In today’s fast-paced world, managing your personal finances can often feel overwhelming and time-consuming. Between paying bills, saving for your various goals, and keeping track of your different financial accounts, it’s easy to feel like you are constantly playing catch-up. Three ways to effectively regain control and simplify your financial life is through an intentional account structure, paying yourself first, and automation. In this blog, we will explore how simplifying your bank accounts and automating key aspects of your finances can help you save time, reduce financial stress, and achieve your long-term goals without all the complexity. 

Intentional Account Structure

Many times, we overcomplicate our bank account structure. Keeping unnecessary accounts open can lead to hidden fees, additional work, or confusion. Reducing financial clutter by limiting the amount of bank accounts your household has is an effective way to simplify your finances. Circumstances may vary based on your unique situation, but generally speaking, a household should have one or two checking accounts for day-to-day transactions and bills and one or two savings accounts. These checking accounts receive all your net income and are used as the “Hub” of your finances. Linked to checking is your Savings-to-Spend account for any non-recurring expenses. Many of our clients use Flourish for their Savings-to-Spend account and have had a great experience with the account. If you are saving for a specific goal (like a down payment for a home), it might be beneficial to open a dedicated savings account that is earmarked for that goal. Also linked to your “Hub” checking account is your investment account, where you can regularly save for intermediate to long-term goals.

Paying Yourself First

Paying yourself first is a cash flow management strategy that we recommend to our clients. It can be used with automation to make your financial life easier. This system involves prioritizing saving money by putting money into savings/investments before or as it reaches your checking account, without you even having to think about it. Mary McCraw reviewed this concept in detail in this 2023 blog post.

Automating Bills

Another way that automation can improve your finances is with automatic bill-pay. Setting up autopay is a fool-proof way to ensure that your bills are paid on time, every time. This gives you the advantage of never missing a payment, avoiding late fees, and saving yourself the time and energy of trying to remember due dates. Many of our clients take this a step further with a separate “Automatics” account, which is a checking account dedicated to those routine and predictable expenses like mortgage payments, subscriptions, and insurance payments. 

If you choose to enable autopay for your household bills and credit card payments, it is best to keep a buffer of at least one month’s expenses in your checking account to avoid an accidental overdraft. Using a tool like the Flourish SmartBalance feature is a great way to make sure your “Hub” or “Automatics” checking accounts are always at an appropriate level. This feature checks your checking account balance twice a month and keeps it at a specific level that you set. For example, if you set your SmartBalance to $10,000, Flourish will automatically check your checking account balance twice per month and transfer the excess above $10,000 into Flourish so it is earning a higher interest rate, or it will transfer funds from Flourish to your checking account to equal the $10,000 balance. This takes some getting used to, but it can be a very beneficial tool in your day-to-day finances. 

Regular Review

Now that you have created your intentional cash flow management system, you are ready to reap the benefits. You can rest assured knowing that your finances are operating efficiently. From here, I recommend setting a schedule (monthly at first, then moving to quarterly or bi-annually) for a financial checkup to ensure that your automations and financial accounts are working as intended and still align with your current financial goals. You can adjust your system to account for any changes in income, large upcoming expenses, or new goals. 

Three of the main benefits of automating and simplifying your finances are less stress, a focus on the long-term, and financial peace of mind. By being intentional about your bank account structure, paying yourself first, automating what you can, and regularly reviewing your system you are sure to lower your anxiety about money. I encourage you to start small with a couple of the tips listed in this article, then gradually expanding as you feel more comfortable. We are always happy to provide guidance on effective ways to manage your finances.

Jake Spradlin, CFP®

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