Two Bank Accounts? No, You may need Four! - (6)

Read? Two Bank Accounts? No, You may need Four! - (5)


Four bank accounts are for ease of tracking and monthly downloading of Excel file; and particularly the Investment account is important for us to PHYSICALLY and MENTALLY separate our investment from all other needs and wants. This setup will help us to ride the emotional roller coaster rides across market cycles without worrying too much about meeting living expenses.

Uncle8888 over the last 17 years hasn't touch a single cent in his investment account; but next year onward will be different as he is now a retiree depending on sustainable retirement income for life!

Where are the money taps to fund four bank accounts?

Two Bank Accounts? No, You may need Four! - (5)

Read? Retirement Income for Life??? (14) - How much is enough for retirement?

If you are NOT into detailed household expenses tracking in view of controlling and tightening expenses; you may like to review Uncle8888's method of tracking household expenses for the purpose of knowing the Number and don't bother with its details to control expenses. It is just few minutes effort every moth to populate the Excel worksheet with the latest monthly number.

One dedicated bank account for all household expenses and to be funded by other sources of income e.g. salary

Since Uncle8888 has retired without earned income; this bank account is fully funded by dividends and trading P/L from investment portfolio, CPF and FD interests. 2017 has been fully funded. In Dec 2017; this bank account will be refilled by CPF interests, dividends and trading in 2017 for 2018.

The big idea here is to spend what has been earned and not to spend future money that is not earned!

Read? No More Year End Bonus!!!

With one dedicated bank account for household expenses; whenever he looked at the account balance; he won't feel rich enough to overspend or feel that poor to under spend. He will naturally adjust and adapt to the remaining account balance to ensure that he doesn't spend until the account drop below the minimum sum and get charged by the bank. So far; it works naturally well for him for decades!

Track your living expenses??? (2)

Read? Track your living expenses???


The key objective of this tracking exercise is NOT for the purpose of knowing where to reduce living expenses by cutting expenses e.g. no more StarBuck as it is deemed too expensive.

Do we go to StarBuck to lim kopi and leave?

To lim kopi and leave; we better do it at Kopithiam. Right?


The end goal of this tracking exercise to conservatively estimate one Magic Number to know how much is enough for us to reach financial independence stage and get out of rat race when staying employed is an option.


We also want to avoid the unsecured feeling of always NOT enough and for ever accumulating more wealth!


Some of us may have read it somewhere in the Web:

"When we are in heaven, our money will still be in the bank."

"We don't seem to have enough money to spend; but, when we are gone; there's still lots of money not spent.

 

Track your living expenses???

Read? Retirement Income for Life??? (14) - How much is enough for retirement?


Uncle8888 is doing it simply and Excelly with one dedicated bank account for expenses : GIRO, ATM cash withdrawals, NETS, credit cards and ITR i.e. all cash out flow!


Just once a month of less than 15 - 25 mins of effort to download the monthly statement. Copy and paste into Excel worksheet. 

Add remark column and keying remarks for those non regular expenses that can be reduced or cut during bad times. 

The whole idea here is NOT to sweat the small stuffs in tracking expenses.



Later SMOL will come and call him Excel King. LOL!

Explanation to the above chart:





Monthly family expenses for five members (Me and housewife and 3 children)  is group into $500 different band on X-axis.


As an example only for the purpose of explaining this chart. The number used is not his monthly actual expenses.






Below $2,000 : 1 (It only happened once. Probably, in that month we ate most of the meals at home or caught many fish and crabs enough for that month)

$2,001 to $2,500 : 16 (There are 16 months of such expenses in this band since Jan 2001)


$2,501 to $3,000 : 34 (There are 34 months of such expenses in this band since Jan 2001)



$3,001 to $3,500 : 31 (There are 31 months of expenses in this band since Jan 2001)

.....



and so on

Two Bank Accounts? No, You may need Four! - (4)

Read? Two Bank Accounts? No, You may need Four! - (3)

My cyber readers, MayBank is now giving you 4 accounts that you need for a peace of mind in investing. hee hee!

Maybank Singapore launches new savings management tool


SINGAPORE: Maybank Singapore has launched a new savings management tool for its deposit accounts.


The bank said that with this innovation, depositors will not need to open multiple savings accounts when saving for different goals and occasions.

This means that depositors can create sub-accounts that reside within their main savings account using this free tool.

Maybank said that for example, one can name sub-accounts as "Paris holiday - S$5,000, by end November", or "Mountain bike - S$2,000, by 15th October".

The bank said it has received feedback from customers that they opened multiple savings accounts to better manage their finances. It added that this will encourage customers to save towards their goals and dreams.

According to Maybank, up to 15 sub-accounts can be created, and depositors will still enjoy the same interest rate in their sub-accounts.

-CNA/ac

Two Bank Accounts? No, You may need Four! - (3)

Read? Two Bank Accounts? No, You may need Four! - Part 2

I have four separate bank accounts for different purpose:

1 - For living expenses and GIRO

2 - For Emergency Fund (3 months in conjunction with FD period 6/12 months)

3 - For Investment and Trading

4 - Fixed Deposit (Mid Term Saving)

With the 4 bank accounts, I am absolutely clear on money movement and transactions. It also helps to save time (less than 5 mins) in tracking by just downloading the monthly statement from the each bank.
 
I also simplify it into broad category as follows:

I have another diary to record big ticket items following Pareto Principle - 80% of your expenses are from 20% of big ticket items and don't sweat on the 80% of the items that contribute only 20% of expenses.

Two Bank Accounts? No, You may need Four! - Part 2

Read? Christmas Days Reflections

If you truly wish to stay calm and steady in the world of investing through the volatile stock market. You have to learn to mentally, financially, and physically separate your investment needs from other needs. It is best to confine your investing activities to itself and your other needs are adequately taken care of and have the least dependency on the success or failure of your investment activities.

It has taken me many years to realize the power of separate bank accounts; and knowing that I should have enough to overcome the worst market condition and that really helps me to stay calm and steady in the highly volatile market.

Even if I have extra money at hand, I will evaluate it carefully which account should it go to and not necessary it will go to investment account as expected expenses may change from time to time in our life cycle. I will forecast what are the expected expenses in the next 1-2 years so that I will not get caught in a financial situation that I am forced to liquate my investment at losses to fund these expected expenses.

Read? Why you may need four bank accounts?