How I Automate My Finances

Even with 9 accounts in 3 banks, my finances are pretty simple.

Here is how my finances are laid out.

Let me walk you through it:

Earn:

• My wife & I both get paid through direct deposit. This is great. No more Friday afternoon trips to the bank. All of our income goes into our ‘Currency Crossroads’ account. This account earns its name. This is the gateway for all of our income & outgo.
• Once the money is in the bank, it is subject to our monthly budget. Our budget includes saving, giving, and regular monthly expenses.

Saving:

• I have automated all of our regular savings transfers through my online bank access.  I have set up money market savings accounts for each of our long-term savings goals:  a house fund, a car fund, and retirement.
• Additionally, I have setup mini-escrows for our big, predictable expenses: a Christmas fund, and an insurance fund. This allows us to save small monthly contributions throughout the year to stabilize these big expenses. For example, we pay our insurance premiums annually. However, I can tell you the monthly cost of insurance because I pay it to myself, a year in advance, every month. When my premium comes due next year, I will have a fully funded ‘insurance fund’ to pay it from. Meanwhile, the money will be in a money market account, keeping up with inflation.

Giving:

• Our Giving has traditionally been on auto pilot as well. However, recently I have changed this. Since giving is an exercise designed to shape the giver, we felt the manual initiation would be beneficial to our souls. But it could easily be on auto transfer as well. It was just a matter of conviction for us.
• It is important to note that our Giving & Saving happen at the first of the month. To borrow from Robert Kiyosaki’s ‘Rich Dad, Poor Dad‘, we pay ourselves first. Actually, we pay God first and ourselves a close second.
  

Expenses:

• Our regular expenses are handled pretty traditionally – spending within a budget. Since 95% of our purchases are online bill pay or debit card transactions, we use Mint.com to monitor our progress. One side note, each month our Currency Crossroads account begins with the same balance. On the last day of the month, if we have any surplus above the starting balance, we move it to the house fund. If we have a short fall, we have a problem. We have busted the budget. We dig a little deeper, recognize the problem, and adjust. Of course, if the short fall is a byproduct of an emergency, our emergency fund comes into play. If not, we simply have less to spend the next month.

• Both my wife & I have ‘Fun Money’ accounts. At the first of each month, we transfer the budgeted amount to these accounts. They are not a separate, secret checking account – or anything like that. Mechanically speaking, we both have complete access to each others fun account. Practically speaking, this gives us the ability to save fun money from month-to-month, in preparation for big, fun expenses. We have found this particular ‘system’ to be very helpful. It minimizes arguments over silly things. If my wife wants to blow $100 on smelly soap, that is her problem. Thankfully, she would never do that. But you get the point.

All-in-all, it is pretty easy. I just have a few online bills to pay each month. Other than that, I just monitor and maintain. I love my system because I feel like I am gaining so much ground and it is easy to monitor my whole financial picture. Although it is a complex system, it is pretty darn simple.