3. Automating Your Finances

Hello, and welcome to this module, automating your finances. So this is going to be a really important module to continue what we have already built up to this point. So here is what we are going to cover. So the first thing I’m going to get into is Parkinson’s law and your money. So many of you may have not ever heard of this before. Like I was saying in the previous slide, I’ve been doing this financial services, financial education, financial advisor thing for about 13 years. And I’ve discovered that this law is really, really impactful when you know how to break it, then want to get into the power of separate accounts. I’m going to explain the account organization system, I’m going to break down, automating your expenses, then establishing additional accounts. And then a couple of cows keeping things with my cash clarity. So up to this point, I want to do a recap.

And this is a very, very important week. As you can already tell, it’s a lot of work that’s being required to be done, but I want to, I want to outline what we’ve already done up to this point. So the first thing we did was we defined your three buckets. So you know exactly each bucket in how it’s defined. You put that in place. The other thing that you’ve done is you’ve completed your cash flow control template, which wasn’t just completing the template. It was defining your expenses, customizing the base of your income. You have done that. You have completed that process at this point, your income, your expenses, your variable bucket, your future bucket, your fixed bucket, you know, to a tee, how that is set up for your cashflow. You also start it and complete it. You either started or completed the daily expense challenge.

So at the end of the last module, I told you to take the next seven days to write down all of your transactions. So you can be more aware of that. So if you are rolling into this particular module right out to completing that module will congratulations. Um, and that’s also because there was a lot of work that you needed to do in the previous module, but you’re either started or you’ve completed this process. And if you just start started, continue that process. Because what it’s going to do is even more visibility. You’ve also established your, my cash clarity system and you’ve sync your particular financial accounts that you do your everyday spending with. Now, this is a pivotal pivotal thing. And you’ve seen at this point, once you’ve linked your account, how much more visibility you have and no pun intended clarity you have around your money.

And in addition to doing that, you, you also created the expense categories inside of the mind cash clarity system from your cash flow control template for your fixed bucket and your variable bucket expenses. So you have covered a lot of ground. And if you’re watching this recap and you have not done this, then you need to stop this video and then go complete these action steps before you move forward with this module, because everything in this week, just like everything else that we’ve done in the entire program builds upon itself. So if you’ve done all these things, then congratulations. And the last thing you have done on in addition to creating the expense categories as you went through, when you audit your actual spending transactions inside of the mouth, into my cash clarity system. So that way the system will automatically know if it’s a variable expense.

If it’s a fixed bucket expense, if it’s food, if it’s gas, if it’s a rent mortgage auto loan you went through and you did that. So hats off, and again, I want to reiterate, if you did not do these things, you want to pause this video, stop this video and go back to module two and complete it in complete all of these steps in its entirety. So, um, but if you’ve done those things, congratulations, I know you feel very, very empowered at this point because you have gotten your glass clean or started the process of getting your glass clean. You have established those new accounts and you have extreme clarity around your finances. So at this point, we’re just going to automate this thing and make it even better. So let’s go ahead and hop right into the first thing I want to cover and that’s Parkinson as well.

So what is Parkinson’s law and why is this even important in how does this relate to your money? Well, let me first off by start, start, let me first off, start by QUT Kenny, what Parkinson’s law is. So this is a visual resume represents [inaudible] on the effort versus the time. And, and you had the task at the bottom. And really what this is communicating is the law really means is the old adage of that work expands work expands to fill the time available for its completion. So what am I saying? I’m saying that if you just took, if you’re looking at this visual chart and then you had this much work, it would just really just take you this much effort. But if you have a lot more time, you end up spreading the work out amongst your team time. And this is almost like if you have two weeks to complete a project, you’ve been given an allocation of two weeks, but if you just sat down and did the project in a probably take you six hours, just have complete focus.

So if you just sat down for let’s just say day one for three hours and day two for three hours, you complete the project in two days, or you can just sit down for one day, focus on solely for six hours and you complete the project and six hours. But what do most people do? Most people take the entire two weeks complete that six hour projects that am I spend 30 minutes, one day, five minutes. Another day, three days don’t do anything an hour. One day. The next, you know, two weeks goes by and it took them two weeks to do a six hour project. Why is this important? Your cash? Your money is very similar. So your expenses, when it comes to Parkinson’s law, if you’re making 5,000 a month, 10,000 a month, 50,000 a month, I started breaking this down in the previous slide.

Your expenses will meet or exceed your income because your money is going to work the same exact way. You ever wonder when you were first starting out, whether you’re in college or you went directly to the job force, or you went to the military or whatever your professional background was, and you just made it happen with your meager means that you started with, and everything was paid. Everybody was happy, everything was good. And then life started happening. And then your expenses started increasing and your income started increasing, but your savings wasn’t increasing it’s because you were, you, you, you were falling victim of Parkinson’s law. So what we have to do is decide that, Hey, look, this Parkinson’s law thing is not going to control my finances, because if we don’t get a handle on it, it doesn’t matter how much money you make, because your expenses will meet and, or exceed your income.

If you don’t break the law. Now, there is a really powerful place that you, you, you, you wouldn’t really want to shift to. And I get told all the time this and I’m, I, you know, I I’ll say it this way first, before I tell you what I’m going to told what I’m told all the time. So you want to learn how to stay broke, but not, yeah, be poor. Now there’s a difference between being broken or you want to stay broke, but not be poor. And here’s what I mean by this. You can still have money in the bank and be broke from a priorities perspective, which means you already know. No. And you’ve already determined all of your different buckets. So you understand that you have money in your fixed bucket. You can have money in your variable bucket and you can be putting money in your future bucket.

And that you might be broke today in your variable bucket, but, but you got savings in the future and you get your, you get your bills paid, right? But you’re technically not broke. I mean, you might be broke from a priorities perspective, but you’re not poor because those other things that we’ve already defined is more important than spending the money. So what I want you guys to learn how to do with stay broke, but not be poor because again, there’s a difference. There’s a huge difference. You know, I have seen people millionaires like penny pinching and they have millions of dollars, right? Or they have hundreds of thousands of dollars in their savings account. But in a checking account, they may only have a couple of dollars because they understand this power. So that’s what I want you guys to really start shifting your mindset to then you, you, you want to just go out and decide.

I think you’ve already started to, didn’t make this decision, but you want to decide upfront not to be a victim of the law. So you’ve done so much to really get up to this point, but we’re going to break that law. So that way we can really supercharge our results. And then like, I’ve already said, you’ve already clearly defined your bucket. So this is going to be much, much easier. So if I was bringing this Parkinson’s law thing to you at the beginning of the, of the, of the, of this week, you might’ve gave me a little bit of pushback, but now you’ve already done a lot of things to ensure that you can really get past as Parkinson’s law. Now, the power of separate accounts and why we want to have that. Now you already kind of understand defining the buckets and you may or may not have separate accounts, but the reason why you want to number one have separate accounts is because it’s going to eliminate the payday temporary reasons.

And here’s what I mean by this when, whenever you’re paid, whether it’s biweekly weekly, once a month, whatever, right. Typically what happens is all that money goes into that checking account and you get this push, you get, ah, like you might be up late at night waiting for that direct deposit to hit, right? Oh, scenarios. They don’t hit to like two, three in the morning, right. Or it doesn’t hit til like four or five in the morning. Right. Um, and what you want to do is when you have the separate accounts is you eliminate that temporary Richfield because when you get all that money in your account at once and you don’t really define it, what you do is you start feeling like you have more than what you have. So the other thing it does when you have separate accounts, is it forces you to view your money differently because you now, you already get the buckets.

You’ve already clearly defined the buckets, but you start to look at your money and in terms of categories and you can prioritize your money a lot more efficiently versus just feeling like you have more than what you actually have. It also allows you to create mental financial boundaries. I I’ve got to say, I’d submit to you that the reason why you haven’t been successful, the way you really truly want to be successful is because you have not created financial boundaries. More specifically, you haven’t created mental financial boundaries. And if you’re in a relationship, you guys haven’t been able to have conversations about this. So what this is going to do is give you that mental, financial boundary. And then in addition, additionally, what it’s going to do is make you more conscious of your spending. So if you’re at a place where you’re in your you’re looking at your variable bucket expense, you don’t get paid until another week and you got $150 in a variable expense account.

You’re going to think twice when it comes to going out to eat $400 versus going grocery shopping, $400, you can still have a nice dinner. You can still go grocery shopping and do all that stuff in between that paycheck. So what that’s going to do is make you more conscious. And then also it’s going to force you to stay on track with your money, because now you can strategically know that, Hey, this is covered right there. That’s taken care of right there. This is good right here. And then all of this is doing is building up your financial confidence and making sure that you maintain your good credit and you maintain building credit. Um, so that’s the reason why we want to have separate counts in the account organization system as the next thing I want to get into. So now that you really understand the power of separate accounts, right?

You understand the mindset behind why we want to have separate accounts and the philosophy behind it. Let me break down the separate accounts that I recommend. And this is how this is called the account organization system. And I even have a cheat sheet for you to reference this right below this video. So I want you to download this cheat sheet, print this cheat sheet out, putting it on your, put it on your refrigerator, put it in your bathroom, put it everywhere so that way. You can really get a feel for this, this system. Okay? So the first account is going to be our bill account and/or fixed bucket account. So I’ll call the fixed bucket account of bill account and what this bill account is for, as you already know, this account is for all of your fixed bucket expenses that you’ve already defined.

You already clearly know what these are. And remember these expenses are fixed. They don’t vary the other important part about this fixed bucket that we’re going to have a specific account for only is that these accounts are tied to the maintain, tied to you maintaining a 35% or the 192.5 points in your score. So this fixed bucket acts as two things. Number one is our it’s our overhead. So to speak, to keep the lights on, to help us just keep, keep, keep saying. But number two was going to ensure that we don’t lose any of the points available to us in that 192.5 points. So we need to name and create a specific bill account. If you already have a main checking account that everything comes out of this could be that particular account. Then we want to set up a separate, a separate account for variable, for variable expenses called our variable bucket account.

So you can call this variable bucket. You can call it a variable expense account. You can just call it variable. You can call it variable bucket, or my suggestion is just call it that variable bucket that way, you know, a variable account. Am I right? Well, I think I call it variable expenses, but you just need to know that this is the variable side of the things. And again, you already know what these expenses are. You already clearly defined what these expenses are, and you’re going to have to ease yourself into this, but this is going to be for those expenses that vary in costs such as gas, food, shopping, leisure activities, all that stuff. So you want to allocate those funds when you’re paid. So you want to really align this page. So when you’re getting paid now, when you you’ve done your cashflow, you want to say, okay, on my next paycheck, I’m going to have XYZ go to the bill account.

And I’m going to have XYZ go to the variable account because you’ve already defined what does XYZ is. And you should already know what that amount is, which means that money is just automatically being a positive to your variable. Okay? Now, another thing you could do is in the previous week, you opened up either an Indigo card or a Horizon go card, and that card can be used as cash anywhere MasterCard is accepted. So the suggestion is that you have this money go to your variable account, right? They go to your variable account. Let’s just say you have 250 deposited when you get paid into your variable account and you have this $500 card. Well, what you would do is you would use the card for 250 and then when you, when you, and then in two weeks, yeah, you can take that 250 and pay off the car.

And then the next time you, you get paid, you, you do it on and off, but you just make sure that you use that card and that you pay it off using your variable bucket expenses. And what this is going to do is prepare you for responsible credit card usage, because you don’t want to keep a balance on that card. You wouldn’t pay it off, but here’s the thing you’re already spending that four or 500 bucks anyways, why not build your credit in the process and build that financial discipline. So moral of the story is you still want to have a separate check and account associated with this, with this, uh, with this particular, um, bucket. And you can use your credit card that you just establish as a way to continue to build credit and develop financial discipline. Now, the other thing that you want to do is have future bucket accounts, but you want to define these accounts.

So I just said future bucket account, but this can be anything that you feel is really, really important to you. So this is, this is the account that we already defined for saving money and things that we want to accomplish, or a big expense. So this could be that vacation account. This can be that home account. You absolutely unequivocally need to without fail, set up an emergency fund. So if you don’t already have an emergency fund account, you’re going to set up an emergency fund account. Um, and what really, I’m going to cover that on the next bullet point, but you, you absolutely what your, what your future bucket account, when to name those things that you want to accomplish in the future. So car, home, large retail expenses, and you just put money aside for that. And then a part of the future bucket account is the emergency fund.

So you absolutely have to set up an emergency fund. You want to name it emergency fund. You want to name it. Life happens because this is that life habits account that I spoke about. So when a flat tire happens, when a car repair needed is needed, when a deductible is needed, whether it’s for any type of, any of your insurances, unexpected home repairs, whatever, when life happens, brother, brother, cousin, sister, uncle, which you may or may not give your family members money because you know, you ain’t getting the money back. So if you have the money to give and you don’t expect it back, you can pull from this account, right? But the moral of the story is that you want to build this emergency fund up to ideally six months of your living expenses three months at the very least. And then what happens is, is that the acts as a buffer for you.

So you want to define that account. So what, here’s, what we’re looking at here, we have our bill account and we already know what that is. That’s our fixed bucket. We have our variable account, which is a separate checking account, right? It’s a separate checking account. We have our future bucket account or accounts. And those accounts are named car fund, home fund, vacation fund, right? Uh, Christmas fund, um, um, whatever you want your fund to be, it’s named, it’s already allocated, and money is going there and you have your emergency fund and you can call it an emergency fund. You can call it life, account, whatever you want to call it, but that’s named, but this is the account organization system. The document is right below download this document. And we’re going to define, you’re going to define which one of these is. So you already know what the first three are, bill account, variable account, emergency fund.

It’s up to you to define what you feel is the most important future bucket. And we’ll walk you through exactly where to go to, to do this, but this is the account organization system. It is very, very powerful. Now automating your expenses. So now that we’ve done this, we really, what we want to do is call all of our main bills and set up automatic payments. So I’ve already alluded to this several times, but if you have not done it at this point, your next action step is for you to call up your, all of your bills. And these are the main expenses that I suggest that you automate now, your rent or your mortgage. If you feel comfortable doing that, and you know, you’re going to be paid on the first or whenever the mortgage is just had that thing on autopilot, if you still want to make that payment and stroke the check then fine.

But my suggestion, you already allocated your cashflow. You already know when you’re getting paid, go and automate that. The next thing is utilities. So utilities is one of those things that you want to watch, but you still can automate. You can automate those things to make sure that they’re taken care of the main thing you want to also make sure your automating. And you have coming out automatically is your insurance premiums. So you want to make sure that you have that insurance just in case life happens. You never know, um, especially the auto, your life insurance, your, your, you already have your, your credit monitoring. It’s technically like monitoring credit insurance. So you want to have all that stuff on autopilot. Um, all loan payments automated all of them, the payment student loans, auto loans, credit builder loans that you established at this point, absolutely the credit builder loans, those need to be automated.

And there even though you’re saving money. It’s reporting to your credit file. So it needs to be automated. And then all minimum monthly payments on your credit cards, every minimum monthly payment needs to be set up. So you went through and you set up some, some, some accounts in the 20K blueprint, and those accounts may already be established, but I want you to go ahead and make sure that those payments are automatically set up to come out from your bill account automatically. Now, the thing about the, the, um, the, the Horizon card or the Indigo card, I still want you to set up minimum monthly payments to be auto drafted from those accounts from this, even though you’re going to pay off the balance in full we using your variable expense account, just don’t eliminate failure as an option, right? Just, just go ahead and do it and make sure it is automated.

Make sure this is taken care of these expenses just happen because you do not want to miss a payment and you forgot about a payment or whatever to happen. And the next thing you know, you got a 30 day late and then your score drops, right? So that’s how we would have to do with automating our expenses. Now, the other thing is, is now we got to feel for the accounts. We understand all of this. Now what I’m going to do is break down, establish some additional accounts. So what we want to do is have an account inventory, right? So we want to look at, um, our current accounts. So if you only have one checking account and one savings account, then you definitely need to you at this point, you get that. You need to open up another account, but if you already have a couple of accounts, then what I want you to do is go through and look at the account mix that you have and start defining those accounts that you already have.

The other thing you want to do is make sure you name the account. So I think it goes without saying the importance of making sure you name each account, and then you want to make sure you establish the following accounts. If you don’t already have them. So you want to establish that variable account. So if you don’t already have a random checking account that you’re not using, you need to establish a separate variable checking account. All right, you also want to set up those future goals or those future bucket accounts. So it can be a checking or savings. My suggestion is set up as a savings and just have that money being put there on a monthly basis or biweekly basis. Whenever you’re you’re, you’re set up. The other thing you want to do is establish an emergency fund, right? You want to go ahead and establish a savings account as an emergency fund.

So if you already have a savings account in a financial institution that you’re comfortable with, then you can move forward with that particular financial institution. And then just set that up. Now, one thing I want to really, really outline about the emergency fund, because again, I’ve been doing this for awhile, and even again, I speak from experience. You want your emergency fund to have quick access, but not be easily acceptable access, acceptable I said acceptable when I mean is accessible. Please forgive me, but you don’t want it to be easily accessible. And here’s what I mean. You don’t, you want to be able to say, Hey, look, if I can access my emergency fund, it might take three, four days for me to get access to that cash. It can’t be as easy as a transfer at your online banking. You need to set up an emergency phone with they separate place where you have to kind of go through a hoop and it needs to be an emergency fund, but you can still get access to it quickly.

So that’s really what I mean that you want to go ahead and establish that. Okay. So, um, this is how we want to make sure we establish these additional accounts. Now here’s the good news. So I work with a company called CapitalWise and they have something called CapitalWise cash. Now this is totally optional at this point, if you already have a particular financial institution that you bank with, or that you you’re comfortable with, you can move forward with that. But I’m going to cover a couple of key benefits of establishing these accounts with this particular vendor, because it’s really powerful. And up to this point, I’ve been doing my best to recommend things to you that are going to be really, really powerful. So the first thing they have is a checking account. Now this checking account, assuming you’re not in check systems, does not have, what will any ATM fee that you get is reimbursed all over the world.

So it doesn’t matter where you pull out money from, it’s all it’s always going to be reimbursed, which is huge. This is going to save so much money. If you pull out cash. The other thing is no overdraft fees, no account fees and no minimum balances with this checking account. So this is extremely, extremely powerful. I mean, this is huge. Um, the other thing is that they have a CapitalWise cash account and the way this CapitalWise cash account acts as a savings account, essentially. And you can start with as little as 10 bucks, um, you can earn up to 1.8, 3% APY on this savings. It may have gone. It fluctuates. So, um, last time I checked, it was at like 0.40 basis points on your savings, which is significantly higher than savings that you’re getting at a, at a normal bank. Uh, but it can go up to 1.83.

Um, so this is really, really powerful. And also what it will do is give you the ability to set up these other future goal accounts too. So right below this video, I’m going to give you a cheat sheet. Um, it’s called download capital cash. It’s it says capital cash, cheat sheet. And I’m going to walk you through a step-by-step how to open up your account with this particular, um, place and financial institution. And then it’s going to walk you through step by step, exactly how to open up a checking account, how to open up a savings account. And then if you need to establish those future accounts, how to establish those accounts as well. So this is really, really powerful. I’ll put the cheat sheet down right below this video. And then the last thing I want to go in and recap is in the last video I had you download your, My Cash Clarity, um, system, but I’m going to make sure you downloaded the app.

So if you haven’t already make sure you, you download the, the app, whether it’s you have an Android or an iPhone, um, if you have an iPhone go and download, the app is going to be named Right Capital. Um, but it’s still associated with our, My Cash Clarity system. Um, the other thing you want to do is make sure access in a system, you can just access it from the dashboard, says My Cash Clarity and or the email that you received, or we can just go to the app. The app is really, really easy to use. Um, and then make sure if you haven’t already, you sync your main checking savings and credit card accounts at this point, I’m assuming you’ve done this, but if you haven’t, I want to reiterate making sure you do this all right. But with that being said, there’s a lot of action steps for you to complete with this particular module. Let’s get them done. And if you need to establish those separate accounts and you don’t know where to go, you can go ahead and download the cheat sheet, and I will walk you through step by step, exactly how to establish those accounts with that particular vendor. Talk to you soon.