The problem with being a money coach is like anyone claiming a measure of expertise, you feel like a total idiot if you ever mess up yourself. But like everyone, life happens and I missed something for the first time in years – it’s RRSP season so I’m going full-tilt with clients and the bank; my dog is mysteriously scratching himself constantly and I’m totally worried (not fleas. allergies?); I came down with a brutal cold, and my cash-flow system, which usually runs like clockwork, derailed a tiny bit, with ugly results.
My clients all know I use, and recommend, a simple banking structure to keep things running smoothly.
- One main account into which all income goes, and from which all regular payments (mtg, insurance, internet, phone, hydro, car etc) get debited.
- A second spending account for discretionary items like groceries, entertainment, clothing. This gets regularly funded a set amount from account #1.
- A third high interest savings account for those ‘extras’ throughout the year – vacations, christmas, emergencies, vet bills (one sub account per item), also funded regularly from account #1.
The beauty of this system is you don’t have to think too much.
#1 means your bills are always paid on time.
#2 means you don’t overspend (since there’s a set amount available, and no more)
#3 means the tough spots are accounted for, and funds ready when you need them.
Trouble is, if #1 derails for any reason (and it’s an easy one to ignore since it’s all automated) you can, well… bounce a cheque! And in my case, since I work for the bank part-time, I don’t pay fees, so don’t keep $1000 cushion. I had spare funds in there, but this was a large pre-authorized payment.
Why did it derail? Simple. I forgot to deposit a couple cheques from clients. Just forgot in the craziness that is my life these days.
It’s embarrassing and frustrating — but keeps me humble. And I never claim to be perfect, just someone who’s (generally!) learned a number of tips and tricks to manage my money effectively and thoughtfully.
Hopefully this won’t happen to me: