First, we utilize direct deposit and automatic transfers so every aspect of our finances are 100% automated. Why? Because humans get distracted and make mistakes… computers will always get it right.

Second, we run 3 primary accounts:

Bills: Fixed expenses, and odd things like random checks we write. We put the money in here, write the check, and move on. No babysitting needed.

Spending: Variable expenses. This is the account we physically “spend” every day.

Savings: Our mandatory emergency fund goes here, along with the money we’ve budgeted for savings.

Our main accounts have sub-savings accounts so we can tell how much we’ve got at a glance (gifts, haircuts, etc), but those three main accounts is the bread/butter. I operate our accounts in this fashion so we never have to ask ourselves if a certain bill has come out yet before making a purchase, nor do we ever risk overdrafting due to human error. Every month, our bills automatically get paid, and we can see how much we’ve got for spending at any given moment…because they’re totally separate of each other. Done and done.

Third, we’ve got a SET amount of money that gets deposited via our payroll. Every other penny above this set amount such as overtime, extra shifts, and bonuses automatically goes into our emergency fund (along with our regular savings contributions). We only live on as little/much as needed, and we save anything extra. Set it and forget it.

Fourth, our emergency fund started at $500, then we increased it to $1,000…then $2,500… then $5,000. Nowadays, we keep about $10,000 on hand. Basically, our emergency fund changed as our lives changed.

I find that mapping out my finances is my secret weapon towards building financial independence. Aim to spell everything out, but make sure it’s not too convoluted that it doesn’t work anymore (KISS: keep it simple, stupid).

Want to start? Visit your local financial institution and setup the systems you need. It’s free!