Hello everyone! We are out of the weekend now, officially at least by the time this goes up, but WHAT A WEEK it has been. The madness isn’t quite over yet and honestly, I’m not sure if I am ready for this new week ahead (not failing to mention the difficulties and increased anxiety that come with navigating through these weeks with everything opening up, people going about as per normal with NO MASKS, eek, and us being forced to hang around them). But yes, it’s been a long week and this week is only bound to be longer, Is it just me or does anyone else feel like their weeks are getting longer and days are shorter, IF that even makes any sense?
Now that we are done with the ranting about the miseries of the world – and please I have to admit that I’m all for things opening up and reviving the economy. It IS needed. However, if we are not even having a mandatory vaccination requirement at least, how are we going to ensure that these decisions won’t send us back to square one? – let’s get back to some finance chats.
Today, I’m going to walk through ALL of the savings accounts that I have and for what purposes I use them. I have to say the list I have today, is different to what I had 1.5 years ago. Personally, I think it’s great that I am able to (re)look at these, realign them with the financial goals I have set out for myself and also adjust it based on my earning/spending. While I am not doing anything unique, a lot of the personal finance material I have found on the Internet (the free ones of course) usually talk about three main (savings) accounts that everyone should have:
- A checking account or a transaction account
- An emergency fund
- A retirement account
Until very recently, I didn’t adhere to most of these and saved with my financial goals in mind. I still do to a great extent but as a result of the pandemic, some of the goals including a “travel fund” seems to be a bit redundant at least for another year so it has now been repurposed.
As always, I’m adding my disclaimer of not being financial expert. I am also not trying to give anyone any advice. These posts are a result of what I have learnt and put in to practice from consuming hours of content on the Internet, reading, listening and watching. Also, in as much as I like to talk more about money and personal finance, and just as much as I don’t enjoy ‘tradition’ very much, I do understand, agree and respect that money in fact it is a personal and subjective discussion. Not only has ‘money’ brought disagreement in our household, it has also affected our society at large. Also to add more context – I have no outstanding ‘large’ (above LKR 250,000) debt and no children.
So as I said, my accounts didn’t really grow to the following number overnight. Sometimes having multiple accounts is not the wisest thing to do either as this means more bank and other fees and more time spent managing these. But this is what has been working for me during the past 1.5 years or so and who knows, I might even revisit this at a later day with an update!
NB – the following accounts do not include any investment accounts.
Primary Transaction Account
Bank if you are interested: Sampath Bank
Pretty self-explanatory here. Most of my bank deposits from various gigs go here. Over the past year or so I have tried to maintain a minimum balance here as well on a monthly basis and if I had money above that minimum requirement then it gets transferred to a savings account at the end of the month. That is just “a scenario” though. It hasn’t happened yet, haha! This account also has online banking and an ATM card since I do most of my purchasing through this account. I was completely cashless up until COVID-19 hit, but with vendors coming to the area and not everyone taking card, I now keep some amount of money at hand too.
Secondary Transaction Account
Bank if you are interested: Commercial Bank
This is the most recent account I got sometime during the last year. The main and only reason behind getting this account was to actually have another ATM card (and I don’t use credit cards). But since it was also at a bank I already have online banking, it seems to work to my advantage too. Currently, this account has one month of expenses sitting there, which is to be used if ever needed. Also it was one of those women’s savings accounts, which at the time of signing up was eligible for 0.5-1% more interest (afaik this isn’t applicable now). It has a pink ATM card but hey, in the long run if it means more interest, I’ll take it.
Temporary Investment Account
Bank if you are interested: Commercial Bank
This used to be an account that I had an ATM card to, but lost it. And before you ask, I didn’t get a new card as it is a joint account with my Mum and we both never found the time to go to the bank together (during banking hours) to get a new card. Resulted in me opening the secondary transaction account. However, like the name suggests, this is the account I use to “hold” money to invest in different accounts, be it fixed deposits or to transfer to my CDS account as I have online banking here. I have also used the money here as an ’emergency’ too, haha. Sometimes these emergencies could also include a new The Sims 4 Expansion Pack #SorryNotSorry
Emergency Fund and Retirement
Bank if you are interested: Bank of Ceylon
These are two separate accounts but I have to write on both together since they have had some shuffling around since COVID-19. This was initially one account that I was saving in (another pink account with slightly higher interest) for what was a 2022 travel goal, Kilimanjaro.
However, since that wasn’t happening, I repurposed this and opened up another account in the same bank that claimed to have bonus interest in case you didn’t withdraw etc etc. However, when I opened this account last year, the bonus interest was not applicable but it did seem attractive in the long-run. The reshuffling of accounts also seemed like a good idea because while I had thought of many scenarios in my head that would leave me with no employment, a pandemic had never crossed my mind. The fact that I didn’t have the usual EPF/ETF and other ‘secure’ retirement situations did bother me for the first time and this seemed like a necessary step.
So both these accounts have neither online banking nor ATM cards and I only make deposits to them via bank transfer every month. It’s not really a lot but has been a consistent amount for a few months now.
The ‘Emergency Fund‘ account is to have about 02 years worth of living expenses adjusted approximately to inflation and currently I am about 35% into it. I will speak a bit more on how I went about this calculation as well.
The Retirement account is to have about 18 years worth of living expenses adjusted approximately to inflation and we are no where near double digits! Also, on a separate note, in as much as I enjoy talking about death, it’s quite morbid to do retirement account calculations and ‘assume’ just how many years you have to live, haha. Moreover, I know that these accounts are not getting enough compound interest on them and once we have some free time during the next month or so, I might repurpose them into some long-term low risk investment options that would have a better interest rate.
Big Purchasing Account
Bank if you are interested: Commercial Bank
So this was an account that I had lying around from earlier that had online banking. I haven’t had any need for it since early 2020 but since I wanted to reduce going out altogether and as I have learnt that closing bank accounts sometimes require you to leave money in there (hmph) I decided to keep this. I have temporarily titled this as ‘Big Purchasing’ because even though I have repurposed my Kilimanjaro account, it’s not too late start again, you know 😂
So yes, there you have it. Those are ALL of the accounts I have. And yes, it is a bit excessive and I agree! But it’s been helpful when it comes to achieving the financial goals I have in mind. As of late I have managed to increase my 30% monthly saving to about 55-60% depending on how things go. I know that it won’t remain this way and soon I would be spending more on travelling etc, but it’s been very thrilling so far. It’s fair when I tell you that when I receive money to my primary transaction account about 80% makes it way out from it into savings, bills, contributions etc.
If you’ve made it this far, congratulations! I’m going to very quickly run through my Emergency Calculation and how I went about it. In the following table, I anticipate worst-case scenarios in two extremes: one that would require a 25% budget cut and another, a 50% budget cut compared to my Business As Usual scenario.
For my ease, I will use the budget lines from my previous article and we are going to assume that the total adds up to 100 for the ease of calculations.
|Budget Allocation||BAU (100%)||Scenario 01 (75%)||Scenario 02 (50%)|
*household expenses, travel and eating out
**games, entertainment, shopping
As I’ve said earlier, we all budget different. Our needs and goals are different to each other and of course the circumstances which we navigate greatly differ. For me, sometimes, aggressive savings goals and investments also give me things to look forward to, even though I am a bit uncertain what happens after one would reach that goal. But that is a bridge to cross when we get there so I try not to let it bother me as much.
As always, thank you for reading and I hope this was helpful. If you are willing to share, I’ll be happy also read any insight you might have on and can learn from, be it your own personal finances or something else. If you have any feedback, comments on this post or suggestions for me to write something else on this comment, please do let me know and I will try my best to accommodate. I do have a freelancing-financing article coming up, hopefully soon and in time, some insight I have gathered on investing.
Until then, good luck with your finances!