Saving habits

My mother taught me about financial concepts as I was growing up, not literally of course. She had no formal education but she knew a lot about money. I was influenced by her subconsciously because I bear her traits in money management.

When I was still a young boy, I would accompany my mother to the banks to either put in money or to withdraw interest on her savings. She would want me to check on the fixed deposit slip for accuracy before leaving the bank. She would also ask me to check the entries in the savings account book.

My mother was a saver. When my siblings and I started work, we gave my mother some monthly allowances. Though not much, she would keep them until she accumulated enough for her to make a trip to the banks. Instead of using a single name for banking in the money, she would use joint-alternate account with each of my brothers and sister. This way, my siblings and I have some money in our names.

My mother knew that there were risks with putting money in a bank. There were runs on some banks in the past. She opened accounts with several banks, namely POSB, DBS, UOB, Citibank, now-defunct Chung Khiaw Bank. So my mother spread her risks of losing her hard-saved money over several banks. Back then, there was no such thing as Deposit Insurance Scheme to protect her.

On maturity of her fixed deposits, she would go to the bank to withdraw the interest income and roll over the same principal sum for another fixed period. This way she only spent on the interest income without touching the principal sum. She was not rich enough to compound the interest because she still needed money to spend on Chinese New Year. During her time, the fixed deposit interest rates were above 10% p.a. not like now.

When my mother was still alive, she still had the fixed deposits (FD). Some FDs were started so many years back. Even when the fixed deposit interest rate was so low like 0.1% p.a., she still did not terminate the accounts.

By saving and putting money in interest-bearing deposits is one way to put the money to work. She spread her risks by putting money in several banks. She planned her inheritance

by having joint-alternate accounts with my brothers and sister. She played it safe by putting money in reputable banks and not to risk her money with some structured deposits. This way, she preserved her capital sum unlike share investments.