Finance Smiths

Personal finance apprentices-in-training

Looking back at the mistakes we made

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I just realised I have written 3 consecutive posts on bank accounts for expense, emergency and investment funds. Goes to show how much I value taking the time to sort out your bank accounts. I actually went through this exercise with my sister. Her monthly salary was being credited into a POSB eSavings Account that was earning 0.05% pa. My sister submitted a form to HR to change the bank account to the OCBC 360 Account and now earns 1.2% pa just from the salary credit. It was easy enough to make 3 monthly bill payments online or through GIRO since she just had to change from the POSB eSavings Account that she was already making bill payments from for income tax and credit cards. That got her another 0.5% pa. My sister is now earning S$50 more per month from doing exactly the same things she was doing before, just with a different bank account.

Why write about Personal Finance?

I wonder how many people there are in the same situation, with the potential to earn higher interest income just by organising your bank accounts. Always start with the low-hanging fruit and focus on the basics of passive income before you start to think about investing!

This is the whole point of me writing about personal finance. I was one of those people! I made the mistake of not looking into my bank accounts after returning to Singapore from Australia in 2014 and went through a year of working with my salary being credited into the POSB eSavings Account. It just never occurred to me that I should review my bank accounts to earn a higher interest income. By making these mistakes and writing about what to do with your personal finances, I hope to shorten your learning curve so you won’t make the same mistakes.

This post is harder to write than I thought. The thing is, I want to write about the positive actions that you can take to improve your situation. With personal finance, it’s easy for me to write about the “good” things that I have done which is working out but leave out the “bad” stuff that I did which have or continue to impact my life negatively. Here’s to a series of posts (not consecutive cause I might want to stop writing permanently if I do it that way) about the mistakes we have made in our life. You can draw your own personal finance lessons from our experience. For me, it works more like a flashback to our past and a walk down memory lane. Who doesn’t like to reminisce?

The 4 years we spent working and living in Melbourne and Sydney have taught us the most about money so far. We have so many good and bad experiences from our time there that I might actually write about all of that eventually. Although we spent 3 years studying in Melbourne before that, it was more about having fun, meeting new friends, attending lectures & tutorials and having even more fun! Life as a working adult overseas sure is different from life as an undergraduate studying overseas. Let’s start from the beginning…

Graduation

When we graduated from university in 2009 in Melbourne, I was unemployed and trying to find work in 2010.  I underestimated how difficult it would be for an international student to find work in a foreign country right after the 2007/2008 Global Financial Crisis. Long story short, I found work as a professional training course sales consultant, administrative assistant before landing a full-time job as a tax accountant at an accounting firm. This was over a period of 6 months and it’s probably worth a post just on my take about graduate unemployment and underemployment. My wife found a full-time role as an accountant at a bank earlier than me.

We were both struggling with being away from our families on a much more permanent basis, having to learn how to live together after just graduating, and adjusting to the working couple life. You can see how this makes for an environment to make plenty of mistakes in. I will write about the first big personal finance mistake we made on rental costs in another post!

Google Sheets – Assets – Cash and Stocks

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As discussed in my previous post on why you should use Google Sheets for personal finances, I will outline how to use it in this post. I will be referring to my Google Sheet and how it is set up for illustration purposes. However, I recommend you take the time to prepare your own Google Sheet instead of using templates that are available online. By building your own Google Sheet one cell at a time, it will give you an insight into your personal finances since you have to work out why the information is in the Google Sheet and how best to illustrate it.

How to use Google Sheets?

Basically, it works like an online Excel spreadsheet but its functions are limited. You won’t get the wide range of functions like Microsoft Excel but you will have enough for the purposes of your personal finances.

Why not Microsoft Excel?

Interesting question I have been asked quite a bit. You definitely can use a spreadsheet on Microsoft Excel to track your personal finances. The main reason I prefer to use Google Sheets is that it is better for online work as I pull data (e.g. prices from Yahoo Finance and Google Finance) into the sheet from other websites. The other reason is that Google Sheets is better for collaboration since my wife and I can work on the sheet simultaneously and update it online from anywhere.

Assets

The first tab in my Google Sheet is for my assets. I had mentioned in an earlier post about the importance of asset allocation. To be able to push funds into your various assets to reach your target asset allocation, you must first be able to track the value of the assets. I will describe the basic components of my Assets tab here to help you along. My wife and I have separate Assets tab which we combine into a total Assets tab.

Singapore Cash

  • Emergency Funds (Bank Account Name) – $ Amount – % Proportion of Total Cash
  • Spending Funds (Bank Account Name) – $ Amount – % Proportion of Total Cash
  • Investment Funds (Bank Account Name) – $ Amount – % Proportion of Total Cash

The bullet point represents a different row and the hyphen represents a different column. I group my cash into 3 categories per my asset allocation and each category serves a different purpose. You can have more than the 3 categories but they are sufficient for me. Each category of cash can be held in more than 1 bank account but the key is to separate the different categories of cash. I usually update the figures at the end of each week to see how my cash levels are from income earned and expenses incurred for the week. I also try to add hyperlinks to the internet banking websites of the various bank accounts so I can click into them and login to access my online banking information.

Overseas Cash

  • Overseas Funds (Bank Account Name) – $ Amount – % Proportion of Total Cash

Yes, you can split this into the 3 categories if you want. For me, I prefer to see it in one line because of the nature of these funds. I hold cash in Australia because I studied, worked and lived in Melbourne and Sydney. It’s a country I return to often and makes sense for me to leave some of my savings behind when I left Australia and returned to Singapore. It functions as Spending and Emergency Funds.

Since the funds are in A$, I use this formula to pull the AUD:SGD exchange rate from Google Finance to convert the A$ into S$:

=GoogleFinance(“Currency:AUDSGD”)

Since I am now living and working in Singapore, it makes sense for me to do this foreign currency conversion on my Google Sheet since I am viewing my assets from a S$ perspective.

Singapore Stocks

  • Name of Share (Ticker Code) – Number of Shares – $ Sell Price or $ Last Traded Price – $ Value – % Proportion of Total Stocks Value

I prefer to have an overview of the value of the stocks and a more real-time update of the share portfolio in my Google Sheet. When I first set up my Google Sheet, I was updating the price of each share manually at the end of the week. You can imagine the amount of work that went into this. Subsequently, I realised you could use a formula to pull price data into the sheet. Despite working in accounting in an office and being relatively proficient in Microsoft Excel, I still have no idea to this day why it took me such a long time to realise there had to be a formula to replicate what I was doing manually!

At first, using OCBC Bank (Ticker Code on SGX is O39) as an example, I used this formula: =GoogleFinance(“SGX:O39″,”price”)

However, this formula no longer works because Google Finance does not support SGX anymore. Nevertheless, pulling last traded price data from Google Finance on Google Sheets works well and I use it for the other stock exchanges. I must point out that the search for another formula to pull Singapore share price data from another website was long and frustrating. I had to do quite a bit of research and tested multiple formulae I found from different websites before finding one that worked reasonably well.

To save you time, I will write out the formula I use now to pull Singapore share price data from Yahoo Finance:

=value(substitute(Index(ImportHTML(ʺhttps://sg.finance.yahoo.com/q?s=O39.SIʺ,ʺtableʺ,2), 4,2),ʺ*ʺ,ʺʺ))

One of the readers (Steven) commented that when you copy the formula into the Google Sheet, it doesn’t work. I tried this and it really doesn’t work. Yet somehow, the same formula is working on my Google Sheet. I was able to rectify this by retyping or replacing the quotation marks ” ” of the copied and pasted formula in the Google Sheet. This means that when you copy the formula into the Google Sheet, you have to retype or replace the quotation marks ” ” using your keyboard to activate the formula. It should work after that!
Notice the number “4” in the formula above? This pulls the sell price data of the Singapore share from Yahoo Finance. If you change it to “1”, that’s the previous closing price data. If you change it to “2”, that’s the opening price data. If you change it to “3”, that’s the buy price data. This formula updates the price of the Singapore share automatically and gives you a more real-time feed of the value of your stocks. Because I use the number “4”, which pulls sell price data, it sometimes comes up with an error (#N/A or #REF!) because it’s live data that changes and this fluctuation can cause problems when trying to retrieve the price from Yahoo Finance. Nevertheless, this does not happen often and it usually goes away by itself after a while, which means you just need to click into your Google Sheet at a later time for an error (#N/A or #REF!)-free update.

Overseas Stocks

  • Name of Share (Ticker Code) – Number of Shares – $ Sell Price or $ Last Traded Price – $ Value – % Proportion of Total Stocks Value

Again, you can use the Google Finance currency formula to do the foreign currency conversion. It’s likely that you can also use the Google Finance formula to retrieve last traded price data for overseas stocks.

Using ANZ Bank (Ticker Code on ASX is ANZ) as an example:

=GoogleFinance(“ASX:ANZ”,”price”)

This formula is more stable than pulling price data from Yahoo Finance and is almost always error (#N/A or #REF!)-free.

There you have it – how I construct the basic cash and stocks components of my Assets tab. I will cover the other components in another post because there is already quite a bit of detail in this post. In any case,  you can use the above as a starting point and develop your own template with additional information. What’s important is that it will become your own Assets tab and you will be more inclined to monitor and update it regularly!

Why you should use Google Sheets for personal finances

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I only started tracking our net worth on Google Sheets in 2015. It’s unbelievable how useful this tool is and I can never quite understand why I didn’t do it earlier. It was only after the size of the investment portfolio becoming significant that triggered the need for me to have a better tracking system. That being said, I track our Singapore portfolio on SGXcafe and it’s a great tool for monitoring the portfolio. I use Google Sheets to monitor our total assets, liabilities, income & expenses; so the market value of the Singapore portfolio is included but I rely on SGXcafe to track the average price, unrealised gains & losses etc of the various Singapore stocks. If you have no idea how and where to start with managing your personal finances, I would recommend getting all the relevant information down into a Google Spreadsheet as your first step.

What is a Google Sheet?

Firstly, you have to sign up for a Gmail account. After you have logged into your Gmail, you can click into the Google Apps on the top right hand corner and access your Google Drive. From there, you can create a new Google Sheet (the one with the green document icon beside it).

Basically, it works like an online Excel Spreadsheet and you can update it from anywhere as long as you have access to internet connection and Gmail.

Why Google Sheets?

In the US, there is a personal finance tool called Personal Capital. Many of the personal finance and investment bloggers recommend this tool as a good way to track your saving, investment, retirement accounts etc. Since it’s a US-based personal finance tool, I tried searching for something similar in Singapore but realised we don’t have an equivalent here yet. Hence, the alternative is to use Google Sheets to track my saving, investment, retirement accounts etc. Although you can update the information on the Google Sheet from anywhere, it’s a manual process prone to error and can be time-consuming. However, this appears to be the best alternative until we have an equivalent of Personal Capital here in Singapore. In my next post, I will write about how to organise the sheets in your Google Sheet as a way to track your personal finances.

Why track your personal finances?

In my previous posts, I wrote about the Balance Sheet (BS) – Assets & Liabilities and Profit & Loss (P&L) – Income & Expenses statements. Understanding their relationships and how they impact each other is essential to your wealth-building journey. To do that, you must be able to track their actual and percentage figures. If not, you will have no idea whether you are making any progress at all. You can read my next few posts about how I organise our Google Sheet as a starting point. Definitely take the time to prepare your own BS and P&L on Google Sheets and you will be amazed at what you can find out!