We are aware that each and every transaction happening through bank accounts. There are something every person can understand while selecting a bank account. This will be subject to change in country to country and bank to bank. Even though, I can just tell you the minimum bank account requirement for an ordinary person and hope he/she has an investment centric mind.
Savings Bank Account
One can start a savings bank account with any good bank. As the name shows, it is a savings account and he/she can put the surplus money to that. It is a better idea if you are considering this account as a savings spot and a source for your emergency fund requirement. A person shouldn’t have temptation to withdraw money from this bank account when facing silly finance problems. Adding small surplus to this kind of account will five you a big amount after some time and that will be enough to meet emergencies.
Savings bank account connected to trading account
This is an another savings account but connected to the trading account. This account is advisable to those who has an investment interest. While selecting this account, one should keep in mind that, this should be a Zero balance account. All the mutual fund SIP can connect to this account and one can easily track this account to know the status of balance and monthly ECS payment to his mutual funds. A connectivity to the trading account will provide him a chance to credit money directly to this account and connect to his trading account to buy stocks whenever required.The major purpose of opening a separate savings account for an investment centric person is, this will help him to track all his past, present and future investments from a central location. This could save his time in a great extend.While opening this kind of account, a person should take the overdraft facility to not bounce the ECS or cheque he had given earlier for mutual funds systematic investment plan or any another investment.
Overdraft facilities also have two clear advantages and disadvantages:
1. An overdraft is a simple, flexible way of financing changing cashflow requirements. 2. You pay interest only on the amount you are overdrawn each day.Disadvantages: 1. In most circumstances, the bank can demand repayment at any time.
2. The overdraft has to be renegotiated every six to 12 months or less, depending on how long it is needed.
This is an account opening when you join with a company and that company providing employee salary directly to the bank. Most of the time this account will be very friendly to users with its greater facilities compare with an ordinary savings bank account. Most of the time this will be a zero balance account. This will be your source account to transfer money to the above two account and it is advisable to not connect this account to any business or investment because you may require to close this account once you leaving the company. Take care to get the facility for an online transfer to the above two accounts with zero commission.Always keep a life time free credit card with you to meet any utmost emergencies. It is highly advisable to not have a tendency to use this card to purchase any items that is not really required. In this case, you should be aware the difference between wants and needs. Wants are the thing you require i.e. bread, food items for the day etc… Needs are the things you really not required but have interest to buy. i.e. some books, some interesting articles etc… to avoid purchasing the items falling under the ‘Needs’ section, wait for next two or three days. Most probably you will lost the interest on that item. If you still have interest, then go ahead.
Take care to be a good money manager and that is not simple to an ordinary person. Thanks for reading this article and your comments on this will be really appreciated.