Did you save your money? If you do this, how many bank accounts do you have for your money?
If you like most people, you may have at most one account or two.
I personally have a total of seven bank accounts - four savings accounts, two current accounts and one time deposit account.
You may think I'm crazy, or you may think that managing so many accounts is too cumbersome. But I can assure you that this is the best way to manage your money and it is definitely worth our every effort.
The reason I have my money in many accounts is to make sure that I didn't spend more money, I was able to pay my credit card bills on time, I put enough money on rainy days, and I have surplus funds to invest.
However, I'm not saying that you should have 7 different accounts like me. What I want to say is that you should decide the number of accounts according to your needs. Each account is designed for a specific purpose. All I did was give you an example.
In Singapore, if your daily average balance is less than the minimum amount, banks will usually charge you a monthly service fee (usually $2). But I'm happy to pay this fee because the benefits of my proper management of my money far outweigh the small amount of money I need to pay.
Having said that, I still choose to have more savings accounts than the current account, because the average daily balance required for the savings account is much lower than the current account, which is easier to satisfy.
The reason for having a current account is because I sometimes need to issue checks for business and personal purposes.
Please remember to check with your bank about the required minimum balance and service charge.
Now let me explain how I use multiple accounts to manage my funds.
1. Central and Business Accounts (current accounts)
At present, I only have one source of income. This is my commission as a real estate broker to get a commission from real estate transactions. Each month, my commission income is deposited into this account and then distributed to other accounts.
But before that, I saved 15% to 20% of this account as my monthly real estate business expenses. After that, I transferred the balance to other accounts through online banking.
For this account, I can usually avoid service fees because my account balance usually meets the minimum requirement, except occasionally.
2. Personal Expense Account (Savings Account)
As a self-employed person, especially your own boss. In spite of this, you still need to pay a fixed monthly salary for yourself.
This fixed amount is mainly used to control your monthly expenses so as not to overspend. The key is to allocate enough money to meet your basic living needs, sometimes adding a little extra for some leisure activities.
You may need to comply with some disciplinary measures to pay only for the amount available in this account because when the funds in this account are used up, it will definitely spend money in other accounts.
The solution to this problem is to have only one ATM card. You should destroy all other accounts, or tell the bank not to send you one.
I know there is the temptation of a credit card. So let's move on to the next account.
3. Credit Card Payment Account (Savings Account)
You may now know that credit cards can be dangerous financial instruments. However, it is only true that you abuse it.
Conversely, if used properly, it may be a great wealth-adding tool because you can accumulate bonus points at the time of purchase. And you can use these points to redeem free products and services such as shopping vouchers, meal vouchers, extra flight miles, gasoline vouchers and more.
Since then, I have accumulated petrol worth several hundred dollars, which helps me to save more money!
The funds in this account are used to pay all my credit card bills. This is a very important account because it ensures that I have the funds to clear my credit card bills on time, so I do not have to pay the issuing bank excessive interest.
This is my assurance that I have enough money to pay my bills on this account on time.
Whenever I use one of my credit cards to make a payment, at the moment I arrive at the family, I transfer the payment amount from one of the other accounts to this account.
If the item I purchased is for personal use, I will transfer the exact amount from my personal spending account to this account. In this case, the amount in the account will be reduced. In this case, I will not overspend because I now have less money in my disposal expense account.
If the merchandise is for commercial use, then I simply transfer money from my central and corporate accounts to this account.
Never delay transferring funds or you will forget about it. This can be dangerous. Once you get home, make sure to transfer money. If not, do it at the latest on the second day.
Remember... It's important to clear credit card bills on time, because this habit may cause or destroy you. At the same time, always stick to spending just about any expenses you have in your personal spending account this month.
4. Automobile Expense Account (Recurrent Account)
Obviously, this account is only required if you own a car. If you do not own a car, simply include your monthly transportation costs in your personal spending account.
I separate my fare from my personal expenses because if I combine two fees into one account, I may spend more on personal consumption than entertainment or new clothes, and use only a small amount of money. Pay off the car loan, insurance, etc. at the end of the day.
When you have more money to control, there will always be temptation to spend more money.
The principle of owning this account is the same as having a credit card payment account, ie: clean up your debt on time!
Use this money to pay for any costs associated with your car - gasoline, grooming, road tax, maintenance, etc. - and deposit it into this account.
You have to estimate how much each month you pay for each listed item, and you only need to credit this amount every month.
For example, if your annual premium is $1,200, then you only need to save $100 in the account each month so that you can prepare funds when you renew.
For other car costs that do not have a fixed amount, such as petrol or car repair, you only need to make an estimate and save the amount based on your estimate.
Initially, you may save or over save due to these costs, but it is OK. Over time, you will have more accurate estimates. For safety, don't be sorry, choose to save too much.
5. Miscellaneous accounts (savings accounts)
Life is not just about future work and savings. We all need to love our loved ones and ourselves from time to time. Just don't overdo it. You'll be fine.
Regardless of my monthly income, I will add 10% of this amount to this account. You can choose any amount you like, but I suggest that your account income should not exceed 20% of your income. If you need to go below 10%, then do it!
You can use the money in this account to travel, buy new TV, new clothes, new bags, new shoes and more.
I can also use this money to buy birthdays, weddings, anniversaries, Valentine's Day and festivals.
Many people tend to give priority to them because humans are very fond of instant gratification.
So the purpose of this account is to control your care.
In any case should use funds from other accounts to calculate the purpose of this account.
If the funds in this account run out, just stop indulging yourself until it has been recharged.
Don't give in to the desire to put more money into this account. Otherwise, this will defeat the purpose.
6. Emergency fund accounts (term deposits)
Many personal finance experts advocate the establishment of this fund, and I absolutely agree with this.
So far, this is the most important consideration because we live in a world full of uncertainties and we must be ready to meet the accident.
Since this is the most important account, always allocates part of your income to any other account prior to the first of this account until you reach the goal.
Although some experts say that if you are unemployed, you should leave enough money to maintain at least 6 months, but I personally prefer to leave enough money to maintain my 12 months.
I haven't been to, but I'm steadily accumulating.
Some experts also said that this amount should be an increase in your monthly income rather than a fee, but I think your increase in monthly costs is good enough.
For example, if your income is $3,000 per month and your monthly expenditure is $2,000, then $24,000 in emergency funds (12-month fees) will suffice.
Saving $24,000 is much easier than saving $36,000 (12 months of revenue), although it is still very challenging. However, this is not impossible.
Retaining 12 months is just my preference. You can choose a number that you prefer.
But the minimum recommended cost is 6 months.
There are investors who keep their contingency funds in bonds, stocks, money market funds and other investment vehicles, but personally, I prefer to keep it cash.
So you have to decide which is the best tool to safely save emergency funds. Please note that the keyword here is Security .
7. Investment Account (Savings Account)
This is a must-have account, because if you do not set aside funds to increase your lair, you will always be financially struggling.
But why is this not the most important account? Because you should only invest in the losses you can afford.
In fact, once your emergency fund account is fully funded, this will be the most important account.
You should start investing only if you have accrued a minimum of 6 months in your contingency fund account.
Prior to this, simply save your money in this account for your insurance. You can use the funds in this account to cover your insurance costs because insurance should be part of your overall investment plan.
However, when you are ready to invest, please do due diligence before committing to any investment Thoroughly research the type of investment that suits your financial needs. Just do it before you buy your first car. Never invest your money in a 100% error that you cannot understand.
You may need some time to conduct research and analyze all your available investment tool choices. Therefore, when you conduct due diligence, set up an investment bank so that when you determine the right investment opportunity, you can get it right away.
So you have it. This is the system I use to manage my money effectively. So far it has been used very well.
As mentioned earlier, you may not need as many accounts as I do, or you may need more!
In either case, you must have four accounts. They are personal expense accounts, credit card payment accounts, emergency funds accounts and investment accounts.
With these four accounts, I am sure that you will do well in managing your money unless you start to lose discipline.
Immediately begin implementing the system and you will see its positive impact on your financial situation.
Cheers ~
[ad_2]
Orignal From: Personal Finance Management - A Practical System to Manage Your Money
No comments:
Post a Comment