s means that investors today have fewer options when it comes to choosing stocks. Now to be clear, an array of 3,700 companies still gives investors a nice amount of choice. And it wouldn’t be prudent to hold anywhere close to that number of individual stocks in your brokerage account or IRA, simply because tracking each one just wouldn’t be feasible.

But still, if the number of publicly traded companies continues to shrink, it could cause problems for investors down the line. So that’s something to be mindful of.

Meanwhile, some investors might struggle to build a portfolio from the pool of 3,700 publicly traded companies on the market today. If you’re in that boat, you may not want to buy individual stocks at all. Instead, you may want to fall back on broad market ETFs, or exchange-traded funds.

If you buy shares of an S&P 500 ETF, for example, you’ll effectively be putting your money into the 500 largest publicly traded companies today. That’s a really easy and effective way to branch out in your portfolio without having to put in the time to research hundreds of companies individually and keep tabs on them over time.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Many discounts may be available for auto insurance, such as for safe driving or driving a car with extra safety features. Check out some discounts to ask about. 

Auto insurance provides vital protection for drivers’ checking accounts and net worths. But that doesn’t mean it’s fun to see big auto insurance premiums show up on credit card statements every month.

The good news is, there are ways to save on getting the necessary coverage. In fact, drivers should ask their auto insurer about four potential discounts that could help them reduce their premium prices. Here’s what they are.

1. Safe driving discount

A safe driving discount is one of the best ways to reduce the cost of auto insurance. It is usually available to motorists who have a clean driving record with no accidents or moving violations within the past several years.

Safe driving discounts can result in a premium reduction worth as much as 20% to 25%. This discount is a substantial one, because insurers price policies based on the perceived risk of an accident occurring. A driver who hasn’t had a crash or any moving violations in a long time presents less of an accident risk than a motorist who is routinely cited for speeding or who has had several recent fender benders.

2. Employee/membership discount

Many insurance companies partner with specific employers or organizations to provide savings on auto insurance to those who work for or who are members of the company or group. For example, federal employees could save 12% on premiums with Geico through the insurer’s Eagle Discount program.

Insurance companies typically publish a list of partner companies or groups so policyholders can check to see if they are affiliated with an organization that entitles them to savings. Those buying coverage or who already have policies in place should check this online list or ask the insurer if they may be eligible for any kind of savings.

3. Good student discount

Student drivers who have an average GPA above a certain range can typically qualify for a good student discount. The specifics of this can vary by insurance, but students will typically need to have around a B average or better.

A good student discount could result in around 15% savings with many insurers, as insurance companies tend to believe young people who do well in school are less likely to present a high risk of a crash.

4. Safety equipment discounts

When vehicles have advanced safety equipment, this reduces the chances of an accident. Anti-theft systems could also reduce the chance of theft occurring. And advanced safety features that protect motorists in case of a crash could reduce the chances the insurer would have to pay out a lot of money in case of serious injuries.

Since safety equipment lessens the likelihood of a large insurance claim for many reasons, it’s not a surprise that discounts are available for safer cars. Drivers can find out how much they’re able to save if they pick a safer car by getting insurance quotes for different vehicle models they’re thinking about buying.

Those who are already covered should make sure their insurance company knows about all the safety equipment their car came equipped with.

By looking into these four options for discounted auto insurance, motorists may be able to save money on the coverage they need to protect against major financial loss when something goes wrong on the road.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Bank of America customers may be entitled to quick money. Find out whether you qualify and what you need to do. 

Bank of America customers may qualify for quick money. The Consumer Financial Protection Bureau (CFPB) has charged the bank with defrauding customers. As of today, Bank of America owes $250 million in total. Of that, $100 million must be distributed to harmed consumers.

Are you a Bank of America customer? Find out why your bank is being fined and how you can get compensated for shady banking practices — a.k.a., get your money back.

Why is Bank of America being fined?

The CFPB has levied against Bank of America three charges:

Double dipping on feesFailing to pay customers promised credit card rewardsSecretly enrolling customers in credit card programs without their approval

Sound familiar? In 2022, the CFPB charged Bank of America over $235 million for illegal activity and failure to distribute COVID-19 funds. This isn’t the bank’s first rodeo with the CFPB and probably won’t be the last.

Much of that money will be distributed to victims in this case. Compensation may be distributed directly through Bank of America or indirectly through the Civil Penalty Fund.

Who qualifies for direct compensation?

According to the CFPB, here’s who qualifies for direct compensation through Bank of America:

Customers denied promised credit card bonusesCustomers charged for accounts they never openedCustomers charged $35 at least twice per transaction after BoA declined a transaction due to insufficient funds

Currently, qualified customers don’t have to do anything to receive these funds. There’s a good chance BoA will deposit funds directly into the accounts of those affected. Compensation may be sent via a mailed check if you are no longer a Bank of America customer.

Enforcement action is ongoing, so answers to “How will victims be compensated?” and “When will I get my money back?” are sparse. You can stay up-to-date on proceedings and payment status at the CFPB website.

Who qualifies for indirect compensation?

According to the CFPB, the victims Bank of America doesn’t fully compensate for this case will qualify for indirect compensation through the Civil Penalty Fund.

The CFPB is responsible for determining who hasn’t been adequately compensated. If, after the case closes and Bank of America distributes compensation, you still haven’t been fully repaid, the CFPB may pay you through the Civic Penalty Fund.

Is your bank account safe?

Generally speaking, bank accounts are some of the safest places to store money. Institutions like the CFPB highly regulate them, so if some employees play games with your money, there’s a good chance the government will catch and address it.

And unlike cash, money in savings accounts grows organically. The best savings accounts are currently paying more than 4% on deposits for the privilege of holding (and lending) your money.

Worried your bank will go bankrupt like Silicon Valley Bank? The Federal Deposit Insurance Commission (FDIC) protects bank deposits up to $250,000 per bank, per depositor. You’re only in possible trouble if you have more than $250,000 per bank at any one time (the limit is $500,000 for a joint account).

To find the best bank for you, shop around. Consider whether your bank offers high rates, easy access, and low fees.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 11x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Bank of America is an advertising partner of The Ascent, a Motley Fool company. Cole Tretheway has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America. The Motley Fool has a disclosure policy.

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