Why 3 Bank Accounts Are Better Than 1

Singapore Bank ATMs (Image credit: Jerry Wong, via Flickr)

When it comes to saving, most consumers prefer simplicity as the best approach – that is to put their money in the bank account that offers the best interest rate. However, if you want to save money fast, it is best to have more than one bank account. No, you don’t get three times more interest, you are just separating your needs and your wants and to stay on track with your budgeting plan.

1. Die-die-must-spend account (The Needs)

Unfortunately, i don’t think you can survive a month in Singapore by not spending a dime. Assuming you are a full grown adult, some costs such as transportation and food is unavoidable. With an iPhone or Samsung phone on your hand, you can’t escape from paying your phone bill either. Since these costs are compulsory and belong to your needs, consider creating a primary account for such expenses.

Since you will be spending the money here often, we recommend you to check out the 3 main banks in Singapore: DBS/POSB, UOB & OCBC as they have the most number of ATMs in Singapore. Convenience is the key.

2. Indulgence account (The Wants)

After a long week of work, most people look forward to Friday. TGIF! As a pat on your back, you reward yourself by catching the latest blockbuster or dine in your favourite restaurant. These are wants that are often guilty of wiping out your month of hard work.

It is therefore important to separate your needs and your wants.

The approach here is to allocate a fixed amount of your salary to your wants and spend within the limits. Anything more than 10 percent is extravagant. While you may enjoy your current lifestyle, you may end up slogging a few more years before you can retire.

For your indulgence needs, look out for the bank that offers the best rewards or rebates for debit/credit cards as banks usually have some tie-up with cinemas, restaurants and entertainment outlets. If you decide to take up a credit card, make sure you pay your dues in full promptly.

READ ALSO: Want to pay less to watch a movie? Here’s how to get cheap movie tickets.

3. Forget-about-it account (Retirement/Long Term)

As the name suggests: you create, allocate and literally forget that you have this account. This account is created for the purpose of saving for the long term or retirement.  By long term, we mean your bank book ages till it turns yellow or at least been kept for a couple of decades.

While we don’t recommend putting all your savings in a bank as it yield paltry interest that gets eroded by inflation, you want your emergency funds to be guaranteed. Also make sure at the same time you have another pot of money that is working as hard as you do.

We recommend that you choose the bank that offers the highest interest rate. (and the one with the least number of ATMs in Singapore) Keep the ATM card out of your wallet and let it collects dust.

READ ALSO: Best bank accounts in Singapore

But how easy is it to keep separate accounts? Easy-peasy. Set up automatic transfer to divert the funds the moment you receive your monthly salary. This way you can spend with a piece of mind and at the same time you are sure your retirement funds is in place.

Unless you have the discipline, having 3 separate accounts prevent impulsive splurge and help you save money faster – without you even knowing it.


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