How I am now managing my personal finances

I have now organised my personal finances as follows;

  1. Automated my bill payments
  2. Budgeted/categorised my expenses to enable automation
  3. Have my spending money clearly defined- like a mini Balance Sheet
  4. All my investments are automated
  5. Automated my kids savings plan
  6. Sweeping all the left overs to Acorns or similar low cost investment account

So let me go into detail about all these aspects together with some lessons to teach your kids

1 Automated my bills

When I get paid, my entire salary goes into a cheque account with a totally different bank(let us call this Bank A) so I do not even see it coming into to my everyday bank account (let us call this bank B) or transactional bank. What takes place in the Bank A is that my bills get automatically paid via debit orders eg phone account, utility bills, insurance etc. and transfers to my investments are automated as well

2 Budgeted/categorised my expenses to enable automation 

The only part of my salary that gets transferred to Bank B “transactional bank” is for the following budgeted items( I have set up seperate accounts within Bank B  for broad categories of expenses)

– Food-I put this money in my credit card in Bank B

-Holiday fund- keep this in a seperate account within Bank B

– School fees -keep this in a seperate account in Bank B

You can set up different bank accounts for large items you know you need to pay once a year in Bank B – it really is a mini balance sheet of how much you own (have in cash in various accounts)  and how much you owe (you know how much your bill will be for school fees for example)

There are various items I need to pay in cash which amounts to $1 000 per month and what I do is I draw this out in cash from Bank B and insert into envelopes for smaller budgeted items e.g. music lessons, cleaners, entertainment,haircuts etc

As pointed out above – I knew how much  needed to be transferred to the various expense items so I did have to do a high level budget – the accounting system did help me track my expenses and therefore made it easier to transfer the correct amounts to the various expense categories – I try not go into any major detail – just broad categories

3 Have my spending money clearly defined

As pointed out above, I use the envelope system for my cash expenses, my credit card for food expenses, and seperate bank accounts for large expenses that need to be paid once a year eg school fees – this clearly defines my spending money and I know my position( Balance Sheet) by looking at my online bank accounts and envelope money

I also do not have to worry about my bills as they are all automated in Bank A

4 All my investments are automated

When my salary is transferred to the Bank B- I have also automated my savings plan and auto transfers to my investment accounts

5 Automated my kids saving plan

Again, when my salary is transferred to the Bank B – I have automated a savings plan to a high interest bank account with Rabo direct so their savings plan is taken care of without me having to manuelly transfer money to them on a monthly basis

6 Sweeping all the left overs to Acorns or similar low cost investment account

For any monies left over on a monthly basis-  I have set up an Acorns account which is a low cost investment platform with no minimum investment amounts, no commissions and easy to use – I have saved about $300 in 3 months without even knowing it – what an easy way to save

Lessons for your kids

The following are lessons to pass on to your kids

When you get paid -try and automate all your transfers so that you do not have to manually do anything

Have your investment and savings plans automated and watch them grow in your balance sheet

You know what you are spending your money on and have no stress as you have set monies aside for your larger savings goals e.g.  buying  car one day or an investment property