This is the second part of our five part series following MindShift.money member Wendy Priester as she goes through Financially Fit Bootcamp. If you’re just joining us, you can start your journey with her here.
A large part of going through the Financially Fit Bootcamp Program is admitting that what you’re doing now isn’t working.
This was especially true for me when it came to managing my bank accounts.
Like most people, I had all of my income land in my main checking account. From here, I paid for all my bills and all of my day to day expenses.
While I had a savings account, I never put money in it on a regular basis. I had some savings, but I was mostly living paycheck to paycheck.
By only having one checking account, I thought I was making my financial life easier to manage, but nothing could have been further from the truth.
I kept second guessing myself every time I went to pay for something.
Did I remember to pay my car insurance?
Do I have enough money to pay bills that are due later in the month?
What if I accidentally spent my student loan payment on groceries?
I was constantly, almost obsessively, checking my bank balance multiple times a day. It was making me feel crazy, but I didn’t know what to do about it.
The Power of Separation
When I first heard about setting up the Perfect Account Structure, I was skeptical. How was this going to help me? It seemed so complicated!
But then I realized that once I had my Perfect Account Structure in place, my money would basically organize itself. By separating my accounts, I would eliminate the vast majority of financial stress that I was currently experiencing. I didn’t need to micromanage my accounts or constantly check my balance.
My bills would be paid out of my Income Account; all my other spending would take place out of my Everyday Account. My constant worry about spending the bill money on shoes was gone.
Once I realized this, I was able to relax. All I had to do was follow the process using accounts I already had in place.
Divide and Conquer
To make things easier on myself, I chose to use my current checking account as my Income Account. My paychecks were already being direct deposited there and my bank offers free electronic bill pay.
Using my Money Planner as a checklist, I went line by line to set up the needed transfers or bill payments that would be coming out of this account.
For my Freedom Fund, I decided to use my long-neglected savings account. I chose this account specifically because I have no ATM access and any transfer to my Income Account takes three to five business days.
I didn’t want to have the temptation to dip into my Freedom Fund should any of my other accounts run low. Sometimes you need to protect your future self from your current self, and that’s ok.
Setting up separate accounts for my long-term goals was really exciting. Often, we dream big dreams, but fail to do anything that will move us along the path toward achieving our goals. Creating accounts for my goals, such as the purchase of a new car in a few years, was my way of assuring those dreams will become a reality.
I get such a thrill out of seeing the money I have set aside for my future plans making its way to a safe electronic home each month. The best part is that now those funds are collecting interest instead of collecting dust in an envelope somewhere.
An Unexpected Benefit
If I had to use one word to sum up the difference that setting up the Perfect Account Structure has made in my life, I would say “relief.”
I realized that my habits and behaviors around money had frustrated me to the point where I had given up on having any financial success.
I was so stressed out about juggling bills and expenses in one account that I wasn’t even thinking about saving for the future or planning for financial goals.
By separating my accounts, I’ve set up some healthy boundaries and guidelines. This has eliminated virtually all of my financial stress and worry and I couldn’t be happier.
I feel much calmer and in control of my money, and I wouldn’t trade that peace of mind for anything.
Often, when starting any new project, it’s easy to get overwhelmed. If you feel this way when going through Module Two and setting up your own Perfect Account Structure, I want you to know it’s ok. It won’t be like that forever.
Don’t let that feeling of overwhelm stop you from taking action. And don’t think you have to do this on your own, either. Talk with a coach or reach out to other members on our Facebook community. Chances are good that someone else has been where you are now and can provide some encouragement as you transform your financial life.
What steps can you take today to set up your Perfect Account Structure? How has dividing your accounts helped you to eliminate money stress from your life?
Share your answers over on the Financial Foundations Community Facebook page. I can’t wait to hear your stories!
image credit: Bigstock/Voy
Wendy Priester is a former Tax Auditor turned freelance writer and certified Financially Fit Bootcamp Coach. When not working with clients to help them live their best financial life, Wendy can be found exploring the Rocky Mountains of Colorado with her two hyperactive dachshunds.