Finance

Do You Have a Single Source of Truth for Your Finances?

Posted Vinaya HS

Of late, I have been thinking about working towards having a “single source of financial truth.” Let me explain what I mean. There are four financial categories which I would like to track every month. These are:

  1. Income,
  2. Expenses,
  3. Savings, and
  4. Investments

More often than not, cash flows into and out of these categories happen from multiple bank accounts, which steadily grow in number as you shift jobs but retain these bank accounts for no readily explainable reason. The result: You have no clue what’s happening where. Your income’s being credited into Account A, your EMIs are being debited from Account B, your investments are happening from both Accounts A and B, you’re worried about delayed transfers from Account A to Account B, and so on. That’s the problem when you have multiple sources of financial truths. Trying to consolidate them into a single source of truth is close to impossible. There’s a side effect too: You end up with too many PINs and too many passwords and you end up remembering none.

Here’s my idea for a single source of financial truth.

A savings account that is not related to your employment and from which you conduct transactions across the four financial categories every month. At the end of every month, you review this account’s statement and you have a clear idea of your financial dealings.

I’d like this savings account to have zero to low minimum balance requirements, low operation and maintenance charges, a debit card with sufficient withdrawal limits, check book, internet banking, and third-party transfer (NEFT/RTGS) facilities, Electronic Clearing Services (ECS), and mobile alerts.

Explains why I’ve been on an account closing mission, trying to eliminate all sources of financial clutter and mess.

What do you think? Do you have better ideas? Which bank would you recommend for such a savings account?

5 thoughts on “Do You Have a Single Source of Truth for Your Finances?”

  1. Vinaya,
    Informative..
    Please clarify, how do you plan to keep more than one lakh of your
    savings in a single account…
    As per your previous very informative blog, Upto one lakh
    in an account in one name is only insured….
    SO we will need to have joint accounts are joint FDs…
    Share your thoughts….
    Regards,
    Girish

  2. Girish,

    Good question. Made me think quite a bit. I see two options here:

    1. Open multiple accounts in multiple banks or in the same bank under different holding structures. By doing so, you’re guaranteeing your savings through insurance. On the other hand, you do end up having to manage many accounts, which is quite a headache. An assumption here is that you DON’T TRUST any bank.

    2. You TRUST your bank and keep your savings in a single account.

    The keyword here is TRUST. Having gone through the headaches of managing multiple accounts, I’d pick one bank that I TRUST.

    For example: There’s a cooperative bank near my house and I’ve been banking with them for over a decade now. This bank has been in existence for over three decades. They’re simple, efficient, and you can actually see and talk to real people every day. And they don’t invest in “sub-prime.”

  4. As you said “trust”, its hard to have a single account in 1 bank and load all your life savings into one bank. Remember the thing that happened to lehmann brothers, there were so many who were banking with lehmann brothers for more than a 2 decades and all their investments were gone within a week. All you would do is to convert the savings account into FD’s in different banks and keep part of your savings in each account. Trusting one bank though you have been banking with them for a long time would not be a wide decision, especially if the economy goes on a downtrend.

  5. My view is instead of depositing in Bank, please put it in multiple Liquid funds through one online broker(like fundsindia). And always keep very minimum amount in Bank. incase the bank has gone away, we can simply open account in another bank and update to broker.It seems very safe and also we can see minimum growth of our money. What do u say vinaya..

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