Hello Readers!
How many jobs have you switched to? How many salary accounts have now converted into regular savings bank account you are holding? Ideally how many savings account you must hold?
Well, if you are in the middle of your career, then one can assume that you might have switched a couple of jobs, and you might be holding several salary accounts that have now been converted into a regular savings account. This is because nowadays with every new job comes a new salary account. the new employer asks the employee to open a separate salary account and, in the process, you might have ended up with several bank accounts over the years.
Salary account initially is zero balance accounts, that is you don’t need to maintain a minimum balance in these accounts, but as soon as you leave the job, they convert into a regular savings account and require a minimum balance to be maintained by its holder.
Problems Of Having Number Of Bank Accounts
Having a number of bank account beside your salary account simply means, you need to maintain a minimum balance in all your regular savings bank accounts. Most banks today have a minimum (average quarterly) balance requirement ranging between Rs 5,000-15,000. Maintaining the minimum balance in your saving bank account bring you around 3-4% per annum returns from it. And not maintaining the balance attracts hefty penalties of up to Rs 750 every quarter.
Secondly, there are many other charges associated with these regular savings accounts like debit card annual fee, non-activation fee, SMS charges, and so on. Basically, if you are keeping this bank account for no use, it’s likely that it’s balanced will shrink slowly-slowly without your notice.
What The Ideal Number Of Bank Account One Should Hold?
Very first, you need to have the main savings bank account. With this bank account all your mutual fund investments, tax filings, home EMI payments, and other automated bill payments, must be linked. You can also make all your UPI-payments through this account.
Secondly, you can hold a salary account, that will be a temporary account and must be closed once you switch your job. After that open a new salary account as soon as you get another job. You should automate the transfer of your money from your salary account to your main account. This will help you plan your expenses, investments and also you can carry all your automated payments without any hassle or delay.
As per financial experts, the maximum number of bank account one should hold is three and not more than this. If you have more bank accounts that you find it difficult to manage, close them at the earliest. Before closing your bank account does ensure to delink all your automated payments if any with that bank account. Submit your checkbook and debit card, maintain a minimum balance and pay closure fees (if any) to permanently close it.
How Much Money You Should Have In Your Bank Account?
Usually what happens, at the starting of the month, we have a big balance in our bank account that slowly but continuously starts shrinking as soon as we start allocating money towards monthly investments and expenses. And hits a low just before the salary for the month arrives. The situation turns upside down when in-between this period any financial emergency or any unexpected expenses appears. And here, preparing a financial budget in the starting o the months plays its card. The ones who have a proper budget of their expenses have a good amount saved in their bank account after completing all their expenses and investments.
A financial budget lets you know in advance which expenses or investments are coming or about the expected shortfall. It reminds you that you need to maintain the reasonable balance in your account which could be anywhere from one to two months of your household expenses.
One more thing that you must keep in your mind always, your saved money in your savings bank account is not your emergency fund. Your emergency fund should be in a safe liquid fund – that will be encashable within 24 hours.
For any kind of query, you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
Happy Investing!
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).