Learn how to set up your super simple financial life.
Hi, I'm Colin Drake and welcome to The Wealth Spa: the place to take care of your wealth and well-being.
I know that you love having control and clarity when it comes to your money. One thing I have seen over the years as a financial planner is that people overcomplicate how they establish their financial lives. They have banking, investment accounts everywhere, transfers that go from everywhere.
What if I could show you the simplest way to set up your finances? Would not that make your life easier, less stressful?
Today in the Wealth Spa: the simple money method.
RULE # 1: Keep it Simple
Rule number one in the Simple Money Method: keep your financial life simple, as simple as possible. Just add complexity if you have a really convincing reason to do so.
So, what is the simplest way to configure the structure of your financial life so that it does not look like this?
Just do this.
1. Start with a checking account 1. I only have one. In your name or set if you have a partner. You will have checks and a debit card, online bill payment and money transfer for that account.
2. Have 1 credit card. It could be with that same bank so you can see everything in one place.
3. Have an investment portfolio. A retirement account a regular brokerage account. The same company if possible. Charles Schwab is my favorite.
HOW DOES IT WORK?
If you are working, earning, saving for retirement: Then, your paycheck goes to the checking account, your bills, including your credit card, are paid from the checking account. And you transfer money to your savings portfolio. Maybe your employer does it for you at a 401 (k) or, if they do not, you set it automatically with each paycheck.
If you are retired or financially independent, here's how it works: you get a constant monthly income from your portfolio in your checking account. Any pension / SS also goes there, you pay your bills for that account. It's that easy.
This will work for 90% of people. Just add additional bank accounts, credit cards, investment accounts if you have a good reason to do so. Otherwise, you're just complicating things more than necessary.
An example of a good reason to add complexity may be if you own a business and want a separate checking account and credit card for business expenses. That makes sense. Otherwise, KEEP IT SIMPLE!
This is what I want you to do. Check out all the bank account statements, investment account credit card account you have and draw on a paper how it is set up. Ask yourself, will not I still get everything I need if I simplify it to the minimum amount of accounts needed? Could I have all my accounts in an institution like Schwab, Fidelity, Citibank or Wells Fargo to simplify things even more? If you can simplify, do it. It will be easier to manage your money, less stress, more control and clarity.
RULE # 2: AUTOMATE
Rule number 2: automate your financial life as much as possible. Join me next time and I'll show you a great way to put your financial life on autopilot.
That's all for this episode. I would like to ask you to go to this publication on DrakeWealth.com and leave a comment: what is the minimum number of accounts that you think will work easily for you? Or ask a question and I will answer it for you.
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Thank you very much for watching today. We end up as always with – guess the voice …
Video credits to Drake Wealth Management YouTube channel