By Matt Becker

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We talk a lot about budgeting, saving, investing, and all the other things that go into a good financial plan, but we rarely talk about how to actually put it all in place.

In other words, how do you set up a system that sends money to the right places and keeps everything organized without you losing your mind or having to quit your job just to keep track of it all?

That’s what we’re going to talk about today.

I’m going to share the financial system I use myself and the one I recommend to clients.

This is how I set up my bank accounts and move money around to make sure that my savings goals are being met and my bills are being paid, all with as little ongoing work as possible.

The Self-Driving Financial System

I’m calling this the Self-Driving Financial System because it’s meant to be as hands-off as possible, and because I’ve been nerding out about self-driving cars recently (indulge me!).

Here’s what it looks like:

I’ll explain each individual part of this system below, but before you get overwhelmed just know that it’s meant to make your life a lot easier. Above all else, this system is meant to be:

Effective – It directs money towards the things you care about most.

– It directs money towards the things you care about most. Low-maintenance – For the most part this system runs itself, relieving you of much of the burden of handling your day-to-day finances.

– For the most part this system runs itself, relieving you of much of the burden of handling your day-to-day finances. Collaborative – It fosters collaboration between you and your spouse or partner, making it easier to work together towards your common goals while also preserving some individual freedom.

So, let’s dive into the details and see how it all works!

Two quick notes:

The assumption here is that you’re working with a spouse or partner, but the basic principles hold true for other situations as well. I’ve illustrated this system with multiple checking and savings accounts for multiple purposes, but you could simplify things even further by using categories within You Need a Budget instead. That’s what I actually do myself now.

Step 1: Deposit all income into one joint account

The first step is directing all your income to a single joint checking account.

You can think of this checking account as the heart of your financial system. All your money comes into this account first before being pumped out to the other pieces of your financial system.

Now, certain things like 401(k) contributions and company health insurance premiums will be taken right out of your paycheck. That money will never touch this account and that’s okay.

But otherwise, depositing all of your income into a single account will keep things simple for you. You’ll always know exactly how much money is coming in and when to expect it, and it will be easy to both set up the automated transactions we’ll talk about next and to update them down the line as your goals and needs change.

And it’s a joint account because you’re a team and you’re working together towards shared goals. But don’t worry, there’s a step below that gives you each some freedom to spend money on your own.

Step 2: Automate your savings

“Pay yourself first.” It’s a motto you’ve probably heard before and it’s a good one to live by.

Paying yourself first means putting money towards the things you care about most BEFORE giving it away to other people. And in practice, it means automating your savings towards your biggest goals before paying all your other bills and expenses.

You read more about setting up these automated transactions here, but it essentially looks like this:

Decide how much you want to save for each of your goals and which account(s) you’ll use for each one. Set up automated transactions that move that money from your checking account to your various savings accounts on the same day(s) every single month. Schedule these transactions to happen right after you deposit your paycheck each month, BEFORE your other spending has happened.

Doing it this way makes sure that there’s always money to save and that it happens every single month, meaning you’re making consistent progress towards the future you want.

Note: If you’re using You Need a Budget, you can direct a lot of these transactions to a single savings account and simply track your progress towards various goals as categories within the app.

Step 3: Automate your bills

The less you have to remember, the better. Automating your bills takes one big worry off your plate by ensuring that all of your bills are paid on time every single month.

There are a couple of different ways to do this.

Many bills can be paid automatically by credit card. If you’re like me and like to use credit cards for your spending, you can probably handle most of your bills this way. (If you are using a credit card, make sure to set it up to auto-pay the full balance every month).

Other bills can’t be handled with a credit card, or you may simply not want to use a credit card, and in that case you can automate them through your joint checking account’s Bill Pay system.

Either way, automating them makes sure that they’re always paid on time and in full without you even having to think about it.

Step 4: Plan ahead for irregular expenses

You know that feeling when the car starts rattling and you don’t know where the money to fix it is going to come from? It’s no fun, but the good news is that you can prevent it from happening.

By saving ahead for irregular expenses you can ensure that the money’s there when you need it. Instead of panicking and scrambling to fit that car repair into your budget, you can simply take the money out of savings.

You can read more about exactly how to do this here, but here’s a quick overview of how it works:

Start with common irregular expenses like car repairs, home maintenance, travel, gifts, medical expenses, and annual insurance premiums. Add any others that come up for you on a regular basis. A good candidate is any expense that’s both large enough to disrupt your budget and happens irregularly enough to not be a consistent part of your monthly spending. Estimate how much you spend on each category in a given year. Divide each of those numbers by 12 to get a monthly amount and set up an automatic transaction that transfers that amount into a savings account each month. When one of these expenses comes up, simply transfer the money from your dedicated savings account to your checking account and you’ve got it covered!

Personally, I use Ally Bank and have a separate savings account set up for each irregular expense. It ends up being a lot of different accounts, but they make it easy to manage things.

You could also use a single savings account and keep track of how much money is allocated to each irregular expense in a spreadsheet. Or you could use a tool like YNAB that allows you to account for these irregular expenses as categories within the app and remove the need to transfer money back and forth.

No matter how you do it, preparing ahead of time for these irregular expenses will make your life a lot easier, and automating that preparation takes yet another worry off your plate.

Step 5: Give each other an allowance

This is where you get to preserve your individual identity within this joint financial system.

In addition to your joint checking account, I would encourage you to open separate individual checking accounts and automatically transfer the same amount of money to each every month. That money is then available for you to each spend or save as you please without having to run it by your spouse.

I would encourage you not to track how this money is spent as part of your joint budget. This isn’t about keeping secrets from each other (bad idea), but simply about allowing each of you to make personal spending decisions without having to justify them.

I’ve talked to a lot of people who’ve credited this exact strategy for relieving a lot of the financial tension in their relationship. There are still plenty of decisions for you to make together, but this makes sure that there’s always some money that’s just yours.

Step 6: Spend the rest as you please

With all of the biggest items already handled, the only real decision you have to make each month is how to spend the money that’s left over.

And the best part is that since you’ve already saved and paid all your bills, you can spend that money guilt-free!

Sure, there will still be some tough decisions like how much to spend on groceries vs. eating out. But there’s no stress about making sure there’s money left over at the end of the month to save or put towards debt. There’s no guilt when you want to indulge a little bit. The money that’s left over is yours to spend as you please.

It’s also a nice little budgeting trick, since you know exactly how much money you have available to spend AFTER all your obligations are handled. It makes all the mental accounting a lot easier.

Give it a shot

This kind of system will take some time to set up and there may be some headaches as you get used to how it all fits together.

But once it’s in place, it does almost all of the heavy lifting for you. Bills are paid, savings are made, and potential budget busters are handled ahead of time, all without you having to do a thing.

So what do you think? Could you see yourself using a system like this? Is there anything that you’d tweak? Let me know in the comments!