Personal Finance & Budgeting by my Father

One of the foundational personal finance systems my father taught me was the 2 checking account system supported by direct deposit.  This has served me well for over 25 years and something I still use today and will teach my children.

Checking account #2 – This account is used for all known monthly bills. You have a set amount direct deposited into this account every paycheck to cover budgeted line items; every other week, not twice a month. You only have a checkbook to this account. This is for housing, utilities, car savings, car repairs, kid extra curriculars, Christmas, tithing, and anything else you don’t want to be surprised with. There is also a line item for “monthly cashflow” which is your monthly bailout. The goal should be a $0 sum at the bottom meaning every dollar you put here is accounted for. This makes your money hard to touch.. you cannot touch $1 in this account without answering for it somewhere else. This account also allows you to build up funds and “borrow” from yourself if/when needed. It gives you total transparence of your savings and bills. I do not use a savings account for this reason.

Checking account #1 – This account is used for all “remaining” funds of the direct deposit to be dumped in. You only have debit cards to this account. This account is used for all loosely budgeted items like food, gas, and entertaining. Lets face it. If the kids need to eat, you’re going to buy food. Dont fool yourself.

Having a strong and transparent system in place for your personal finances will give you the confidence to move on to bigger and more challenging financial tasks like real estate investing and business development.

“If you take care of the small things, the big things take care of themselves.

~ Emily Dickinson, 1800s