![]() ![]() This will ensure your “balance” remains in line with the amount reflected in your banking app. Remember to also show it as an “OUT” item when allocating it as it will be flowing out of the current account. If funds are left over in your current account balance at the end of the month, consider using some of it to repay expensive debt or to top up the emergency fund. If funds from the emergency fund are used, topping it up again, before investing in less liquid investments, must be prioritised. Emergency and ad hoc expenses are usually paid from this account and if it is used, make sure to top up the current account and show it in the “IN” section. Remember the golden rule – your savings account, or emergency fund, should hold at least three to six months’ worth of your nett income. Using this account works great for an emergency fund as it is a ring-fence and separate savings in a liquid account and can easily be transferred from or into the current account simply on a banking app. Most banks offer a savings account with a slightly higher interest rate than the current account. A savings account with your bank can be used as an emergency fund. To the top right, all saving accounts and investments are listed from most liquid to least liquid. Managing Savings, Emergency Fund, and Current Account Balances Of course, there may be times when you will spend more money than what was budgeted for, but this will keep you mindful of how often and how much you spend over your budget. Allocating a budget at the beginning of the month to these variable expenses and luxury expenses is important and should be kept in mind when spending money. The fixed expenses at the top are those that are paid every month and are known amounts, while the variable expenses are also paid every month, but the amount will differ depending on needs. Understanding and Managing Fixed and Variable Expenses At the bottom, any money that will be transferred out of the current account into savings or investments will also be listed. ![]() There are subsections where the expenses will be classified and listed according to the most important “need to pay” expenses to the lesser urgent “want to spend” expenses. We will continue the discussion by moving on to the “OUT” section in the “current account” box. The “Current balance” in light green should correspond with what you are seeing as the balance in your banking app. It is important to remember that the “current account” box shown below is your transactional account that keeps track of all money that is flowing in or out of this account. In last week’s article, we started the discussion based on the budget template, as shown below. The Excel template this article is based on, as well as a full explanation of it that includes part 1, can be requested from MyWealth Investments by e-mailing. ![]()
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