How to automate your finance?

[SanthoshSomu]

Any one help here
How to automate your finance once you got the salary?
How to use different bank accounts effectively for automation?

 

[polles]

Arrange for your salary and any other regular income to be directly deposited into your bank account.

 

[Ganesh_Shinde]

Here’s a structured approach to setting up and utilizing different bank accounts effectively:

Why Separate Accounts?

1. Salary Account: Use one account exclusively for receiving your salary. This account serves as the hub from which all financial allocations and expenses flow.
2. Expense Account: Have a separate account for day-to-day expenses. This segregation helps in budgeting and prevents overspending.

Automation Steps:
1. Salary Allocation:

- Immediate Needs: Set up automatic transfers to your expense account for monthly bills, groceries, and other essential expenses.

- Emergency Fund: Allocate a portion to an emergency savings account that is easily accessible for unexpected expenses.

2. Savings and Investments:

- RD (Recurring Deposit): Automate transfers to an RD for short-term savings goals.

- FD (Fixed Deposit): Allocate funds to an FD for medium-term savings with higher interest rates.

- SIP (Systematic Investment Plan): Invest in mutual funds via SIPs for long-term wealth creation. Automate monthly contributions from your salary account.

- NPS (National Pension System): Consider contributing to NPS for retirement planning. Automate contributions if feasible.

- PPF (Public Provident Fund): Allocate a fixed amount towards PPF for tax benefits and long-term savings.



Allocation Strategy:
- Emergency Fund: Aim for 3-6 months' worth of expenses in a high-yield savings account or liquid fund

- Short-Term Goals: Allocate to RDs or liquid investments based on the timeline of your goals.

- Medium-Term Goals: Use FDs or balanced mutual funds for goals like buying a car or home down payment.

- Long-Term Wealth: SIPs in equity mutual funds or NPS for retirement planning, aiming for higher returns over the long term.

Personalization:

- Budgeting: Review and adjust automated transfers periodically based on your spending patterns and financial goals.

- Risk Appetite: Choose investment products aligned with your risk tolerance and financial objectives.



Thoughts:
- Consolidation vs. Separation: While separate accounts aid in budgeting and expense tracking, consolidating funds into fewer accounts may simplify management, depending on personal preference and financial discipline.

- Financial Discipline: Automation reduces the temptation to spend impulsively, fostering better financial habits over time.

By setting up this automated framework tailored to your financial goals and lifestyle, you can efficiently manage your income, savings, and investments while ensuring financial stability and growth over the long term.

Do let me know in case if you have any other thoughts or need any additional information.

 

[SanthoshSomu]

I am using Different credit cards for utility bill payments and shopping and movies every month , Which account do i need to use to pay these bills and to maintain monthly spend in credit cards can I change my bill generation date to 29 or 30 for easy tracking?

 

[Ganesh_Shinde]

I recommend paying your bills from your regular savings account instead of your salary account for better funds management. Additionally, using apps like CRED and CHEQ for credit card bill payments can offer you additional rewards and benefits.

According to recent guidelines provided by the RBI in Circular No. RBI/DPSS/2022-23/70, you are permitted to change your billing cycle.

 

[SanthoshSomu]

Do we have any third party apps which will show credit card outstanding bill?

 

[Ganesh_Shinde]

CRED will show it once the bill gets generated.

 

[SanthoshSomu]

I want the trasactions after the bill genaration also.

 

[Ganesh_Shinde]

Cool

 

[raini]

nice info!