Have Trouble Saving Money? Try One Bank Account

reason to have one bank account
Are you one of those who has trouble saving money? Or, want to do better at saving more? Well, you’re not alone. Right now, the national savings rate stands at about 5%. This is pretty weak considering other countries. France has a savings rate of almost 16% and Spain, nearly 14%. So what’s this all about – why are American’s saving so little money?

The answer may surprise you.

One researcher out of the University of Kansas says our love for multiple checking and savings accounts could be the culprit.

“For years, the conventional wisdom has been that spreading your money across various accounts encourages you to save”, Professor Promothesh Chatterjee said. “Nowadays, the average American has multiple liquid accounts, typically a combination of checking and savings accounts. But our research finds this is the wrong strategy to encourage saving. We find that individuals are more likely to save if they have only one primary account, rather than many accounts.”

While there are some great reasons for having multiple savings or checking accounts (as stated by Charlie earlier this year), perhaps the old wisdom needs further review?

Chatterjee cites two interesting theories of behavior: “motivated reasoning” and “fuzzy-trace theory.” Motivated reasoning implies that individuals find spending more enjoyable than saving and are motivated to search for reasons to justify spending. In such situations, vagueness enables them to distort available information to follow desirable spending motives. And having multiple accounts provides that vagueness.

“Basically, people look for an excuse to spend, and vague information facilitates this,” Chatterjee said. “And having multiple accounts provides just enough vagueness to do the trick.”

If I look at my family’s situation – we have a checking and a savings account at one bank. We also have multiple savings accounts open to which we funnel money in and out – saving for this or that. While we have a consolidated view of the checking/savings account at our bank – the others become money that is in the “back of mind“. For me at least – it sometimes gives me a feeling that I can spend more than I currently have in our main accounts. In other words – like the Professor says – it can provide me with “motivating reasons” to justify ‘wasteful’ spending.

While I find this research pretty interesting – I don’t think it necessarily applies to all of us. Some of us are great handlers of money and could have a bunch of accounts open and remain great savers. But, I would say – as a whole – these findings could provide some helpful insights into our bias’ to spending over saving.

I’d be interested to hear your thoughts on the subject. Do you have multiple savings and checking accounts open. And, do you feel the urge to splurge with the more accounts you have open?

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  1. I only have one savings and one checking. I’m one who once the money is in the savings account I will try my best to not have to remove any. If I have put money in there for a specific reason I often find myself trying to cut other expenses so I can simply pay for the expense from my checking account.

  2. Wow, I disagree 100% with this one. Maybe I’m just the odd one, but when all my money was in one account it was all ‘game’ if I wanted to buy something! Sure, I knew in my head I had emergency funding to do, and the-car-will-break-again funding to do, and all the rest, but what I SAW was $$$ sitting right there. Separating into a number of dedicated accounts, along with Dave Ramsey and Your Money or Your Life got me out of debt and are building a significant savings for the first time in my adult life. If I could have an account for every envelope I would!

  3. I don’t know why, but this is true for me. My saving is now about 15% and I find that the larger the balance is the more I want to keep it, the lower, the more i’m willing to spend. Go figure…

    The bulk of my money is kept in a rewards checking account that pays more than any liquid savings account I’ve found. The way I differentiate the balance is through a budget spreadsheet which saved my financial life and got me to the 15% figure.

    • @Kay – A rewards checking account – those are rare these days!
      @Mary – This is definitely against conventional wisdom, for sure. I think it’s interesting to hear about these studies that sometimes “defy” conventional thinking though.

  4. Aaron,
    I have just one savings account and one checking account. Savings is strictly for putting money away. However, I treat it as if it’s multiple savings accounts. So what I do is look at my total savings balance. Then I write out how much of that is for an emergency, for a future trip or whatever I need.

    Just because I have money saved in one account does not mean I can only save for one thing.

    -Christian L. @ Smart Military Money

  5. I am on the fence with this one. I have multiple banking accounts, but I am now a pretty good saver. The reason I save well is one, I automate my savings and two, since I have multiple accounts, I really only check my checking account. The balance it kept pretty low due to nothing being earned, so when I see the low balance, I realize that I don’t have much to spend. I don’t calculate what is in my other accounts when I am looking to spend. I only look to see what it available in my checking account. This works very well for me.

  6. I will admit that I’m not the best saver, somewhat hindered by my income. However, I have been successful in saving for taxes. A fair amount of my income the past 3 years is due to self-employment. When depositing my checks, I would put 30% in a specially labeled “Tax Savings” account. While slightly depressing how much I would be potentially be paying, it was nice to take that out of my budgeting considerations.

    • @Laura – it’s tough when you are self-employed, having to put money away for taxes and such.
      @DR – yeah – I think most people are similar to you – w/ multiple accounts. I like the way you manage yours.
      @Christian – this is a good way to “split-up” your savings w/o having so many accounts.

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