You will set up the accounts and standing transfers from your payday flow.
You have a payday flow on paper from lesson 2.3. It shows where your salary goes, how much each account gets and which bills come out of where. A drawing does not move any money, though, and many good payday plans stop at this point because setting them up means half an hour in four different banking apps.
This exercise is that half hour. Do it in one sitting if you can, with your drawing in front of you and your spending plan from lesson 2.2 beside it.
Work through your drawing box by box and match each one to a real account. Start with what you already have. An existing salary account can usually be the bills account, and an old savings account can take the savings. If your bank lets you create pots or sub-accounts, use them for the irregular costs line instead of opening a new account.
Rename each account in your banking app after its job: Bills, Spending, Savings, Irregular. The name shows every time you log in, and it reminds you what the money is for.
Only open a new account if your design truly needs one, and before you do, check the terms. Some accounts charge a fee if the balance falls below a minimum, and some bonus conditions are easier to keep with fewer accounts.
For each arrow out of your salary box, set up a recurring transfer: monthly, with the amount from your plan, starting from the next payday, dated just after your salary normally arrives. If your salary sometimes lands a day or two late because of weekends or public holidays, date the transfers after the latest day it usually comes.
Check the account numbers twice. A transfer to the wrong account is easy to make and slow to undo.
Set every credit card to be paid in full automatically, from the account that funds its spending. In most banking apps this is a card setting or a GIRO arrangement for your own bank's card.
Then go through your fixed costs and move each one you can to GIRO from the bills account: phone, internet, utilities, insurance premiums, loan repayments, town council charges. Some GIRO applications take a few weeks to be approved. Until the approval comes through, pay those bills by hand, and mark the dates in your calendar so nothing slips.
When the transfers and GIRO arrangements are in place, take a screenshot of each standing instruction. That gives you a record of the amounts and dates you set, which you will need when something does not run as expected.
Set a reminder for the day after your first transfers should run. On that day, open each account and confirm three things: each transfer went out, it landed in the right account, and it ran on the right date for the right amount.
Fix anything that failed straight away. The usual causes are a transfer dated before the salary arrived, a typing error in an account number, and a GIRO arrangement that has not been approved yet. Check again at the end of the month to make sure the bills account still had enough in it after every bill went out.
Darren, from the earlier lessons, sets up his flow with figures made up for the example. His salary of S$4,200 normally lands on the 28th but has come on the 30th after a long weekend, so he dates his transfers for the 1st of each month.
He renames his salary account Bills, because his bonus interest depends on his salary going there. His old savings account becomes Savings, and he creates a pot inside it called Irregular. His second account, with the debit card he uses every day, becomes Spending.
He creates three standing transfers from Bills, all on the 1st: S$500 to Savings, S$300 to Irregular and S$1,570 to Spending. That leaves S$1,830 in Bills for his fixed costs. He sets his credit card to be paid in full from Spending, applies for GIRO for his phone bill and insurance premiums, and sets up a recurring transfer to his landlord on the 2nd. His study loan and his parents' allowance were already automatic.
He takes six screenshots, three for the transfers and three for the card setting, the rent transfer and the GIRO application, and puts a reminder in his calendar for the 2nd of next month.
That is what done looks like for him. When you are finished, every arrow in your drawing exists as a standing transfer or a GIRO arrangement, every card is set to be paid in full, and you have a screenshot of each. You also know the date when you will check the first run.
You should not need to open your banking app on payday again, except to look. Gather your screenshots in one folder and note the check date beside them.
Set up the transfers, take a screenshot of each standing instruction, and record the date you will check the first run.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).