One of the things we are asked about constantly is how to structure your finances. While there are many ways to do it here is one way that I have used pretty much my entire adult life. Before that, I kept all my money, literally, in a piggy bank (yes, it looked like a pig and you had to break it open to get the money, although you could get some of the coins out of the little slot). I read about this concept in a book called “Uncommon Cents” by none other than – Ben Franklin. Yes, that is correct Ben Franklin. Here’s how I did it.
Bank Account 1: Our Checking – this account is where we pay our bills and day to day expenses. I took, depending on the year and salary, most of my salary and put it in here. I use Bank of America but any bank will do. The money is FDIC protected.
Bank Account 2: Her Checking – this account is for my wife when she was a full-time mom when the kids were little I took a fixed amount a month and put it in here.
Retirement Account: – This was our 401(K) or IRA. The companies I worked for Keane, Fidelity Investments, Collaborative Consulting all used Fidelity as their provider so it was easy. I put in 5 – 10% every pay period. Investing constantly is key, in up and down markets. More on retirement investment in other articles.
Personal Investment Account: – If we had any money left over, and sometimes we didn’t, I would put money in this account. It served two important purposes; 1. rainy day money. This was in a money market account and was our emergency money. 2. personal investments – stock or other investments. Note: you can certainly separate out your rainy day account, most banks have a checking account and savings account. You could use the savings account as your rainy day account if you want. I tried this but over the years could get a better return on a money market fund.
That’s it, I have kept this system in place for many years and it’s worked for me. The only changes I have made was to set up a couple of business accounts for my businesses. Try it you’ll like it. Any questions please don’t hesitate to contact us! Happy savings!