How I Manage My Finances
I get paid every other Wednesday.
Before taxes my 401(a) gets funded by my contribution and the matching funds from my employer. I work at a university and they’re very generous with their match, it’s actually well beyond matching.
My check is deposited to my local checking account for a predetermined amount, based on a budget that I review every 3 or 4 months. Everything else is deposited in to my ETrade account where I get higher interest. Also, because I’ve decided not to get a debit card or checks for this account, the money is distant and feels untouchable. This is the part of the plan where I pay myself first.
Every bill that doesn’t fluctuate from month to month - internet, cell phone, insurance, rent, and student loans - is scheduled automatically. I’ve toyed with the idea of setting up a separate account for bills, but haven’t gone that far yet.
Other bills, if possible, are done electronically or scheduled to be paid the day the bill arrives in the mail using my bank’s bill pay service - power and water.
I don’t have any credit card balances now, but when I did I paid the balance off right away. If I can’t pay the balance or there is no interest I will schedule payments so that everything is paid off as quickly as possible.
My student loans are automatically withdrawn, which reduces my interest rate by 0.25%. My monthly payments were just reduced by $40 a month as part of the scheduled payment plan I am on. As soon as the payments went down I scheduled $25 payments of my own that are mailed every time I get paid. In my mind the money was already going towards the loan, so I’d rather have it keep going there (plus a little extra) than have it available to spend on something frivolous. Once the loan is paid off (years from now) that money will also be moved towards savings.
I review my balances using Yodlee nearly every day. I make sure that there’s enough money to cover any bills being paid in the next few weeks, check performance of retirement accounts, and look for any charges I don’t remember making.
All of this helps me to make sure that I’m saving money, keeping everything balances, and staying aware of my financial status. The initial setup took a couple hours of my time, mostly in creating the budget, which I’ll write about soon. Now it’s largely a passive operation. The only thing I have to actively do is schedule payment for 2 or 3 bills a month and make sure that my regular spending doesn’t go beyond my monthly budget. The first takes moments, the second takes self control.
What’s your process for managing your finances? If you were in my shoes, would you do something differently?