So I’ve armed myself with a brand-new interest in personal finance, and I’ve got a list of sources to feed that interest. Time to start planning the fundamentals of how I’m going to manage and distribute my money in future.
I’m going to break this up into a series of posts because otherwise it’ll just be a long-assed screed that even I get bored of reading.
First off, there’s two main basics to take care of. Number one, determining the right accounts to keep my financial plan running, and secondly, determining a schedule for distributing money between those accounts.
Once that general framework is sorted out, I’ll need two major tools to keep track of progress:
- A “net worth” tracker (basically, just a spreadsheet)
- A way of tracking spending, so that I can pare down unnecessary costs and formulate a workable, sensible budget for day-to-day living.
A lot of what I’m going to cover (how to divide your money up; financial tools) can be found elsewhere on personal finance blogs and other sites, but what I hope to lay out here is a distillation of the best concepts I’ve picked up in my reading so far, from the point of view of someone who (as you may well be) is basically new to this game.
Over the next week or so, here’s what we’ll cover:
The Five Accounts You Meet In Heaven
For the bulk of my future financial machinations, I’ll be using five different accounts. For someone like me, accustomed to “managing” my money through a main checking account and a single online savings account at the same bank, such a spread of “money buckets” seems odd; a little frightening, even.
Nevertheless, a five-account distribution makes a lot of sense, and we’ll cover each of the accounts I’ve identified in turn:
- Checking Account
- Online Savings Account
- “Emergency Fund” Account
- “Investment Fund” Account
Next, we’ll look at how I’m going to distribute money between these accounts.
Finally, we’ll cover those 2 financial tools:
Net Worth Tracker
The posts will be linked from here, and to one another, so you should be able to jump around the series as the mood grabs you. I’m afraid that some of this will be rather US-specific, since that’s where I am right now. Hopefully the core concepts will mostly translate to wherever you happen to be.
(And once I’ve covered this, I’ll attempt to finish up on some of the productivity stuff I’ve been promising.)
Photo of an old ledger from Peter on Flickr.