How many bank accounts do you have? In order to manage finances wisely, one has to open at least 4 accounts, through which wealth can be built up with savings. Meanwhile, the money flow can be clearly traced. It is not surprising that all careful financial planners having several accounts. So, what is the reason of doing so? The point is, they can distinguish well how various types of accounts function. Let’s learn from them from now on. By distributing the funds to different areas step by step, their financing and investing should be at ease.
1) Payroll Account
Many people use payroll accounts to get their salary credited on the date designated by employers. Some employers might ask their employees to open payroll accounts at specific banks. You should withdraw money from this account for your daily expenditures, including regular bill payments for water, gas and electricity as well as other expenses, as banks often offer reasonable interest rates for this type of account. Deposit one-third of your earnings into this account and take money out from it when necessary. And you can transfer the remaining two-third into other bank accounts.
2) Savings Account
If you want to save up for your goals, it would be best for you to put about two-third of your salary into your savings account.Many people would save about one-third of their income into the demand savings account every month. When you are certain that the money won’t be used in the foreseeable future, then you can go ahead converting it into time-savings.
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Read more: 7 Easy Saving Tips For Lazy People
3) Time Deposit Account
When it comes to time/fixed deposit accounts, banks often offer various kinds of interest rates and deposit terms. If you deposit HK$100,000 or more in cash at a bank for 6 months, the annual interest rate would be about 0.6500%. But for the same amount of deposit over a 3-month deposit term, the interest rate would be about 0.5500% p.a.. Note that these figures are for your reference only. They are not fixed and will be renewed from time to time. Banks reserve the right to make adjustments.
4) Investment Account
The fourth essential bank account would be an investment account. Deposit part of your income here if you plan to invest on the stock market, funds or other financial products. It is necessary for investors to open this kind of accounts in the banks for making transactions but there is no need to worry about this procedure as it is convenient and some securities companies have deals with large-scale banks.
As a reminder from MoneyHero.com.hk, it would be best for you to make investment with your savings. Yet, it depends if you can afford to take on risks. After all, everyone’s abilities and the amount of capital vary among individuals. Some would use personal loans to fund investments; whereas some would opt for the property secured overdraft facility to do so. And of course, a few are not even financially-empowered enough to think about investing.New investors should take a more conservative approach to investing since investing won’t lead you to wealth in one day. Yet, you won’t be a total loser, given all the experience and reflections you gain afterwards in investing.
No matter what class you are belonging in society, it’s time to have a review over your bank accounts. It is preferable to have several accounts that cover at least 4 aforementioned functions. Even if you’re not so well-paid at work for saving any, be well-prepared for the future as you may find some ways out to improve your career one day. Make good use of various bank accounts to know where you money goes. That’s a key to financial wisdom that brings you satisfaction.
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Read more: “How to Survive on Low Income: 6 Survival Tips”
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