Personal finance isn’t a one-size fits all approach, although there definitely are some basics (see my Cardinal Rules of Personal Finance) that are wise to follow. From there you have lots of options when it comes to managing your money. Over the years I’ve heard from friends many different options of managing their money and tracking their money and I’ve learned that the best way to managing your money is the one that makes sense to you and the one that you’ll stick with! Although you likely have your own way of managing your money, I thought I’d share how I manage mine in case you are curious or are looking to change your approach up!

MONEY IN, MONEY OUT

At a basic level, I get paid twice a month from my job twice a month. This money is deposited into my checking account, which I have at Bank of America. Any bank with ATM access, local branches, good service and no fees should do in my opinion, I just happen to bank with Bank of America. Throughout my decade blogging about personal finance I have learned that it’s wise to minimize any fees you pay. Even if it’s a couple dollars each month, it can really add up over time! Really there’s no excuse to pay bank fees. If you can’t meet a minimum balance requirement to avoid a fee, switch to an online bank (i.e. Amex/CapitalOne etc) or a credit union. Don’t pay fees if you don’t have to!

Each month, I have bills to pay: mortgage, utilities, phone bill, charitable giving and then I also have monthly expenses: groceries, entertainment, clothes, restaurants etc. Quarterly I get a bonus but I do not budget that money monthly and instead rely on my quarterly bonus for bigger purchases (mostly trips) and/or bigger deposits into my savings account.

GIVING EACH DOLLAR A NAME

For me it’s really important to track my money – both in and out, so I try to do a good job tracking my income/project expenses. I know how much my family brings in each month and have a ‘plan’ for each of those dollars. I save about 35%, give away about 10% and then live off the remaining 55%. A decent chunk of this 55% is pre-set, meaning it is fixed/steady and doesn’t really change each month. I then allocate the remaining to: groceries, restaurants, gas, travel and other entertainment. Dave Ramsey refers to this as ‘giving each dollar a name’. Of course I don’t 100% stick to this budget each month, but if I spend more on entertainment, I try to spend less on gas or restaurants. Sometimes I go over a bit (gasp) and other months I have a little extra. If I spend less one month, I’ll spend more the next or vice-versa.

CHECKING VS. SAVINGS

With Bank of America, I have a checking and savings account. As previously mentioned, my paychecks flow into my checking account. In the past, I would try to be proactive and go ahead and move half (or sometimes a third if I expect higher expenses) of my planned savings into my savings account. Lately I’ve done a poor job at doing this as I’ve found our expenses just to be out of control. I don’t know if it’s a combo of kids or inflation or just how expensive groceries are but most of the time now I’ll move money into my savings account at the end of the month. I do have a few Capital One and American Express savings accounts where I keep money too – the interest rate is like 10x higher than Bank of America. I then keep the remaining balance in my checking account for the time being and as my expenses add up (mostly via credit cards…I love points!), I have enough in my checking to pay for them. So, most of my monthly budget stays in my checking account to pay the bills and credit card at the end of the month. My monthly expenses go out in the form of checks (electric bill, paying my parents for the phone bill and my charitable contributions to my church) or via my credit cards, which I get a total bill at the end of the month. Since I stick to my spending limits each month (i.e. not spending more than I earn), I don’t have to worry about having enough in my checking account to pay my credit card each month.

CREDIT CARDS

It’s no secret that I’m a big fan of credit cards (how I earn $900 annually) and the points that come with them. (Check out: What’s in my wallet 2022 edition). About 95% of my monthly spending goes onto my credit cards. It’s awesome getting points and it’s a bit easier for me to manage and keep track of. Because I monitor my spending to make sure I’m not spending more than I earn each month (although sometimes one month will be more expensive than another…but I just spend less the next month), I am confident that I’ll have enough in my checking account to pay it off when the bill comes at the end of the month.

Pre-Paycheck Money

It’s also worth calling out that a decent chunk of my paycheck is actually money that I never see – it’s all pulled out before my paycheck gets paid. I put 15% to my 401(k) retirement and 15% to my employer stock purchase program. Also some of that pre-paycheck money gets pulled to pay my insurance (health, vision, dental and life) as well as my HSA for medical and daycare expenses. These are all super important things so I’m glad that I’m able to have my employer pull it out and pay those things on my behalf! Makes it super easy for me!

Everybody is a little different, and the real secret to financial success is finding what works for you. This strategy (keeping more in checking) works for me so that’s what I stick to. If you’re looking for a better way to manage your money, consider giving this method a try!

Summary

I personally track every dollar in and out and keep a watchful eye over my budget. I rely heavily on credit cards for my spending, although of course I pay them off each month! Figure out what works for you, ensure you’re spending less than you’re earning while still prioritizing some saving/investing and the rest should take care of itself!

A little confused by some of the terms in this post? Check out the YMF Guide on “Personal Finance 101” to get up to speed.

How do you manage your money? Any strategies that you have to share? Feel free to leave some comments below!