25 July 2007

Fixing you Money Problems - 5

Part 5: (Where to Save/Bank Accounts)

If you work, there are two ways you can get paid. First is getting your salary deposited into your account, and second is in cash. Every other way of payment falls into one of the two (ie, if you get paid in cheque, you can either get the cheque cashed, or have it deposited into your account). I found it pretty suprising that a lot of people and companies still deal in cash.

If you are one of the people who do not already have a bank account, get one. Bank accounts give you an easy way of tracking your money, how much you have left, how much you spent, and can give you a pretty reliable picture of where you spent and where. Opening an account is very simple; you'll need some identification (ie, CPR and Passport), to be physically present in the bank to sign the documents, and a small amount to deposit to actually open the account (between 20-100 dinars usually).

Banks offer lots of types of accounts, but the main two you need to be aware of are current/checking accounts, and saving accounts. Current accounts give you the facility to write checks, but unless you have a specific need to write checks (for a loan, rent, business, etc), do NOT get one. They do not pay any interest on your balance, and have excessive charges as compared to regular saving accounts (high minimum charge balance, returned check charges, etc).

My advice is open a plain savings account; you get an ATM card, which you can use to withdraw money from any of the ATM's around the country (and in the case of most banks, around the world). They don't need a big amount to open, and you don't need to keep a lot in the account to keep it active (and to avoid getting charged).

So which bank should you open your account with? Well, this is really a personal choice, since most offer very similar services. I'm not advertising here, but I think the bigger banks in the country usually serves best; National Bank of Bahrain, BBK, Ahli United, etc. They're wide-spread and have branches everywhere so they're easier to get to, and they have a lot of ATMs all over the place.

Anyhow; if you do not already have a bank account, open one, and make sure you deposit your entire salary in it every month. This is good for record keeping to know how much you recieved and how much you spent. In the next post i'll talk about organizing your money so you don't end up overspending in the first week or two after you get your salary, and end up with no money at the end of the month.

If you already have an account, great! Time to open another one. You need to divide up your money over two accounts to make it easier to manage. One is for your savings; as soon as you recieve your monthly salary, transfer a certain amount to it (ie, if you recieve 500bd, you can deposit 200 or 100 every month or so; this depends on your expenses, how much you can afford to save, etc). Your other account can be for your regular spending. If you try to save and spend money in the same account, chances are you'll end up spending part of, if not all of, the savings as well.

If you don't like the idea of a second account, you have other options. Some people prefer putting their money into saving certificates; a few banks offer these, such as Ahli United and BBK. Each certificate is a denomination of 50 dinars, so just buy a few extra certificates every month, and keep them in a safe place; you also get the chance to win a bunch of prizes throughout the year. Some people like to get together and start a saving scheme (جمعية), where they all pay the same amount every month, and the total goes to one of them, in rotation (make sure its backed by a legal contract though; someone might decide to be funny and run away with all your money).

There are lots of ways to save your money, just make sure its separated from your main spending account. Just leave this amount to accumulate month by month, and don't touch it, it will grow over time. Next, i'll talk about how to manage your monthly spending (so you don't end up broke one or two weeks into the month)

1 comment:

SoulSearch said...

Hi, what do you think of Islamic Banks, and whch one do you think is best?