Friday, 15 September 2017

How many account does this 19-year-old student has?

The answer is 4. Different accounts are meant for different purposes.

  1. Expenses Account
  2. War-chest
  3. Emergency Funds
  4. The Dream Account

Let me break them into different parts now. Whenever, I receive a sum of money, be it my salary I’ve received from my part time job, some extra cash from occasions like Chinese New Year, I’ll allocate them into portions whereby it will go into my various different accounts.

Expenses Account
This account is used for general expenses like food & beverages, clothing, transportation etc. Expenses should only be spent from this account. As such, if this account is running low, I will have to ensure that my spending is lesser until my “next paycheck” comes in. However, I do realize that even in this account, I manage to accumulate a little savings here as I do not empty my expenses account totally every month. For this account, I’m using my POSB Savings Account I had since I’m a kid. This is because POSB/DBS offers great convenience in locating their ATM for easier withdrawal.

Funds that are allocated into this account will be used for investment purposes. No withdrawal will be made by this account. Dividends received from shares I own will be credited into this account as well as payments for shares transaction. I make it a point that I’ll transfer a certain percentage of any “cash inputs” I’ve received to this account. I’ll maintain a certain balance for reserves to be deployed in a depressed market.

Emergency Funds
The emergency fund is an account used to set aside funds needed in an event of any personal financial dilemma. It will be dependent on the average living expenses over a period of time (3-6 months).  The account will be reviewed accordingly when I progress with age, as I would have larger expenses. This will also mean that I’ll need a more funds in that account to be able to sustain myself for 3-6 months. At the present moment, the emergency funding account has sufficient amount of money that will be able to sustain myself for at least 3 months. I do plan to slightly increase the funds in the account so that it will allow me to sustain myself for 6 months. This is not a lot of money, as my expenses are pretty low currently. The funds in this account must be a liquid asset.

The Dream Account
This is an account whereby the funds that are inside will be used to buy the “want” things or for expenses such as a vacation. The percentage of allocation to this account is lesser as compared to the other account. The day this account hits a certain amount which Is sufficient for me to get what I “want”, that will be my reward day.

It’s a pretty simple system. I personally feel that with this system, I’m able to do things I want without having to worry if I have sufficient for the latter. Why do I need to complicate myself and create so many different accounts for myself? 

Well, because it provides me with the comfort to shit in peace, knowing that:
-      If I’m in a deep-shit, I’ve my emergency funds to back me up.
-      If my investment turns sour, it will not cause me to jump down from a building
-      When I’m getting my “wants” or going for a vacation, it does not break my bank

Peace of mind is indeed priceless.


  1. How about 4 bank accounts and 3 or more taps for sustainable income for life?

  2. Hi Uncle!!

    Tap 01: Survival - CPF + Expenses Accounts to sustain living
    Tap 02: Safety - Emergency Funds + Medical insurances
    Tap 03: Freedom/Gift Taps - Stock Investment Portfolio + Investments

    War-chest to fund tap 3 now. Dream funds shall come from Tap 3 and a small portion of income. Well allocation is something I need to do now.

    At this moment, I will need to rely on tap 1 very much, when my tap 2 has some but little water. As well as tap 3. Hopefully, I will be able to channel my tap 3 water into sustainability so that my tap 1 will remain shut in the future.

    Now, I shall be building my education & career well to be able to better build the taps in the future.

  3. At your age, I would actually remove the "Emergency Funds" and move it to "War-chest"/investment. I am saying this because I am guessing that you do not have any liabilities at all - no mortgage, your parents are probably still working, no wife/kids (I maybe wrong). Of course everyone is different, do what you deem best :)

    1. Hi KPO,

      Yes indeed. I'm currently debt-free and without wife and kids. However, I must be prepared for situations whereby I'll require medical attention and/or an event whereby I'm not working for a period of time.

      This will secure my days with the ability to buy myself a meal when I'm not working for an extended period of time. Presently, I do not receive much from my family apart from shelter, and I'd have to depend more on myself

  4. Hi,
    You mentioned that you have 4 accounts. First one is from POSB. How abt the other 3 accounts? From which banks are they from?

    1. Hi Double A,

      I'm using OCBC Frank Account for my war-chest and the 'goal-setting' function in OCBC to store my emergency funds. UOB Account for my dream funds.

  5. Feels good to discover that there are still sensible and prudent youths like you in SG. Wish you 马到成功. 加油. Hwaiting!

    1. Hi Laurence,

      Thanks for dropping by my blog and the words of compliments :)

      All the best to you too :)

  6. Good effort!

    I wished I had your mindset when I was 19. In polytechnic, I made many purchases that sapped my part-time job earnings. I only really started to save and read after graduation and before NS.

    I assume you will have to serve NS. Then you could save using the POSB Save as You Serve as well.

    All the best.

    1. Hi K,

      Thanks for dropping by and the kind compliments!! :)
      Yes! I'll be serving the NS after I graduated from my polytechnic. It's never too late to start!! :D

      POSB SAYE .. I've read about it!! I believe I'll be creating one in time soon, when I will need to serve the army!! :)

  7. Like me, I also split the monies into different accounts, holdings and even portfolios. Guess both of us have mental accounting bias, which I think is a good thing.

    1. Hi Bedokian,

      Nice to see you around!! :)

      I feel that there is a need to seperate between the different needs & wants and to spend within the sum in each account for each purposes. With discipline, I believe this bias will serve us well and help us in overcoming the problem of spending beyond our means.