## How your bank calculates Monthly Average Balance ?

Do you understand what is the meaning of Minimum Monthly Average Balance in your saving account? When you say “Monthly Average Balance of your saving bank account is Rs.10,000”, what does it mean exactly?

A lot of people feel that their balance in saving bank account should not go below Rs.10,000 on any given day, otherwise, there will be penalty charges and they make sure that they have a buffer of Rs.10,000 in their saving bank account all the time.

This means that their account should always have that much surplus. However, the way the monthly average balance is calculated is different and very simple.

### Meaning of Monthly Average Balance?

It simply means that the average of the all the closing day balance in a given month. So given a month, add up all the closing day balance and then divide it by the number of days in the month. If you have to put it as a formula it would be

MAB = (Total of all the EOD closing balance)/(number of days in a month)

Let me show you an example. Let us say the month we are talking about is April. The minimum balance limit in your bank lets say is Rs.5000.

Now your balance at the start of the month (Apr 1) is Rs.10,000. You withdraw Rs.8000 on 10th Apr and then Deposit Rs.2000 on 20th April. What will be the Monthly average balance for the April month?

Learning’s & Tips

• Keeping Rs.10,000 in a bank account for 15 days is same as keeping 5000 for full 1 month (10k * 15 days = 5k * 30 days)

### PSU Banks vs Private Banks

A lot of PSU banks like SBI bank, Bank of India, Allahabad bank generally have a lower monthly average balance to be maintained in saving bank account, it’s average limit is up to Rs.5000 non-Maintenance Charges are very low around Rs.40-50 only.

However Private banks like ICICI Banks, HDFC bank, Axis Bank etc have Monthly balance as high as Rs.10,000 and charges a high penalty for not maintaining it , It some times can be as high as Rs.750.

So by now, you must have known how the minimum average balance is calculated? Will this information impact your banking in any way? Will you keep less money in your bank account because you now know that Monthly average balance is calculated in a different way than you thought?.

Let us know if you have any query in the comment section.

## How an IT engineer tripled his networth in 8 yrs – An exclusive story

Do you want to read the story of an investor who has tripled his net worth in just 8 yrs and learn about his great skills in financial planning?

We bring you the money story of one of our readers from Pune, who agreed to share about his life journey and his achievements. Over to him …

Hi Manish

First, let me start by thanking you and Jagoinvestor team for running this great learning portal (Jagoinvestor) and giving me an opportunity to tell my money story which may help some of the readers.

A little bit about my family

To give you some quick background on myself, I live in Pune and I am an IT architect by profession working with Wipro. I come from an upper-middle-class background with my father (passed away last year) been a banker and mother being a housewife.

I also have a younger sister who has been married and well-settled. I have been married with a 4- year old kid now and my wife takes care of the home.

### My childhood experience with money

My introduction to money management started at a very early age. My father and mother were always advising us both kids to spend it right and all genuine/reasonable demands were met. However, we didn’t get any pocket money any time as we had been asked to ask for our needs and no money was just given to spend as we like.

Even during my teens, we had a simple practice of giving complete account to mother/father for the money that was given to buy any items.  So, I have always valued money to be spent and would continue to do that with my kid.

My father was also a good investor in his time even with no internet and mobile phones available. He had invested in some stocks, some land/flat, FDs and PPF during my growing up days. As a kid, when I used to see him receive cheques for shares dividends for paltry sums, I used to ask him what is this that you keep receiving. He used to tell me that you will understand more with time.

So, curiosity started very early.

## I got a job in Bangalore

My hands-on work in personal finance and financial planning space began when I started working in Bangalore at a very low salary (~10K in hand) and was always trying to see the best I could make out of it in terms of savings. To me, money saved was always money earned.

So, I looked upon all possible legal ways of reducing income tax to start with and then investments in other avenues. It also gave me a great boost that all friends used to ask me on how best to save taxes. Later, I did the same even when I was outside India by understanding the IT laws of that country and ensuring I only paid required taxes.

## Expanding the horizon

As my interest grew in financial planning, I started covering all bases including insurance policies, PPF investments. Interest in investments led to Stocks, MF, real estate and eventually Portfolio Management Services (PMS).

For fixed-income instruments, I keep some investments in Sukanya Samruddhi, NPS, Fixed Deposits and of course PF. I had created cash inflow/outflow projections for the next 20 years and my estimated expenses at various stages considering inflation.

This has led to investing as per goals at various stages like buying flat, child’s education expense at age of 15, 18, 21 and then marriage, retirement corpus, etc.

### My Financial Achievements

From where I started (10K per month salary with zero bank balance) 15 years back to today with well-over 6 figures take-home salary, of course, the salary has grown many folds but then expenses have too. My net worth has tripled in the last 7-8 years (my salary went up by 50% in that time), Stocks/MF/PMS portfolio stands over 1 cr, 2 flats owned.

Money attracts money and so, more investments I made, more returns I got. I bought a flat with no home loan a few years back because of the investments made and that gave me great satisfaction.

My Equation with money

In one sentence, my equation with money is to maximize my potential. Be it earning through all legal means or maximizing returns on my investments. Money has and will always be important to me just like others. Having enough money to me means all needs (and not necessarily all wishes) at different stages are met with ease.

Spending money to me means that every rupee spent is worth the object to be bought. When I meet either of these, I am a happy and content man. If I fail on either one, it’s not losing money which troubles me but it’s the standard/process that I couldn’t follow which led to the loss of money.

## How my perspective towards money changed

My primary experience with money is that you need to be diligent with money management. When I was not diligent enough with a couple of investments, I made bad calls and lost money. Similarly, informed decisions in investments have given me substantial returns. Like other aspects of life, Wealth creation takes time and knowledge.

You have to be alert and keep reading to understand views from experts. Blogs like Jagoinvestor help a lot when you start on this journey.

Money is not everything as they say but not having enough money brings everyday problems, I believe.

People crib about not earning enough but they don’t know how to manage and invest what they are earning which leads to higher dissatisfaction. Then come compromises on various needs that have a butterfly effect on other aspects of life.

I have seen someone in my family who has retired from a very high post in Income Tax department, still doesn’t even own a single house and not enough retirement kitty which shows not being diligent enough with money management. He lost money in bad investments with no tracking and his family simply loved spending on shopping time and again.

Then came excuses and defensive attitude. That’s the worst case of lack of money management that I have seen around.

## Summary of learning

While I am still learning, there are some experiences/habits/ which have helped me and would like to share –

• Cover your bases – Before you invest, make sure you insure yourself/family with the right policies for Life, Medical, Critical diseases, House and Car (in that order).
• Start Early – It’s been said multiple times that when you start early, the magic of compounding works big time. Make sure you start the habit of saving and investments early even for small amounts. Remember it is a habit and with time, you can increase investments. I started at the age of 23 with saving not more than Rs 1000 in taxes but the habit was developed.
• Ask/Look for help – Solid financial planning is not everyone’s cup of tea. Leave it to experts (check with Jagoinvestor team) where required and don’t hesitate in paying small fees for that work. You also get paid for the job that you do because of your skillsets.
• Track your net worth – It is critical to track your net worth i.e. difference of assets and liabilities. Similarly, track your cash (FD/Savings Acc, Liquid Funds), fixed (real estate, PF/PPF, NPS) and variable assets (Stocks/MF/PMS/Gold). I try to maintain a healthy cash balance too.
• Return on Investments – Your investments should grow when you sleep. Make sure there are no dead investments. A lot of bank balance in savings account looks good but it is detrimental to wealth creation and leads to “money erosion”. Ideally, Your investments should take care of at least your regular payouts i.e. Loan EMI, Credit Cards, Policies premium.
• Track your monthly expenses – I have created a simple excel sheet to track all expenses in a month. I then bucket them in real expenses, Liabilities payout (Loan EMI/Insurance premiums etc) and investments (SIP, Endowment Policies, NPS, Sukanya Samruddhi etc). The idea is to capture % of your income from getting allocated to these sections and avoid unnecessary expenses. Typically, I average 35% in expenses, 35% in liabilities, 25-26% in investments and remaining as just savings.
• Share with spouse – Share with spouse details of your bank accounts with passwords, complete details of assets and liabilities. You never know when would they need it suddenly and you may not be around. Trust me, it becomes impossible for someone new to find all your investments. I have created simple excel sheets, keep updating them and share them with my wife. I store all physical documents in one place.
• Diligence in money management – As there are no shortcuts, make sure you read enough and then make informed decisions. Respect your hard-earned money.
• Wealth Creation – The key is to create wealth over a period and increase your net worth. We are not born millionaires.
• Aspire, not greed– When you see someone successful/failure in money matters, try to learn. Aspire to be successful but don’t envy or have greed. Don’t lose night’s sleep because everyone makes mistakes. There’s always a chance to make a comeback but with patience and again, no short cuts. I learned this from my father who made all right investments but was still very detached emotionally from those investments.
• Follow the right processes and money will follow – Wealth creation is a result or even a by-product (if you may). Following right processes of money management will lead you on the right path.

So, that’s it, folks. I hope my story helps some of you and you can benefit from learnings/best practices I shared. I would like your views on areas that you think I might be able to do better in money management.

I hope everyone has learned a lot from his story.

If you want to write your money story, Leave your details here and Jagoinvestor team will get in touch with you with the next actions.

## Rags to Riches money story of Mohit (Employee vs Entrepreneur mindset)

Mohit, one of our readers has agreed to share his rags to riches story which will help a lot of you to build the mindset to become rich and do what it takes. Over to Mohit.

My story is going to be about two generations and how each view, treats and values money differently. Some background first…

Imagine sitting under a lamp-post or under the stair-case of your palatial home (shared) for your studies, way back in the 1970s? Sounds like a scene from a Bollywood potboiler? Well, this was exactly how my father scrapped through his school and college education.

He was born to a joint-family that had a huge house but no income. A vain father, no mother and zero income; my father’s money story is a true rags-to-riches one in the sense that he had absolutely no support and progressed on scholarships by his college to complete his degree.

Also in true Hindi-film style; the love of his life (then) rejected him for lack of money.

## How my father got his first job

In the 1970s, a generation waking up to the post-independence yet pre-liberalized era of working; he got his first job in the then Hindustan Computers (HCL) under its founder, Shiv Nadar. He still remembers fondly that his employee code was 0002, i.e, he was HCL’s second recruit.

My father faced such money hardships in his childhood that the only objective in his life was to acquire wealth. But there were no equity markets or organized financial planning back then. One invested in real-estate of whatever surplus they had, and he was no different.

## My father started his own business

After a brief stint with HCL, my father decided to venture out on his own and set up a small logistics company (for the uninitiated, logistics is responsible for import of goods in India from a foreign-country and vice-versa), and again as my father fondly recalls now, the first month’s profit he made in 1980 was fifty thousand rupees!

That was more than what he earned in his five years in his job! Therefore he immediately recognized that business is the way to be if one wants to make more money.

From the early-1980s to the early 2000s, i.e. in a span of 20years, he made the tables turn in his favor and even though he did not make an Ambani out of himself; he acquired a 9-digit net-worth starting from absolute scratch. As much as I am proud of his achievement, I objectively analyze his money journey and mistakes in following bullet points –

### My analysis on my father’s money journey – “Achievements and Mistakes”

• He was never a big risk-taker. So his entrepreneurship success is a bit surprising (no risk = no gain) to everyone. Yet as a close observant and first-hand beneficiary; I attribute it to immense HARD WORK! Really he amplifies the cliche that there is no substitute to hard work. I have seen him work weekdays and then Sundays too.
• He made some mistakes in businesses like a factory went wrong, but he knew what his A-game was and stuck to his guns. Often people over-diversify (even in investments) but he invested his majority time to the business he knew best.
• He had absolutely no knowledge of shares. But he did make some IPO investments on advises etc but they never yielded any returns. It happened with endowment plans from LIC etc.
• At the “right” time, he made some real estate investments, which paid off big-time and are the real reason behind his swelling net-worth.
• The best part was – he was never a miser. I don’t recall a single day during my childhood when we felt we were missing anything for lack of money. He spent on cars, jewelry, travel, and the typical good things of a lavish life.
• Typical old-school style, he kept his entire money either in property or in spending; which I often remind him as a mistake.

## Cut to 2004 – This is where my own money story begins.

Having seen his business success story (which as a child, I often took lightly. I didn’t quite acknowledge that making money is this difficult), I had a few things clear to me –

• Born to such a successful person, the benchmark was quite high.
• My mother kept reminding me the importance of money during my growing up years, and so, making huge money was always a priority.
• I was eager to get out of the world of business and take our net-worth to the next level, i.e, 10-digits!

Just like my father, I knew business was the way to be and set-up my venture in December 2004 (although I had a kickstart – firstly space was provided by him, secondly I didn’t have to be the breadwinner).

Again the first few months were so profitable that my self-belief was sky-high. In fact, I became over-confident, or maybe a better word would be snotty. Yes, today I can admit it; even though back then I didn’t realize it. So I set-up another business. And then another.

I wanted to become super-rich and in super quick time that I started losing sight of value-addition by my business. I learned 2 important lessons.

### Lesson # 1: Never take things for granted

A couple of years later, my businesses started going downhill. I had to shut down a couple of them and like my father before me, I focused on the A-game. Thankfully a new trade-lane emerged in India and my business and money-journey started improving brightly.

As it became more consistent, I again ventured out in a couple of new fields. Whatever surplus I had, I either put in my businesses OR in bank FDs. Looking back, I am shameful to admit but I didn’t utilize India’s maturing equity markets especially between 2008-2010 period.

In late-2013, I had my first brush with mutual funds. Through a banker (I still credit him for bringing me to equity), I made my first SIP and my first lump sum mutual fund investment. Because the markets grew rapidly since Modiji came to power, my investments swelled handsomely.

And that’s when I made another mistake – I shifted all my FD money into equity. My 7-digit portfolio was 100% equity, full of mutual funds, NFOs, direct stocks, you name it!

### Lesson # 2: Take financial planners seriously

Thankfully, better sense has prevailed since then and I have deliberately re-designed my portfolio with a 50:50 equity: debt allocation in late 2017.

As things stand today, I am doing two businesses and while the first one is doing great, second is still in nascent stages. My money is invested in these two, with no investments in real estate or FDs. A third stream is markets (as shared above, 50% equity and 50% debt) with running SIPs.

As of March 2018, I am proud to share that my own net-worth (not counting father) is nine-digit itself and the aim is to attain 10-digits by 40 (I am 34 now). That’s when I shall hang-up my boots and stop working for money.

## Am I happier today because of my high net worth?

Personal happiness is a state of mind. When one is feeling rich (not only money-wise but overall), then one is bound to feel happy too. In that sense, I do attribute a lot of my happiness to my growing net worth.

I have never been too much into ‘brands’ or ‘consumption’ per se, yet it is mentally comforting and moral-booster to see your net worth grow. So yes, I will agree that happiness levels have increased definitely with growing money in the bank.

However, there is a very thin line to be identified here. One tends to cross that line unknowingly (as I did at the little success at the beginning of my career). If one gets obsessed with their money-success, then it captures your mind.

You start expecting more out of yourself every day, and in the process – keep pressurizing yourself. So the trick is to find the “right balance” and acknowledge that you are separate from your “material success”. Appreciate the money success, yet keep reminding yourself that it can all go wrong tomorrow – so don’t bet your life on it.

Rich have their own set of problems

A lot of people tend to feel that their problems will vanish once they get rich. This is largely true as well, however, once you settle into “the rich” life, a different set of pressures and problems will take over. Your lack of resources for foreign travel or a Volkswagen car; will be taken over by problems of beating your neighbor’s car or foreign travel with a business-class flight etc.

My point is – money problems will disappear temporarily but new ones will soon take their place. To counter it – always try and live a lifestyle one-level below the one you could afford. If say (in the Indian context) there could be five levels of income, and you are on the fourth level, then try to deliberately follow a lifestyle you deem fit for third-level income.

Those ways, your ‘money problems’ shall always be 1-step behind you.

10X money definitely can bring 10 times comfort or even 10-times security; but definitely not 10 times happiness. Unless again, your life is one-dimensional (i.e. only about money) which is definitely not the case with anyone.

## Some money lessons out of my own experiences

• Don’t become a philosopher, before you become rich. Nobody listens to a poor philosopher. This implies that one needs to get rich (whatever an individual’s definition of rich maybe) in life, to be taken seriously. You can reject the notion of “money is not important” only after you have conquered it.
• Beyond your line of work (business, job, professional – whatever it may be), you need to develop a passive income. It can be through equity markets, interest income, rental or combination of all. One must aim that such passive income can match their monthly-expenses at some point in their life (earlier the better).
• Do not consider your ancestral wealth as your own. At best it should be your fallback option. I speak this not only from my own experience, but n number of observations out of families around me. By the time you inherit it, you have lived past your prime life (i.e. past your 20s and 30s, even 40s). Also, you have to carve your own identity and make your own money for improving your self-worth.
• Living on debt or on a monthly paycheck-to-paycheck can be mentally demoralizing. One must have a decent amount of savings tucked-up somewhere, to live with dignity and a sense of security.
• And finally, DO NOT think of money as the only thing in life. One must value the balance of life very highly. It is of no use to have a high net-worth when you are occupied with it 24*7 or are living an unhealthy lifestyle plagued with physical problems. Always try to create equilibrium between money/income, health, close-ones and entertainment (travel, a hobby or something etc). I especially emphasize the last one as I have known people who are so much into their careers that they do not know how to spend their spare time, or what to do on their weekends except watching tv. That is quite sad.

Let me know what did you learn from this money story?

I hope everyone has learned a lot from his story.

If you want to write your money story, Leave your details here and Jagoinvestor team will get in touch with you with the next actions.

## How to quickly check your bank balance without internet on phone?

Everyone wants to check bank balance and keep a track on their bank accounts. Smartphone’s, internet and banking system together has made this process easier by providing the facility to check your bank account details online.

But what in case of those people who don’t have a smartphone or internet connection?

Now you can check your bank balance and a few other details of your bank account without internet also.

Let’s see 2 methods of checking your bank balance when you do not have internet and also you want the information quick fast.

### Method #1: Missed call feature to know your bank balance

This is a very simple process by which you can check bank balance easily without having an internet connection.

How does this process work?

As I said earlier, it is a very simple process which will be completed in just 2 simple steps.

• Dial the 10 digit mobile number which is allotted to your bank (Select from the list given below.)
• After 2-3 rings your call will be disconnected and you will receive a message which will show you your bank balance and mini-statement of last 5 transactions.

OR

• If your number is not registered to the bank, you will get an SMS which will show that your number is not registered with the bank and it will also include details of how to register your mobile number.

Given below is the list of banks and the 10 digit contact numbers which you can use to know your bank balance and mini-statements. You can simply save the related number of your bank in your contacts list and you can easily check your balance anytime.

#### Public sector banks and their contacts for missed call service:

 Bank name The contact number for missed call facility Allahabad Bank 09224150150 Andhra Bank 09223011300 Bank of Baroda 09223011311 Bhartiya Mahila Bank 09212438888 Bank of India 02233598548 Indian Bank 09289592895 IDBI Bank 18008431122 Canara Bank 09289292892 The Central Bank of India 09222250000 State bank of India For balance: 09223766666 For mini-statement: 09223866666 Syndicate Bank 09664552255 Punjab National Bank 18001802222 Union Bank of India 09223009292 UCO Bank 09278792787 Vijaya Bank 18002665555

#### Private sector banks and their contacts for missed call service:

 Bank Name The contact number for missed call facility Axis Bank 09225892258 Dhanalaxmi Bank 08067747700 Kotak Mahindra Bank 18002740110 HDFC Bank 18002703333 ICICI Bank 02230256767 Karnataka Bank 18004251445 Yes bank 09840909000

Some salient features of this facility are given below:

1. This facility is completely free for everyone.
2. To get the benefit of this facility your mobile number should be registered with your bank account.
3. If you have more than one account, then your latest opened account will be considered as a default account and you will get the details of that account in this facility. However, the default account can be changed.
4. These features are the same for all banks. However, the process might be different in some of the banks.

### Method #2: Know your bank account balance using *99#:

The code *99# is also called as USSD code which is not related to any particular mobile network service providers or any bank. This facility is introduced by NPCI to provide the facility to common people to have an easy access to their bank account.

Below given are the steps to check bank balance using USSD *99#:

• Dial *99# from your mobile.
• Select the option of bank balance from the list which will be opened on your screen (which is most probably 3 for all users).

• Then enter the 3 letter name of your bank or first 4 letters of your IFSC code.

#### OR

• Enter 3 letters of your bank name (for e.g. SBN is the 3 latter name for State bank of India) or first 4 letters of your IFSC code (OR UPI pin).

## Basic features of *99# service

This facility is a relief for those people who can’t have access to the internet all the time. This unique code has some basic features which you should know if you are going to use it.

The feature of this USSD code is as follows:

1. This code works without internet.
2. No hidden charges or roaming charges are applicable on use of this code.
3. It works across all the GSM service providers on all kinds of mobile handsets.
4. You can use this code 24/7 including holidays.

## What kind of services you will get under *99#?

*99# is a USSD based mobile banking facility introduced by NPCI which brings together the two diverse ecosystem partners i.e. Banks and Telecom service providers.

Apart from the balance inquiry this banking system also provides some other facilities which are listed below. Let’s have a look at those facilities.

• Send Money Using IFSC code and bank account number of the beneficiary.
• Balance Enquiry
• Mini Statement
• Generate or change MPIN or Mobile PIN.
• Send Money Using Aadhaar number of the beneficiary which must be linked to his bank account.