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Forced Checks and Balances: Bank Acquisitions
About a month ago, I had to migrate from my old checking account to a new checking out. Due to the free checking account being transitioned, I lost my favorite budgeting tools. I decided to keep the new account since the account numbers would not change. I also looked at the “financial tools” that would be offered, but when implemented they were quite lackluster.
Last week I did a revamp of how I handle my checking and cash flows. I took advantage of other savings and checking accounts I have. Free accounts sometimes have some useful tools) and I like the idea of “buckets.” No other bank has the buckets as my old checking account had.
I’ve decided to start using my secondary checking account for rent since it offers free paper checks. Unfortunately, my rent at the time can’t be paid online. Only check or money order (bleh).
Automating Finance Systems: Automatic Transfers
Since savings and checking accounts take business days for transfers I’ve lined up my weekly pay, monthly, and yearly expenses. I started a bit of a Twitter thread of how I did that.
I set up my rent to pull into my secondary checking account along with my car payment. Since I only pay rent and car payments monthly, I can quickly make sure I have enough to cover both. I also transfer these payments each week.
In my secondary savings account, I use the buckets feature for yearly expenses, so that minimal transfers are needed. I dislike savings accounts limitation to 6 transfers per month. I prefer separating everything out and having “buckets” or “envelopes.”
After transfers cover most of my expenses, my primary checking handles my student loan payment, credit card payment, investments, and savings. I prefer this system because I can modify each week’s debt repayment, savings, and investments. Currently, I want to focus on minimal debt repayment (low interest), higher savings, and increasing investments.
I also have my credit card set up to have the minimum payment sent once a month. I pay my credit card off each payday and use it as a debit card, I haven’t had to rely on the automatic safety net yet.
Checks and Balance With Too Many Accounts: Use Reminders!
Unfortunately, every bank wants you to have multiple accounts with them when refinancing. The multiple accounts within a single bank also mean instant transfers. Hence the balance of not enough and too many accounts to handle.
Reminders with a checklist help avoid doubling up on manual transfers or forgetting to pay for certain expenses. Google Calendar has a built-in reminder system where I can add a checklist. This reminds me of the automatic transfers and to initiate manual transfers and payments. Automatic reminders set to invest and pay off debt each week.
One thing to consider after refinancing is the benefits of the account. Is the account worth keeping open? Can you use the benefits of the account for a type of bucket or transfer? Is there a benefit of this account over another?
Automating For Cash Flow
In writing, my approach probably sounds convoluted and confusing. But I use minimal accounts (with nicknames), automatic transfers, and can use a “hybrid” budget system. I know how much is in my accounts, what my expenses are, and don’t worry about cash flow as much. I can use my cash flow to my advantage without stress. This approach also helps with my impatience. Knowing I have most finances automated, I can watch my net worth go up without trying to squeeze every penny. I can just let time handle my finances as I can focus on other things.
Because of having a lower to middle income, cash flow is more important to me currently than budgeting and payments. The longer I can hold on to my dollars (or invest them rather) sets up my future. I’ve made this possible through refinancing student loans and a low-interest car payment.
To help with cash flow, I mentioned earlier being a month ahead on rent and my car payment. I also have my utilities (internet, streaming services, electricity, etc.) automatically paid on the credit card. This also gives me a 30-day buffer to pay expenses. Having a weekly paycheck that can cover these expenses after a debt repayment is another step to help me succeed.
Automating Emergency Funds
When others ask about my emergency fund, I ask them what type of emergency are we talking about? I have savings built up for routine car maintenance as well as emergency or major car repair. Healthwise, I have the HSA that requires a cash cushion before investments. Also, I have my out-of-pocket receipts ready to go. Expenses in the home are covered by my apartment complex. Any other emergency is covered by my one-month worth of expenses. I also start paying back debts early so I have another few months of “buffer” before payments are due.
These are the systems that work for me. They might not work for you. If you’re low or middle income I hope this post helps you think about your financial systems. Make some changes as I have to help with financial anxiety and cash flow.