Ask HN: What is your financial “setup”?

200 points by PascLeRasc ↗ HN
I've gotten a lot of good recommendations for software from this community - most recently AVRFuses and pyenv. These both focus on being simple and "doing one thing really well". They're tools and don't require much active thinking to use them regularly, which I really like.

I'm trying to get my finances set up better, and I'm wondering if anyone can recommend a "setup" of bank account, credit card(s), investment platform, budgeting tools, etc along these lines. Ally Bank and SoFi seem good, as does Wealthfront, but I'm just not sure if I'm using them right. I have Mint but it spams me with notifications and I'm not sure what exactly it does for me. Credit cards feel stressful to think about with keeping track of what to use for what purchase or making sure they're all paid off - I recently got a Citi card and the app alone makes me want to get rid of it.

Does anyone have a "setup" for how you manage your money that you really like? Anything that follows the "don't make me think" philosophy?

146 comments

[ 6.2 ms ] story [ 207 ms ] thread
YNAB (https://www.youneedabudget.com) for budgeting and tracking spending. It forces you to pre-allocate your funds which ensures that you don't overspend unconsciously via credit cards. I've been very successful with it.

> Anything that follows the "don't make me think" philosophy?

I don't think that exists. YNAB requires pretty diligent tracking, but the payout (heh) is huge.

I second YNAB, but as you said, it requires diligent tracking especially for those of us living outside the US and can't hook their bank account into it.

I happen to love the diligent tracking, though, and it's just part of my daily routine. Every time my wife or I charge a card or the money from the ATM, we log it in YNAB. Then every day I open my banking app and reconcile the charges with what we've input into YNAB. Sometimes we forget to log something, or mis-log something, or there are surprise charges to be dealt with.

Now that I'm in the habit, it takes a total of 10 minutes a day.

I'm hoping the arrival of PSD2 in Europe early this year will finally mean we get apps that will be able to auto report as opposed to manual accounting like it has to be done today
There are some fintechs already paving the way and abstracting psd2 away. I just tried to log into my bank using tink (no affiliation) and it worked great.
I'll have a look! Being a French guy in the Netherlands and with money spread over 4 different banks in several countries, bookkeeping really is a pain. I looked a few times in the past but support is notoriously lacking in NL.
There are already plenty of providers (at least in the UK) that offer the APIs YNAB need - yet for some reason they've opted to use two obscure North America only aggregators. Salt Edge and Yodlee are two very heavily used providers that work internationally.
I just wish they offered a one-time payment as they used to on Steam. I hate having to budget for another subscription.

I think thats ironic.

I loved ynab4 and actually build a smallish webservice to duplicate it's functionality after it went SaaS.

It sadly stopped working with the PSD2 regulation this fall.

I'd definitely pay for it, if I could connect my bank account for automated imports.

It's seriously silly that they still haven't come around to that. There are several platforms which let you access basically all banks in Europe. And these have been around for years.

Which platforms? Do they also work if you have an American bank AND a German bank?
> Do they also work if you have an American bank AND a German bank?

why would that even matter? its not rocket science to add more integrations. especially in an asynchronous process like fetching bank transfers. you got all the time in the world.

heck, why would you even want that? if you have a singular provider which gives you access to all banking logic, you're entirely at their mercy. they can just put whatever price they want on their service and you'd have to shell it out.

> Which platforms?

plaid to point out the most obvious. there are a lot since PSD2 came into effect though. that regulation isn't german btw. your comment makes it sounds like it is. and before PSD2, there were other providers that supported all banks in europe for example, and again: there is no reason not to add several integrations.

Yodlee works internationally. There's also Salt Edge that works across Europe, not sure about elsewhere.
The only time I’ve been able to unconsciously spend with credit cards is via automatic billing that manages to batch when I am asleep.
And there we added another expense to the list of here-money-goes-out-every-month :)
I have;

1. One account for salary and bills

2. One credit card for large purchases and spending online which I pay off each month

3. One pre-paid card which I top up weekly to use for daily spending and when travelling (as it has multiple currency accounts)

4. One savings account

(All of the above accounts are available to me on one App, due to the Open Banking regulations in Europe)

(Would be a good idea to set up auto sweeps to move funds between accounts, so that it's automated. I don't do this as I like to view the accounts regularly to stay on top of things)

Rules I try to follow are;

- Maximize income - Minimize expenditure - Save or invest the remainder - Don't use credit/debt but save up to buy what you want

I don't have a go to investment platform, but my preference would be to use a broker and value invest for medium to long term. I can't compete with pro traders and algorithms.

How is the app called, that you use for your accounts?
Herrvogel I bank with a large bank and their app connects to other account via APIs
I really like Beancount with Fava for analyzing my spendings: https://github.com/beancount/fava/blob/master/README.rst
I have been starting on the road to putting all of my transactions into beancount, pulled ofx data for chase and scraped pdfs for another bank account.

The idea of keeping records of everything is satisfying, but still need to do it.

Could you give me some details about how you started? I've glossed over the docs once, but hopefully I can just import everything, name it properly, and view it on Fava.

Is it possible to automatically generate tax documents?

I have 6 accounts:

A for income, ex. when I get a check I put 80% here

B taxes, when I get a check I put 20% here (taxes in Poland are 18%)

then:

C for business expenses, I know how much I spend each month, and I wire that amount each month from A

D personal account - whatever is left in A after business expenses, I wire here

Finally:

E, joint account with my partner, I know how much we spend each month and I wire that from D -> E

F, saving account for myself. Whatever is left in D at the end of the month, I put here

ING lets me manage all these accounts from their app, and wire money instantly from one to the other. All these accounts cost about $2/mo. each, but if there's enough action (ex., if you spend at least $500/mo.) the price drops to 0.

This setup is useful to not go splurge every time you get paid.

My setup wouldn't work for the majority of people, but I freelance and have set up a corporation. I pay myself a salary that's about 2x my rent. The rest of my funds stay locked in my business account.

This forces me to limit spending. After paying rent, I only have about the same amount left over for personal expenses.

Any money left over in my personal account at the end of the month is transferred into a mutual fund.

What are the advantages and disadvantages of this setup?
I can't really speak to the financial or tax advantages of this setup - I've never been particularly good at these things.

But the big advantage to me is behavioral. If I have just a limited amount of money to spend in my account, I spend, well, a limited amount.

It's simpler and thus, easier to stick to than complicated rules that require more fiscal discipline

I have built myself a expense tracking tool, where I track my expenses. I have one "account" for my expenses and another shared one that I use together with my girlfriend.

I input expenses manually and each expense has a "category". For each category I can set a monthly "Bucket" (the maximum I wanna spent) and then I can track my progress during month.

Every month I get email with spending stats and I sit down together with my girlfriend to consider our finacial situation. We can change the buckets, etc...

I think the most inportant part is manually writing expenses and then talking about it after we get the email.

1. Consolidate all spending on a credit card that gives cash back. Autopay all bills that don’t levy fees with it.

Pros: no need to worry about points or blackout dates; maximize cash back; facilitates budget tracking with annual summaries and integration with budgeting sites (otherwise you’ll have to do it manually).

Examples: Double Cash 2% cash back, Apple Card 1-3% depending on payment method

2. Direct deposit your paycheck into one bank account that your credit card from 1 and investment account from 4 are connected to (set it up so only investment account can debit from the bank, not vice versa). Autopay remaining bills from 1.

Pros: only worry about paying one bill (credit card); only the hub bank account is exposed, bulk of savings is isolated in investment account.

3. Max out 401k and IRA every year using automatic deductions from your paycheck/bank account.

Pros: saving/investing on autopilot; lower taxable income

4. Consolidate and invest all savings (and roll over old 401k accounts) into an index fund at Vanguard or Fidelity. Auto-deduct from your paycheck in increasing amounts until you hit the pain threshold.

Pros: automatic diversification; one place to monitor your investments; maximum investing on auto-pilot.

> 3. Max out 401k and IRA every year using automatic deductions from your paycheck/bank account.

> Pros: saving/investing on autopilot; lower taxable income

Does it ever make sense to do Roth 401k instead of traditional 401k?

If you are expecting to be in a higher tax bracket in retirement (counting traditional IRA/401K income) then Roth IRA/401K may be a better choice, since it is after tax when invested but tax-free when withdrawn. Most workers will have substantially higher income subject to income tax during working years than in retirement even with IRA/401K withdrawals as taxable income, but that's not always the case.
For a roth IRA there are two other benefits (not familiar with Roth 401k, so won't speak to that).

* Hedge against different tax rates in the future. Even if now you think you'll be paying a lower rate when retired, there's no guarantees.

* You can withdraw your contributions, though not your earnings, without penalty before retirement. If you add 5k/year for a number of years, that starts to add up should you need to tap it for an emergency or other investment opportunity (real estate or bootstrapping).

I believe you can withdraw early on roth 401k funds as well. You can at least roll it into a roth IRA which I know for sure you can withdraw early from with no penalties. It seems like nobody talks about this, but it's a really nice perk. I put half of my first 2 years of 401k contributions into roth when I started working, and it was great knowing it was there just in case.
I was under the impression that if you contribute the annual limit (currently $19k) every year for 40 years (25 - 65), then pull 1/20th the account value per year once you retire (65 - 85), Roth makes more sense because the amount you will be pulling will be $4.15m, which would be $17.3k/mo before any additional investments (like a maxed out Roth IRA every year). That's $207.5k/yr in income at retirement from just the 401k alone, which would suck to get taxed on I'm sure.
I disagree with your analysis. Taxes due are going to be less a function of your income and more a function of tax law. At least in the United States, we have enjoyed many years of low and lowering taxes, at the expense of ever-increasing debt, and are likely reaching the limits of what we can expect the magic of monetary theory to insulate us from. Upshot: tax rates will have to increase substantially in the medium term.
fun fact, tax revenues in the US are projected to not even cover interest on the debt in the near future.

The concept of raising taxes enough to affect the budget would cause a revolt.

Small quibble: if you have any future tax years that are in a lower bracket than what you're in right now, then a traditional 401k is probably better. You can accelerate taxation into the current tax year via a Roth conversion, which means that if you spend a gap year without taxable income, that's a bunch of room for making a Roth conversion.
I mostly just have two accounts: a private and a shared account.

The shared account is very simple: Every month me and my boyfriend tops it up to 5000 USD, we have a debit card to it each, and all shared expenses including rent come out of this account. By topping it off to a high number like this, we ensure we wont run out within a month, and we just use the debit card for things we need.

For my private stuff I have a credit card that I pay everything with, and I've set it up to be automatically paid off at the end of each month.

Every so often I write the expenses we've had into gnucash so I can see how much we're spending, but I don't budget in advance.

I also have a savings account with some emergency money, but I'm a poor student so I don't really have money to invest or for long term savings.

Mine is similar, except:

1. The top-up amount is much lower and designed so we run out of money at the end of each month. This way, we spend pragmatically and save more.

2. I take pictures of every receipt.

> but I'm a poor student

with savings, a personal and a additional 5k usd checking account... sry to burst your bubble but thats called wealthy for most ppl on earth.

5000 USD seems high to me as well for a student and you don't know what his girlfiend does. It does not really matter how high that amount as long it can cover unexpected expenses.

When I was a student, I made sure I always had at least 1000 EUR on my account, basically treating the 1000 as 0. I cannot remember ever running into debt this way.

Just because I have savings doesn't mean I have income.
I don't manage money - I just try to live with as little as possible. I have a nice salary at the moment, but it's gonna go down significantly next year as I am relocating, so I want to have loads of savings.
I put fixed sum to loan account to pay off the bank debt each month (amount may vary on some months, it's flexible so I can put 0 - 9999€ per month for example), then move majority that is left to "pseudo-savings" account which is only used to pay maintenance fees etc. and also 1-2 times a month to move spending money to everyday account (in case of theft i only keep small amount in account linked to debit card).
The thing that really worked for me was I only ever buy in person with cash. I almost never use my debit card in person. This simple thing changed my relationship with what I buy. Obviously my mortgage and other monthly payments are direct debit but unless the purchase is several hundred Euros or more I will pay in cash.

I always have €200 in cash on me which is enough to cover me at least a week. Then whatever I have left over at the end of the week I roll over. So if I have €60 left I take out 140 and transfer the difference into a savings account. I have saved a shocking amount doing this. It may seem strange but budgeting myself 800 for the month and only using cash has really helped me appreciate how much the money is worth to me. The short of it is on pay day each month I transfer 800 to my "cash account", I transfer the exact amount I need to cover my bills into my "bills" account (I also have a "buffer" of 100 in this account as a 'just in case its more than I calculated'). Everything else goes into savings. Everything.

Obviously some things fall outside the 800 cash allocation for example I bought a new coat a few weeks ago which was €230. I tried it on in store but bought it online as there was a discount I couldn't use in store annoyingly. However I have a separate budget allocation for key clothing items like coats and boots which I generally replace every other year. However I don't bother with multiple savings accounts anymore. I never found I benefited from the added complexity. If in a month or two I ruin my coat and have to buy a new one unexpectedly I will just take 230 from my savings rather than juggle things around.

I should say though that all of our expenses come from a single salary. Every month my wifes automatically goes into savings. Generally we never need to touch it. This is great for many obvious reasons but it also helps us (well me!) feel less guilty when I suggest we buy something we don't really need such as an OLED TV we got a few months ago.

How do you feel paying in cash helps compared to cards? I honestly don’t get it. For me, withdrawing and paying cash simply adds unnecessary complexity, and on top of that, it destroys any paper trail you may need for tracking your individual budgets. How come people (mostly in Germany, from my experience) are so obsessed with cash?
Having recently received private financial advisory, my advisor recommended that I do exactly this:

Withdraw cash weekly, use only that cash to pay for food.

Supposedly, it will make you more aware of how your spending affects your balance.

Swiping a card "feels free".

> Swiping a card "feels free"

Could this relate to age or how one grew up? It doesn’t seem like one abstraction is really all that different from the other.

Cash is physical, it's tangible, exists in your hand/wallet, occupies space, carries weight in the real world.

It's experientially very different to spend, and for me at least, carries substantially greater negative feedback as my wad diminishes in transactions. Then having to replenish my stash, visiting an ATM or asking for cash back, carries a distinct bite.

Those things are largely absent when using cards or other electronic payments like phones.

Though you can structure electronic payments such that it at least draws on a very small account requiring explicit replenishing of some inconvenience, to retain some of the bite as weekly or monthly funds become exhausted.

The idea is that all of that unnecessary complexity helps make the expenses more tangible. So you're paying with 20s instead of a swipe.

This isn't as much of a problem for the thrifty whom feel similar anxiety in using a card. Most likely people who are actively keeping a mental track of where their balance is after every purchase - or using a ledger.

The idea is you spend less if getting your money is unnecessarily complicated. Plus since you can physically see your money going away it "hurts" more so you'll be more likely to spend less. This doesn't "work" for everyone.

OTOH what really helped a family member of mine understand how much he was spending was getting a credit card. He was on all cash for years and then moved to all debit. Never had any idea what he was spending because if he needed cash he'd just hit up the ATM or when he was using debit just swipe. He always spent less than he had/made but he wasn't paying attention to the amount on a larger scale. Once he got a credit card (at my suggestion) and started putting everyday purchases on it the bill would come at the end of the month. When he say down to pay it off he had to confront the entirety of the money he spent that month. He'd say "what the hell did I spend ${amount} on?" and he'd comb through the transactions and get a much better idea of his spending habits and was able to reduce the purchases that weren't providing him much value.

This could easily be rephrased as “How come people are so obsessed with using payment systems with real-time warrantless government surveillance for all purchases?”

I honestly don’t get it. Why would you pay a percent or two to be surveilled? It creates a time stamped track log, too, which can be easily cross-referenced with (also surveilled) cellphone position.

https://www.wired.com/2010/12/realtime/

YMMV but I don’t mind payment processors knowing my location. I’d choose that anytime over touching physical money (or having people who process my food touch it).
It’s not just the payment processors, it is also the federal government, who, via parallel construction, have the ability to lock you in a cage for years and effectively prevent you from ever leaving the country thereafter, should they ever desire to do so.
Google buys your payment stream, and can correlate that with your email, browsing and tracking history. Also other companies do this.

You have to be a tool to do most of your payments with credit cards now.

Can you imagine that this could be actually a matter of personal preference?

Some people may not use Gmail, or any free email services. Others use Apple Pay so the acquirer and bank cannot know what items you bought, and the merchant cannot know your credit card number. Finally, some people enjoy having a digital ledger so they know what they spent.

Do you feel your harsh words are justified here?

Few places give a discount for cash in the US. I use my credit card and get reward points worth 1-2% (sometimes as much as 5%). I don’t do it specifically for the points, but over the course of a year, getting ~2% of purchases back really adds up.

I get that the merchant is paying it and passing it along to customers. Since they pass it on to me whether or not I use the card (almost always), I might as well take the money.

Pay a percent or two? Well, there's your problem. I'm paid 2 percent "to be surveilled". Plus, it just seems nice to have over a month to pay for stuff I buy.
A small pot of savings will give you over a month to pay for stuff you buy, plus interest on the money you haven't saved yet.
2% cash back on a credit card is worth twenty five times more than 2% interest on checking (assuming you can even get that).

If you spend $2000 every month, and you get 2% back, then that is $40/month or $480 per year. You also get from $0 to $40 interest per year on the money you haven't used to pay your balance yet, depending on the timing of your income and payment date.

If you don't have a credit card but only a checking account paying 2%, and you spend $2000 perfectly uniformly over the course of each month, then you are getting $20 per year interest on an average balance of $1000.

You have a choice of either $500 with a credit card or $20 without. So 2% <> 2%.

(comment deleted)
I found I had a "poor relationship" with money due to always getting out my card and paying without even paying proper attention to how much I was spending. I am/was terrible at tracking what I spend when using my card.

So I tried the cash experiment by looking at what I spent each week then taking enough out in cash for it all. Having to do that quick calculation of how much to give the cashier made me realise just how much I spent on crap. I realised over time I had become blind to the prices of items as I picked them up. I would just grab what I was used to getting. So having to make sure when I got to the check out I had enough cash to pay for it made me look at the price as I picked up an item and keep a running total in my head.

It didn't take long before I shocked myself that I was spending €15-20 every day on lunch. Plus an additional €10 on a coffee. Plus lots of other random €5-15 purchases.

Carrying cash I realised how quickly I burned through it all. It helped me appreciate what you can get for a Euro.

From there I decided to change some of my habits to spend better. I was clearly over-eating (as I was fat and even with "healthy eating" I never lost more than a couple of kilos) so decided to plan my meals out of the home. Then I planned my meals at home to be healthier and cheaper.

Then it was just a good habit to actually check how much I was spending on things before I got to the check out. I read a few articles and skimmed books on how to better spend and save but to be honest it is just common sense and paying attention to what you are buying. Unless of course you are talking large amounts of money but then you should seek some professional advice IMHO which is what I have always done. But when it comes to your day-to-day spending common sense and knowing how much you're spending is key and for me cash helped with that.

Obviously this won't be the solution for everyone but it worked well for me. If you haven't tried it I suggest you commit to it for two months. It is scary to leave you debit card at home and just take cash (I kept my credit card on me but that is only used for emergencies anyway) but do it and see how using cash works for you.

Also just to clarify I don't get cash out every time I go to buy something. That would be a pain in the ass. Instead I take out €800 on pay day, keep 200 in my wallet for that week and put the rest in my office for the rest of the month. Not one week has come to an end with me being on zero. I think the lowest I have ever been was just under 20 remaining.

Then on Sunday night whatever is left over carries over to next week and I take the rest from the initial 800 (well 600 on the second week). Then at the end of the month whatever I have left rolls over to the next month and I get out 800 minus whatever that left over amount is. So if I have 100 left I take out 700 rather than 800 the following month then I transfer that 100 difference into savings right away.

Hope I have explained that in a way that makes sense? :)

Update: Forgot to mention that tracking my spending with cash also changed my relationship with the foods I ate. I have cut right back on meat for example as I realised I was eating processed meat every day so I reduced that to quality meat three times a week. Just that change alone and I lost almost 10KG in a couple of months of no other changes. I went to the doctor to get my bloods checked as at first I was worried something was wrong with me. The doctors response? "well you stopped eating shitty processed meats and started eating more greens, of course you will lose weight". My bloods came back perfect.

Thanks, that really helped. Good point about knowing-what-you-spend before checking out. I think I’m going to make that a habit too (albeit cashless).
Yes it isn't so much cash vs card. It is just that with a card it is very easy to fall into the "I'm in a rush just grab what you know" trap. You get to the check out, you rush to pack the bag and just tap your card against the reader and leave. I didn't even check the amount as I didn't need to enter a PIN thanks to contactless.

So cash forced me to pay attention. There is no reason you can't do that with a card, I just needed the cash method to force me out of my bad habits.

Tangentially related: ever since I read “In Praise of Cash” [1], I started doing as many transactions as possible in cash. I make sure I carry enough change in different denominations so that I can pay almost any amount without having to worry about inconveniencing the receiver for change. It may seem like a hassle to others, but I’m ok with this.

[1]: https://aeon.co/essays/if-plastic-replaces-cash-much-that-is...

This is somewhat similar to what You Need a Budget ("YNAB") does. Whereas you are prepared for any transaction and deliberately process it manually; YNAB forces the user to manually document and enter the transaction, recreating a similar process as you do physically. This creates a tangible transaction in the human's brain - making the action stick and be more real.
I might have recommended this for someone in college in 2000 but this is unrealistic for any reasonable person. Paying cash for a TV at a physical store?!
The parent comment covers cases like your example, so why try to twist that into not being for "any reasonable person"?
To clear up any confusion I bought the TV online (so with my credit card, then paid it off in full that month). While I did go to a store to compare a bunch of TVs it was much cheaper to buy online.

My comment about buying the TV was related to not feeling guilty spending several thousand Euros on a TV because we live off a single salary therefore saving it.

What exactly do you find "unrealistic" about using cash over a debit card for day to day purchases like lunch, grocery shopping and such? This is where I find I "lost" most of my money. Lots of 'invisible' (to me at least) purchases could easily suck over €1000 a month from my account alone. Using cash forces me to think about small but frequent purchases. Looking at my previous spending patterns I save between €350-400 a month by using cash over my debit card. With all of the other changes I have made regarding diet that goes up to over €500. And remember this is just my spending. My wife also saves several hundred by using cash over her card as well as she had fallen into the same trap as I of blindly buying with card and not thinking (much) about what it cost.

Obviously a large purchase I do with a credit card for the added protection but I rarely make large (>€100) purchases.

I find this fascinating because in Spain we are in a quick restrict-access-to-cash spiral with banks shouting down offices every.month and getting an ATM nearby is increasingly hard unless you live or work in the center of a big city.

If you actually touch the money, you can feel easily how much is going out.

Plus, I guess having to go to an ATM to get money out makes it more valuable because you pay everything with both money and time. Good trick

We make it a point to have our kids spend their money in the form of physical cash (and they’re the one to hand it over to the cashier at the store and take the change back). Otherwise, it’s unapproachably abstract for them.

We don’t extend that to our adult spending though.

I feel the opposite. I use a Fintech bank called Monzo that's available in the UK and is now expanding into the states.

When I have cash it feels like Monopoly money that I can splash on anything.

When using my card I get instant notifications as soon as I pay and the notification gives a running total to how much I've spent in the day. Also shows me how much money I've got to last me into payday taking into account recurring payments like bills, online-services etc.

I'd love to use cash. Only downsides are lack of change, it's always an issue, and it adds to the wallet thickness.

For me credit card works just fine. Somehow credit card has never felt to me like a credit instrument. For me it's always been offers, deals (when I have to buy something), free lounge/spa access, and free points. I have also set 3 limit alerts on my main credit card which does my ~90% of expenses usually and last alert means no more use unless something really urgent comes up.

If I need to buy something it goes to my "Buy" list on my todo app and depending upon the urgency either right then or during a sale I just check that "Buy" list and buy all or some of it. I don't buy anything else on impulse except books which are not very often and are not expansive at all. Food/eating out is the only thing I have budgeted. This has worked fine so far. Touch wood!

> it adds to the wallet thickness.

This was an irritating thing. My wallet has been one card stuffed in the back of my phone case for about 10 years now. One less thing to keep track of. It goes against the grain here, but going 100% cashless has improved things for me and has reduced my spending. The extra points on the credit card are nice and the crud and shrapnel that used to accumulate in and around my wallet are not a thing anymore.

Important features of any good setup:

- you consolidate your finances in the minimum number of accounts & cards

- you have a couple of months of expenses as cash in a current or savings account

- you pay off your credit card in full every month

- you invest some amount every month

- all of this is automated - paying bills, credit card repayments, investing, putting money in savings, all of it.

Once you have these things down, you can then adjust percentages, providers and all other details according to your personal situation and preferences.

I've automated everything except paying bills and credit card payement: I like feeling that money going away.
I automated specifically after getting a few stupid late fees in my 20s. At this point, if it’s not automated, I’m at least 25% likely to be late.

Fortunately, there are only a handful of small bills that I have that aren’t automated. They’re annoying.

I noticed a 15 euro charge to "Jet Multimedia" on my internet bill one month, and made a point to not direct-debit anything due to the simple fact that a leachy parasite game co. (I've never played a game in my life) was able to latch onto my internet bill somehow.

Allegedly I signed up for this, but they could neither produce my signature, nor could they explain the mechanism by which they are allowed to agglommerate onto my internet bill, and a quick call to the ISP removed this surcharge, but wisened me up to how utterly cheap and tawdry an ISP could be.

Direct Debit had best be reserved for actually trusted actors.

I love this minimal approach, but I've learned the hard way that there's a missing word - "resilient".

"you consolidate your finances in the minimum resilient number of accounts & cards"

I almost lost my iCloud data when my single credit card at the time was compromised and the new card got delayed. I now think one should carry at least two independent credit cards of some sort, if one is paying periodically for critical IT (cloud data, domain names, etc).

Another anecdote: a relative had to pay cash (the venue didn't accept cheques) for an expensive rehearsal dinner, because their only credit card was compromised the day before at a business lunch.

Likewise for emergency funds. I've now split my e-fund between two banks to reduce the risk to paying my mortgage in a financial crisis.

We have a checking/savings account, and then various investment accounts at vanguard.

All income goes to vanguard. Each year, we move our total budget for the year to checking. Then, we pay for all spending from checking. We can easily track whether our budget is on Pace at any given time. If we run out of money, we went over. (Technically, we subtract out year end expenses like property taxes to avoid a year End surprise.)

We also have a 30 year budget spreadsheet that estimates our savings, expenses, and income Up too retirement. If we exceed or income goal for the year, we put half towards retirement and half towards a virtual 'bonus discretionary' account. If we exceed our annual budget (have to do an extra transfer from. Vanguard), we deduct that from the virtual bonus discretionary account.

Note that I wouldn't recommend exactly this approach unless 1 years spending is a relatively small amount of your net worth. We only started this technique in our 30's.

You should consider keeping the unused/not yet needed annual funds in a high yield savings and do monthly transfers, excess cash in a checking account adds up. Sounds like you have a good system regardless though!
Maybe.

Some checking accounts give high interest rates (rewards checking, Sofi, etc.). Plus there's fidelity cash management that acts exactly like a checking account but you can invest the funds in money market.

Any link for that budget spreadsheet?
Also interested in the spreadsheet, but figured commenting directly rather than in that thread would increase the likelihood you see this.
Good salary and modest needs basically.

So whenever I look at the balances on my cellphone and there is "too much" I flush it out to an investment a/c

And when I get a bonus same

So very little active managing tbh.

I struggled with this before but then I found Banktivity. I have dozens of accounts/cards/debit/credit/savings/investments etc... and Banktivity helps in keeping track of my overall "wealth".

The way I do it is to budget a yearly (or half year) expenses beforehand and then channel it through whatever account for expenses. I'm lucky enough to live in a very cheap place and make enough so I don't have to live pay-check to pay-check.

If I make more than I think enough to cover my next period, I usually spend that on a new Tech gadget, Travel or into savings. But I rarely save these days as I'm trying to maximize my lifestyle before I'm 70 year-old with too much money and little to do.

Does anyone have a method for setting a rule, when random-amount deposits into account, take 30% and move to other account? The amount changes every week, so it needs to be percentage not a static number.

Seeing some interesting things in this thread, may be that some of them are normal for Europe or what have you.

Other things talk about automatic this and auto that - but not specific about what makes it automatic? You bank web site?

Interesting just thinking about how some of these things are working, and if there are business account type solutions that are similar.

I’m currently demoing Tiller. It aggregates all your financial data in a spreadsheet.

The jury is still out, but so far it is good.

I’ve been using tiller for a year now and it’s so nice
building on submitters question: if y’all don’t want to give services like Personal Capital access to pull transactions in through apis, which often involves giving them your password (!) rather than properly giving them access through something like OAuth since many smaller (and even large) banks don’t offer it, what do you do? I still want the benefits of pulling down all transactions into a centralized location
I forget the article but someone had the genius idea of turning on email notifications for all their accounts and scraping the emails instead of dealing with aggregators.
Pay yourself first.

Setup an auto transaction to move a set amount into a savings account on payday - that way at the end of the pay period when you run out of money, you've already saved how much you wanted to. If you wait till the end of the pay period to save, there will never be any left.

My trick is to increase the amount going into savings every time - just a little. Eventually you'll find the point where you're saving the most you possibly can, and you might need to back it off just a touch.

This maximizes my savings to the point where I work for a couple of years, then I can take years off and drive around the world.

Rinse, repeat.

>Setup an auto transaction to move a set amount into a savings account on payday

Better yet, go to payroll and have them split your check, $x or x% in savings and the rest in checking. If you do it by percentage then your savings will grow in proportion to your income.

As good as this idea is, I suspect that relatively few payroll departments are set up to provide this option, and most of them would resist going to the extra effort to provide it.
What? All the major payroll processors/front ends (ADP, Paychex, PeopleSoft) support this "out of the box," no problem whatsoever.

Even when my employers was on paper forms for direct deposit there was always an option for multiple bank accounts.

I've never NOT had my paycheck deposited into a multiple accounts except for when I was a teenager at my first job.

My employer’s payroll charges a fee for each additional bank account that they are to pay into.
I like the idea, though I personally prefer to have all the control.

Payroll will get mighty annoyed with me when I want to change the amount going into a savings account every couple of weeks.

I’m not sure if vanguard would be able to get payroll deposits.
After I get paid I split my money into two accounts - the first account is a discretionary account that I will use to live off for two weeks. I can spend this money on whatever and it is meant to be exhausted. The second account I keep a buffer (for me that means $2000) and I pay any bills I have. Any excess over $2000 goes into index funds.
I know I'm late to the party, but I can highly recommend the Bogleheads philosophy [1] and community/forum. They have a wonderful set of videos that explain how to build an emergency fund, and how to invest in a tax efficient manner.

I've been following their philosophy for a while and it's been nothing but positive and very hands off:

- Emergency fund in a BofA account

- Schwab account with a lazy 4 fund portfolio [2]

- 401k with company match

- I am also working towards financial independence (FIRE), see [3]

[1] https://www.bogleheads.org/wiki/Getting_started

[2] https://www.bogleheads.org/wiki/Lazy_portfolios

[3] https://reddit.com/r/financialindependence

This is my non-business (personal) finance setup.

I have a checking account, vanguard account, and fidelity account. The checking account is used for business to pay me. The vanguard account is 100% VTSAX as is the fidelity has account. I’ve just been keeping a couple thousand I the checking and rolling into VTSAX. Should be enough, if VTSAX tanks we need to be buying ammo if anything.

I also churn credit cards. Chase sapphire/capitol one savor/Amex platinum should all get you $500 or more. But if you are making >100k like it seems most people in here are then this is not such a large concern.

My radically simple approach to finances is a result of simple living. I spend maybe 1-2 hours a month thinking about money and finances.

- I don’t budget.

- I don’t use spreadsheets or finance apps.

- I don’t have any credit cards, loans, or debt. I don’t care about my credit score because I’m not ever going to get a car loan, electronics lease, or mortgage.

- I don’t own a car. If I did I would buy it with cash and purchase only what was necessary to get from point A to point B safely, with the best gas mileage.

- I have reduced expenses as much as possible, and only buy essentials: Rent, utilities, health insurance, and groceries. I don’t spend money on new gadgets, entertainment, or other things. I read books from the library, I go to the park instead of the movies, etc. I don’t go “shopping” whether online or offline. I don’t buy a new laptop or phone unless my old one breaks and cannot be easily and cheaply repaired (still using MacBook from 2014).

- At the beginning of the week I go to my bank and withdraw cash, and only buy things with this cash. I don’t buy much online except toiletries and cooking oil.

- Instead of budgeting food, I have a simple rule that if I’ve eaten out already in that week, I avoid eating out until the next week. I avoid buying groceries until I’ve eaten most of what’s in the kitchen.

- At the end of every month I log into my bank, check how much money came in, and subtract how much went out. I then invest whatever I feel like out of that month’s profit into a mutual fund. I choose mutual funds as my method of saving because they are liquid, free of management, and simply taxed (capital gains). I have them setup to automatically reinvest earnings. I don’t use IRAs.

- I’m happy with my income now, but in the past when I felt like I didn’t have enough money, I simply focused on the easiest way to earn more money (changing jobs, learning a new skill to change jobs, taking another job, etc.).

I was with you until you mentioned you don't use IRAs. Tax advantage is important!
I don’t use IRAs mainly because they aren’t liquid. I can’t withdraw without a penalty.

An IRA is not necessarily tax advantageous because gains are taxed as income when withdrawn, which is higher than capital gains. The choice to use IRAs is not straightforward. It's also hard to plan for any of this because tax rates can and do change. Capital gains and income tax rates may change, so I generally prefer to pay taxes earlier than later where possible.

I have generally found it more financially rewarding to focus my time on increasing income rather than on finagling my finances to save money. Same reason I don’t own a credit card just to get the cash back or other incentives.

I like the approach of focussing on increasing the income. I do budgets myself and set goals. If they do not match up with what i make, i go back to trying increasing the income.
> I have generally found it more financially rewarding to focus my time on increasing income rather than on finagling my finances to save money. Same reason I don’t own a credit card just to get the cash back or other incentives.

Diverting some of your income into a tax-deferred investment account will not significantly affect your ability to focus on increasing income.

They're not mutually exclusive.

My approach largely resembles yours, but there's no effective difference between increasing income and reducing how much of it is taken from you in the form of taxes. If your priority is to increase your income, deciding to throw some of it into a tax-deferred investment account can be seen as a very efficient use of your time spent increasing your income.

Tax deferring doesn’t necessarily equate to reduced taxes. IRAs just mean paying taxes later, at an unknown rate.

All income from IRAs are taxed, principle and gains. A traditional IRA has gains taxed as income, which is higher then long-term capital gains on ETFs. Assuming tax rates don’t change, a traditional IRA will cost more taxes if the withdrawal and contribution taxable income is over roughly 40k, correct me if I’m wrong. That’s assuming income tax isn’t higher in the future, which is quite a gamble as historically income tax has been going up, and historically there’s just been more and more taxes.

Don’t forget that deductions for contributions don’t matter, because you will pay income tax on that principle when you withdraw. If tax rates increase, the tax cost of deferring could be even worse. It really depends on if you’re going to be earning income when you withdraw and how much is going to be withdrawn. It’s complicated and practically impossible to estimate total final tax obligations at retirement. IRAs are not a cut and dry “just put money in an IRA” decision.

Another problem with IRAs is the lockup. If you withdraw before retirement there’s a hefty 10% penalty unless it’s for a mortgage or health insurance.

You can also do a Roth IRA which allows you to pay tax on it now.
Sure, and IIRC like a traditional IRA gains are taxed as income. So there’s not necessarily any tax benefit versus a traditional savings account invested in ETFs, depending on withdrawal and contribution incomes.
Aren't you ignoring the advantage of being able to invest the money you would have paid in taxes for the entire time you've left it all in the tax-deferred account?

I don't get why you're assuming you'll have to withdraw the money prematurely and incur the penalty. That's a rather pessimistic attitude, and it's not like you'd be putting all of your investment funds down this path.

You have to withdraw at some point (after age 59-1/2 unless the law changes), and you’ll pay income taxes on principle and gains then. Taxes on principle will be paid either way. If you give to your children, they will pay taxes on the principle + inheritance tax.

The idea with tax deferral was that when you retire, your fixed withdrawal income will have a lower income tax rate than when you contributed, but as capital gains and income tax are now, that isn’t necessarily true depending on your contribution and withdrawal income.

Roth IRA was then created as a response to the well founded concern that income taxes will rise negating any tax advantage to deferral, but Roth wasn’t able to pass the legislation without severe compromises like contribution limits, and gains taxes as income on withdrawal.

You pay tax on it eventually, like you said with the lower tax rate when your income will be presumably lower.

But in the mean time, which can be a very long time, you're free to invest those deferred tax dollars. That can add up to a significant amount, over a large number of years.

It's not something to trivially dismiss.

(comment deleted)
"I don’t use IRAs mainly because they aren’t liquid. I can’t withdraw without a penalty."

I'm not a registered tax advisor, so this is not tax advice, but my impression is that you can take money out of a Roth IRA whenever you want, as long as you don't take more than you put in; the profits/returns are tax advantaged, but the original money is after-tax.

The reason why people will argue this is a bad thing to do is because you can only put so much money in per year, like $6,000 currently, and if you take money out, that doesn't add to the contribution limit.

In my mind Roth IRAs will only be advantageous if income tax rates are higher in the future. But that’s true of money kept in savings as well, since it’s already taxed. And Roth IRA gains IIRC are taxed as income at withdrawal, which is higher than capital gains right now. I might be wrong about that though.

I don’t see how a Roth IRA is really any different than keeping money in a traditional savings account, besides the withdrawal rules.

Roth IRA gains are not taxed as income at withdrawal when you're retired - that's the whole point.

To first order, if tax rates don't change, and your investment return is the same, then I believe that you end up paying the same with a Roth IRA as a non-Roth IRA, which in turn is significantly less than a taxable account.

But Roths do have some other incidental advantages like I think you don't have a RMD. And if you have uneven income, you can do (partial) Roth conversions whenever your income is low. Which also gets around the contribution limit.

Sounds horrible. I don't get why people want to go through life like this.
Several here have mentioned Charles Schwab. I personally use them for brokerage + IRA + checking + savings. It gives me a single view into my finances.

Why Schwab? They have outstanding customer service. One time I was traveling on Christmas Eve and forgot to place a travel notice on my cards. I called and got a human on the line immediately. This is the norm with their customer service whom I rarely call because 99% of what I want to do can be done via their web site from download tax docs to ordering new checks. Also, when traveling abroad they (1) still fulfill their promise of reimbursing all ATM fees and (2) give an excellent exchange rate. I could not be happier with them as my bank.

I'll note that they now have a calling tree and it's harder to get a person on the phone. This is fairly recent, in the last year or so I think.