The EXACT System I Use to Manage Every Paycheck

Transcript:

On this episode of the Personal Finance Podcast, the exact system I use to manage every paycheck

What's up everybody, and welcome to the Personal Finance Podcast. I'm your host, Andrew, founder of MasterOfMoney.co. And today on the Personal Finance Podcast, we're gonna be diving into the exact system I personally use to manage every paycheck. If you guys have any questions, make sure you join the Master Money newsletter by going to masterofmoney.co/newsletter, and don't forget to follow us on Apple Podcasts, Spotify, YouTube, or whatever podcast player you love listening to this podcast on.

And if you wanna help out the show, consider leaving a five-star rating and review on Apple Podcasts, Spotify, or your favorite podcast player. Now today on the show, we are gonna be diving into the exact system I use to manage every single paycheck. But before we dive in, really quick, just in case, to get this out of the way, if anybody is interested in working with me one-on-one, we are launching one-on-one coaching, and we're gonna do a very specific program for people in one-on-one coaching.

If you are interested in that, shoot me an email, andrew@masterofmoney.co, and let me know you're interested. You have to make over $100,000 per year to qualify, and in addition, you also have to be willing to put in the work. I'm gonna give you some, uh, systems to, and processes to put in, and you have to be willing to do the work in order to be able to qualify.

So in any event, I am... If you are interested in that, let me know. And if you don't qualify or you don't meet those qualifiers, join Master Money Academy, because I literally coach you in Master Money Academy as well, if you have not seen that so far. All right. So let's dive into the exact system that I use to manage every paycheck.

Now, my goal with this episode is to make this simple for a lot of you out there so that you understand, oh, this is the order I should be thinking about my money when it comes and starts to trickle down to me, so I can understand where my dollars need to go. And the problem is, most people run their paycheck in the wrong order.

Most people flip this entire script. But instead, I'm gonna show you exactly how to do this. Now, one big key to this entire system, before we dive any deeper, is I want you to understand how to automate your money. If you don't automate your money currently, you're gonna see how automation works with every single thing that I do.

But you really need to get your money automated. This is why in Master Money Academy, we have a program in there called Literally Automate Your Money in One Weekend, because we want you to get some of the financial foundation done as quickly as possible so that you can get the ball rolling on investing.

We teach you investing in Master Money Academy That's our entire goal, and I want you to get to investing as fast as you possibly can. And as you see, once you have the foundation set up and you understand kind of where you are and what you're doing currently, then we can really get the ball rolling and get more dollars invested so that you can start to build wealth towards financial freedom, so that you can take those extra dollars and actually become financially free.

That's where the progress is made is through your investments. But we gotta get that financial foundation set up first, so then you can get to the point in time where your investing is working on autopilot. Now, the way you manage your money is gonna be really, really important because if you can get money out of your hand so you don't go and spend it, boy, oh boy, is that going to change the way that you think about this.

And so when it comes down to automation, I want you to automate a couple of different areas. One is I want you to automate your bills. If you are manually paying your bills, as you're gonna see in a second, I don't want you doing that. I want you to automate your bills and then checking to make sure things get paid with a very simple system.

Number two, though, is I want you to make sure that you are automating your investments. And number three is I want you to be automating your savings. This is gonna be the three areas that once you get all three automated, all of a sudden you start to build wealth on autopilot, you start to pay down debt automatically.

You have the ability to do a lot of really, really cool things. Now, this order priority is, in my opinion, in order of importance for my situation. And so I want you to think through, okay, well, is there some things that you really want to make sure that you are working on? If there's If there's something you're really focused on right now, you can start to think about the order priority.

And if you have a question on this, shoot me a question over and I can help you. Uh, but this is gonna be one of those things I think for many of you could be very eye-opening. I would also love to hear down below for wherever you're listening, you know, what your order of operations is as you start to listen to this episode.

All right. That's enough yapping. Without further ado, let's get into my exact system on how I manage every single paycheck. So the first thing I do, step one, is every single time money hits my account, I wanna make sure I get it out of that account as fast as I possibly can. Now, you may be saying to yourself, "Andrew, what are you talking about?

You wanna get money out of your account?" Yes. I want to move money out of my checking account as fast as I possibly can. Your checking account is just a flow-through account. That's all you should see it as. Money flows through your checking account and goes to the places it needs to go. And so the first place I want my money to go is towards investing.

Investing should be treated as a bill. Investing should be something that you do first before everything else, and this is after you have your emergency fund set up and after you have your high interest debt paid off. You need to make sure that you are getting your dollars investing. So this, by far, the most important thing.

This is called paying yourself first. See, many people do this in the reverse order. They start to spend their money on bills, or they start to spend their money on fun things before spending money on themselves. But when you pay yourself first, that means you can keep those dollars, but also get those dollars working towards your financial future.

And so this needs to happen as the very first thing. Now, whether you get a 401k match or do other investing is gonna be how you want to think about this. Now, a lot of times before you even get your paycheck, things like your 401k contributions are going to come out. Now, how many of you out there listening to this podcast have ever looked at your 401k balance and said to yourself, "Wow, there's a lot more money in there than I ever thought there could be"?

Well, the reason for that is because you automated this, and the process of automation allows you to have way more cash on hand than you ever thought there would be. So your 401K contributions are gonna come out first anyways before they even hit your paycheck. And so what I would recommend is trying to look into things like your 401K, and I like the Roth 401K best.

And so that is gonna be for me what I am really focused on. Now, the Roth 401K, if you don't know, is similar to a 401K in contribution limit, but very similar to the Roth IRA in how it operates, meaning that money goes in that's already been taxed, meaning it came out of your paycheck and was taxed, then it grows tax-free, and you can pull the money out tax-free.

Now, this is very powerful because you can get $24,500 per year into a Roth 401K. Why is that great? Well, if you start at the age of 25 and start maxing out your Roth 401K, I know it's a lot of money, but let's say you're making good money, and you are able to max out your Roth 401K from the age of 25 to the age of 65.

You would have $10.8 million inside of that account at a 10% rate of return. And guess what percentage of that money is going to be completely tax-free? It's gonna be the growth. About $9.8 million is going to be the tax-free growth. Literally, you never pay a dime in taxes on $9.8 million. Plug that into your tax bracket, and you will see the amazing savings of a Roth 401K.

The ability to get $24,500 per year, having an employer match, having the ability to really fund and front-load that cash is really awesome. So I love the Roth 401K, one of my favorites. You also have the traditional 401K if you wanna go that route. So these are accounts where money goes in Money grows, and then when you pull the money out, you get taxed.

And the thought process here is, well, hopefully when I'm retired, I'm gonna be making less money, so I'll be taxed at a lower rate than during my working years. And so that's why we wanna contribute to something like a 401k, for example. Now, the 2026 limits for the 401k are also $24,500 per year. Another place that you could be contributing to is the HSA, the health savings account, which has triple tax benefits, meaning money goes in tax-free, it grows tax-free, and it can be pulled out tax-free, as long as you have a qualified medical expense.

But you must have a high deductible health plan to qualify for an HSA. So we used to call this the super retirement account because it has those triple tax advantages. And so having an HSA as part of your arsenal, as part of your retirement plan, can be really, really important. In addition, one of the other places that I love is obviously the Roth IRA.

And for many of you out there, the Roth IRA is a wonderful place to put your dollars because it gets $7,500 per year into something that grows tax-free, and you can pull the money out tax-free once it's in there. Now remember, the number one mistake that people make when investing their dollars is thinking that the account is their investment.

No. Instead, you need to still invest the money inside of that account once you have those dollars working for you. Now, you may be saying to yourself, "Andrew, how much do I need to be investing every single month?" Well, our goal always here at the Personal Finance Podcast is to start you off at 20%. And so one of the things that I want you to do is as you begin to think about that 20% number, you may be saying to yourself, "Well, I can only invest 10% right now."

Well, what we need to do is increase our income, decrease our expenses. Increase our income, decrease our expenses. Say it over and over and over again to yourself because if you can increase your income 10% and decrease your expenses 15%, all of a sudden you have a 25% delta. That gets you 25% more that you could be putting towards wealth building, and that's what we want you to do.

So as you start to think about this, I want you to figure out ways, how could I get closer to increasing my income 10% this year and decreasing my expenses by 15%? Now, you can only decrease so much. You can increase infinitely every single year. And so once you get those expenses under control, then your main focus should be going towards that income.

Now, if you're starting from zero and you don't know what to do, just start by investing 1%, then 2%, then 5%, then 10%, and start gradually getting your dollars working as you get comfortable. That's why in Master Money Academy, I tell people in there, "You could start from zero, and I'm gonna be able to help you here."

I'm gonna be able to transform your finances and help you get started investing because that's my goal, is to get as many people investing as possible so they can become millionaires. Now, why is this important for me to do first? Because I wanna get my dollars working for me so that I don't have to think about this anymore.

Your money can work so much harder than you ever can, and so this is why it's number one on my personal list. Now, if you are still In high interest debt, meaning if you have credit card debt, if you don't have your emergency fund funded yet, those are the first two things you need to do in your foundation.

Then you can get to the point in time where you're investing first. So still focus on those two if you haven't done those two yet. But in my situation, I invest first, and I'm showing you exactly what I do. All right, what is step two? Step two for me is to pay down any debt that I have. So I have a number of different ways I get paid.

I have businesses that pay me. I even have a W2 that pays me. And so because I have all these different ways I get paid, I manage money on a weekly basis instead of a biweekly or monthly. So if you're biweekly, this is still gonna work. If you're monthly, this is still gonna work. But the second thing I do is I pay any debt that I have on hand.

And so for me specifically, one of the biggest things I do on a weekly basis is pay off my credit cards. Why? I put as many bills as possible on my credit cards, and I don't like for those credit cards to get a larger balance than they need to have. And so for me, it's very easy to manage my money without having to track every single penny by having the ability to be able to go into my credit cards bills, scan them to make sure that everything looks okay, and then pay them off in full every single week.

I even do this with my business credit cards. I pay them off on a weekly basis. Does this help your credit score, Andrew? No, it doesn't help your credit score. It is just something that I do to stay on top of my money. And I promise you, if you have never done this before, and you feel as though your credit cards get way too big at the end of the month, and you say to yourself, "Well, I don't know how I spent this much money," paying them off weekly will solve your problem.

My friends, I cannot tell you how important it is to understand that paying them off weekly will solve a lot of different problems for you because the last thing you want is to have revolving credit card debt. Let's say, for example, that you put $10,000 on a credit card over the course of a month or two, and then you decide, "Okay, I'm gonna go pay off my credit card now," but you only have $7,000 in your account.

Well, now you have this $3,000 lingering here. That's A, going to start collecting interest, but B, it's gonna be what we call revolving credit card debt, meaning every single month you're going to have to deal with this additional debt in the back of your head. And maybe some months you pay it off, but then when you pay it off, you gotta pay other bills, and then all of a sudden it just comes back again on your credit card statement.

So it's revolving. It's always there. It feels like it's never going away. So we wanna avoid that. The way to avoid that is to pay off credit cards on a weekly basis. Maybe you have a HELOC or something like that. Making sure that you are paying this on a weekly basis can be really important. Or maybe you want to pay your mortgage on a weekly basis to try to get some extra payments in there.

I love paying debts on a weekly basis because I think it's a very interesting way to get ahead on a lot of your finances. Now, I've had people do this where they're paying it off on a high interest car loan, for example, and they pay off their car in like a year and a half. I've had people do this with their mortgage before, and they're paying it off on a weekly basis and they're like, "Hey, this is making me motivated.

I have a high interest debt on my mortgage. I just wanna get rid of this thing." And they start to really accelerate their path to paying this off. And so looking at some of the extra cash that you have on hand and paying off debts is really, really important. Now, if you are currently in debt- and you're trying to decide between the avalanche or the snowball method, we actually are building out this, and it might be ready, so check the show notes.

It might be ready by the time this episode airs We're building out what I am calling the Millionaire Blueprint. The Millionaire Blueprint is going to actually have all of these different ways to manage your money, and inside the Millionaire Blueprint, completely free by the way, it is going to have a debt avalanche calculator and a debt snowball calculator so you can decide which one is the best option for you.

For most folks, I think psychology needs to come into play, and paying the debt snowball or going with the debt snowball method is gonna be a great way to do this. Now, if you don't know what the difference between those two are, the debt avalanche means that you pay off the debt with the highest interest rate first, and then go to the next debt with the next highest interest rate, then the next one with the next highest interest rate.

Whereas the debt snowball says that you pay the lowest balance debt first, pay minimum payments on everything else, and then once the lowest balance gets all the extra money that you have on hand and it gets paid off, then you roll all of those payments into the next lowest balance. And all of a sudden it's just like a snowball effect where you're paying off this debt faster, you're staying motivated because you are paying off these different debts.

Whichever one you choose, I think both of them can work well. It depends on if you're type A or type B, and if you haven't heard that episode, make sure you check that out. But many times I think the snowball method can work for most people because it keeps you motivated. So if you have any other debts that are out there, I like to do this second, and I like to put my debt payments close together in clusters, and you'll see why in a second when I talk about bills, because I think these clusters are really important to stay on top of your dollars.

So let's get into number three, because that leads us right into the third thing that I do, which is paying bills. So bills, I usually try to set up my bill payments three days after payday, okay? So when you think about bills, most people don't know this, you can move the date of your bills, and almost every single bill that you have can move to a different date.

Now, a mortgage or, like, a rent payment, those are more difficult to move, and so what you can do is move your bills closer to those specific bills so you have one bill cluster in place. Now, I call these bill clusters because you can cluster them together so that after you get paid, you already have the cash there, then you can have a little bit of time to get your dollars into your investments, then you have the weekend coming in, then maybe it's Monday or Tuesday you start to pay your bills after you've moved all the other money to the places it needs to go.

And so once you have these bills in place, it also makes sure that your money clears for holiday weekends or whatever else. If you work for a small company, for example, sometimes payroll takes a couple of extra days to clear on holidays, or if somebody messes something up. You don't wanna have to deal with any of that.

So instead, making sure that your bill clusters are two or three days after the date you get paid can be very, very helpful for a lot of folks out there. So I really, really like this process. So let's say, for example, you get paid biweekly. One of the things you could do is you could put your bill cluster near the first of the month and near the seventeenth of the month.

That means that you can then spread out these bill clusters enough that are going to allow you to know- So hey, I'm gonna have one cluster on the, the first, one cluster on the 15th. And this is one thing I like about Monarch Money too, because you can kind of see exactly where all of your bills fall on their calendar.

So Monarch Money has this calendar where you can visualize all your recurring payments and all your bills, and you can see exactly where those bills are gonna land. And then you can go identify, oh, I need to move this one to the 17th, or I need to move this one to the first, so that all my bill clusters are within the same, you know, two, three, four days, somewhere in that range.

This allows you to not have a bunch of surprises throughout the month. This allows you to make sure you can manage your cash flow a lot easier and ensures that you just have extra cash on hand once all of these clusters come through. So every fixed bill, if you can move it into one of these clusters, you could do twice a month, you can do once a week if you want to, and/or you can even do this in a way where it's once a month and just having all of your bills clustered surrounding, you know, that first, maybe it's, you know, the 28th, 29th, 30th, 31st, and 1st.

Uh, clustering all those bills together allows you to make sure that you are on top of your money. But you just gotta make sure you got enough cash on hand when you start to pay those bill clusters. Now, one of the things about these bill clusters is you can start to ensure that you have the cash. If you know how much your bills cost every single month, if my Type A folks, shout out to my Type A folks, if you are having fun tracking your money and you know how much you spend every single month, or if you're Type B and you just calculate this number once so you understand where you are, then you can have the money there, cash on hand, ready to make those payments.

And so automating and making sure that all your bills are on auto-pay, and then understanding just how much your bills are every single month, and then clustering them ensures that you don't have to really budget every single line item if you don't want to. And I know for many of you out there, you may not want to.

All right. Next, one of the things that I would do, before we go to the next thing actually, is one of the things that I would do is also think through a paycheck cushion. So if you can get to a point in time where you are paying this month's bills with last month's money earned, getting one month ahead in terms of how much you have on hand in your checking account, that's gonna really help you when it comes to automation so there's no surprises and nothing that really just comes and bites you.

So by paying off that credit card every single week and then clustering up those bills, you can see how you can start to manage your money in a way that's simple. Listen, this stuff isn't hard, but this stuff's not taught to you, so it's not like you're gonna know this stuff unless somebody teaches you.

That's why your boy is here. I'm here to teach you this stuff and teach you how to manage your money so you don't have to just look at spreadsheets all day and just na, na, na, na, na, na. No. Instead, you can make sure that you're living your life and having a little bit of fun, too. Now, I know my Type A people, you like your spreadsheets.

Nothing against that. But for my Type B people, I want you to be able to look at this in a way that is helpful, okay? Next is the emergency fund. So I still, even though I have a fully funded emergency fund, I still like to contribute a little bit more. I like to pour a little bit more pixie dust on my emergency fund.

I like to throw a little extra cheddar there. And so a lot of times when I am, you know, managing my money now, the fourth thing I will do is make sure money's going to my emergency fund. Now, I don't actually physically do it. It's automated, obviously. I have a high yield savings account where my emergency fund is automated, and if you wanna see my favorites, by the way, we will link them up at the top of the show notes so that you can check those out.

But my favorite high yield savings accounts many times have buckets. So Ally is one place I have one, SoFi is another place I have one. There's a bunch of amazing ones out there. So this is a way for me to start to really be able to get some dollars going. And so I like my emergency fund to progressively grow Why?

Well, there's two reasons. One is my plan long term is to have a much larger emergency fund by the time I hit retirement age. I don't know when that's gonna be. I love this too much. I love, you know, helping you guys with your money, and so many times, uh, I say to myself, "I don't know if I'm ever gonna retire."

But as we begin to look at some of this stuff, it is really, really important to make sure that I am still growing my emergency fund because in retirement I wanna have a couple years of cash on hand, and so the only way to do that is to slowly fund your emergency fund. I have this big, hairy, audacious goal to have five years of cash on hand just in case that the market pulls back in my first couple of years of retirement.

I got the cash just there. Or anything else happens in retirement, I got cash just there. And so for me, I continue to sprinkle a little cheddar every single month into my emergency fund. Think about your emergency fund as a big taco, and you're just throwing a little extra cheese at that taco, and that cheese is melting and it's getting all nice and gooey, and I don't know where this example's gonna go.

I feel like I'm just get- lost in this example here. Throw some

extra cheese on that emergency fund even when it's fully funded if you want to save it for retirement. That's enough weird examples from me today. So next That's one thing I keep doing. So it's automatically transferred, and then my goals are, are there. I review it every single year to say, "Hey, am I putting too much in here?"

And sometimes I am, and then sometimes I'm like, "Nah, I'd rather just get these dollars invested as well." So sometimes for the long-term dollars, I think to myself, "Okay, well l- why don't we just get more of this in a brokerage?" And because it's for the long term, and so many times I will make adjustments like that, is I will send it over to my taxable brokerage instead of just keeping it in a high yield savings account.

And then at other times, when I have to use my emergency fund, I wanna make sure I'm peppering some extra cash there and adjusting that based on, you know, usage of emergency fund. Which guess what? I've used my emergency fund a bunch of times this year because a lot of things have happened throughout the year that I did not anticipate.

Like, a great example of this was, uh, I think I just talked about this on a recent episode, but we had, like, $1,000 sprinkler bill that just popped up. We had to replace a bunch of things in the house that popped up out of nowhere that were just needing, needing repairs. Uh, we had to do some gutter moving, and there's just all kinds of stuff that we had to do around the house that were just, you know, stupid stuff that I hate spending money on.

But you have to use the emergency fund if you don't have the allocation there. So that is the thing to think through as you start to, to begin to do this. Now, what counts as an emergency? Things like job loss or medical expenses or essential home or car repairs, those are all really important and are emergencies.

What's not an emergency is the holidays or a concert or things that are on sale. Those are not emergencies, so make sure you understand what an emergency fund is and what it's not. When I get with people one-on-one, I make them create an emergency fund document that says exactly what an emergency fund is, and their family agrees to this, so they don't just spend their emergency fund on something that's ridiculous.

Okay, next. So the next thing I do is I go and set up my savings buckets. Now, my savings buckets, this is for fun stuff, okay? So for enjoyable stuff, for stuff I wanna spend money on. So, like, this also falls into play of, like, spending money, stuff I wanna just blow money on, that type of thing, because I've got my wealth building stuff taken care of, I've got my debt stuff taken care of, and my bills are taken care of, so now it's time for Andrew to have a little bit of fun.

Now it's time for Andrew to go out there, and maybe he wants to buy himself a brand-new driver so that he can, you know, hit the ball right in the water. Or maybe he wants to buy a brand-new putter, which I recently just bought, that I three putt every single time on the green. Or maybe he wants to go and, you know, buy himself a boat.

Shout out to Master Money Academy for our boat reference here. But there's a lot of different things that we could be doing. There's a lot of different things that you could spend money on that you enjoy. Maybe you like to go out to eat more often. Maybe you wanna buy a new pair of shoes. Maybe you wanna buy the new iPhone.

And by the way, if you are not debt free and you go and buy that folding iPhone, I'm gonna come through that iPhone, and I'm gonna tell you Bad choice, my friend. So I think that's one of the things that we need to consider as, as we go through this. So my savings buckets, the way that these work, is I have these savings buckets set up for like longer term fun goals.

So one is for vacation, one is for, you know, if, if my wife and I wanna do something, uh, cool, like we, we have all these different savings buckets for things we wanna do. I have one set up in a brokerage account that I talked about recently on an episode for my vacation fund brokerage account that I have set up.

I have one for like a boat fund. I have one for a watch fund. I wanna get a couple of nice watches that I can hand down to my kids when I pass away, uh, as like a keepsake, a family heirloom type thing. So there's a lot of things like that that I've been saving in. Uh, and so that's where my savings buckets goes, is, is right after I make sure I take care of everything else.

Those are some of the things that I do. But this is also the time where like I spend money on stuff that I want. You know, if I wanna buy the random stuff that I like to buy, uh, this is the timing where I do that as well. And so it's spending money, guilt-free spending, that, whatever you wanna call it, that's exactly where it comes out of.

All right, step six. This is the next thing I do. When it comes to step six, now I set up these savings buckets, these additional savings buckets for repairs. So what I've been doing lately, and I've really enjoyed this, is I have set up... And I've done this for years, not lately, but I've set up these savings buckets for specific repairs that I know are gonna come up all the time.

So things, for example, like car repair. I built a car repair fund. Over the course of a year or two, I put about $5,000 in a car repair fund, just so when any car has an issue, I don't really have to think about it, and I don't have to decide, oh, I gotta recalculate my emergency fund and do all this stuff. No, it's in the car repair fund.

You know, I just send money to that car repair fund every single month so that I have it available. Secondly is a car replacement fund. That's the other thing that I like to have on hand there, where I have this money going into my savings bucket that's going to allow me to replace a car and pay cash for the next car when the time comes Then I have another bucket for home repairs, and that's for, you know, anytime a home repair pops up or in a...

This started because of the last couple of months where I've ha- I've needed more home repair funds, and so I've actually increased the amount, uh, needed for th- that home repair fund because there's just a lot of things that happened over the course of the last year that I feel as though I need. If you're trying to decide how much to put in your home repair fund, look at how much you paid for the home.

Do one to two percent. That's kind of the easiest route to take there. Uh, and then you can kind of adjust based on how much you have in there. If you get like ten grand into a home repair fund, that's pretty good unless you feel as though you got a roof coming up or painting or some big CapEx thing, capital expenditure, that could be coming up later on down the line.

Another one that I like to do is like a medical or deductible bucket that just allows me to have that cash on hand too, just sitting there just in case like I need it for if I need to use my whole deductible. At some point in time, I would like to have that whole thing funded where I just have the cash on hand there that I can utilize.

You could also put this in, in your HSA if you're not maxing it out. That's another place that you could put these dollars. If you have pets, that's another great place to, to have a pet bucket, making sure that you are taking care of that or kids things, you know, the... If you have kids, you know, making sure you have a kids bucket that allows you to kinda get a cushion there.

Because all of these different buckets allow you to make sure you're not just paying a bunch of cash out of pocket that you don't anticipate. Christmas bucket is another one, uh, meaning that you take how much you spent on Christmas every single year, you divide it by twelve, and that's how much you put in that bucket every single month to make sure that once you get to Christmas time or holiday time, then you just have the money there.

And so these are just some of the buckets that I really like to use and really like to think about, uh, just to have extra cash on hand. Now, I know we're talking about a lot of different things here. Like everyone else is at different places in time, but if you're really trying to get ahead, this is the ultimate place you wanna get to is, is doing the things that I'm talking about here so that you have the cash on hand to protect you against anything in life.

You have your emergency fund, but you also have these additional buckets that allow you for additional protection if you want it. And so just sprinkle in a little bit more into those buckets. Even if it's twenty-five bucks, you're gonna be amazed at how much these things grow over time. I usually put small amounts of money in these.

Like it's not a lot at all, and over time, when I don't use them, they just grow to thousands of dollars. And it's really neat to see the growth, and it's really neat to, to see what happens here. Even if you have three hundred bucks in there and you have a five hundred dollar car repair, you're gonna be so happy you had three hundred dollars to take care of the car repair, and now you only have to come up with the extra two hundred bucks.

It's not a big deal once you start to see stuff in small amounts of money growing, even in a high yield savings account, can really start to add up over time. It just helps protect you. Just putting it in these other little places after you have some fun though. Like these are luxuries to have. Uh, but after you have a little bit of fun, it's, it's great to do that.

And you don't have to worry about money anymore once you start to do this kind of stuff, and I think it's really, really important to think about it. Next is kids savings and future goals. Okay? So future goals are things that are gonna be bigger ticket goal. Let's say you want a vacation home, or you want to make sure that you have a future goal when it comes to, you know, stuff like that.

Maybe you want to take a sabbatical, or you want... You're saving for a wedding. These types of things you can start to put in future goals. This may be a little higher for you if it's, like, a high priority thing. Like, if you're saving for a wedding and it's over the... It's in nine months, and you need to make sure you're prioritizing this, this may be jumping ahead of a lot of these different things.

But this is the area where I do it currently, is I just start to kind of pepper money to here, uh, and, and add money to these funds when I see fit. And then kids savings, obviously, I automatically just save or invest my kids' money into, uh, our systems that we talk about all the time. And so when I do kids investments or 529 plans or those types of things, we are doing those in a way that, uh, it makes sense and, and is automated.

We just had multiple master classes that are saved inside Master Money Academy if you wanna check out how to invest for your kids or how to save for a 529 plan. We have multiple classes talking about that, uh, if you are thinking about that or are interested, uh, make sure you check that out. And then we have step eight.

Now, step eight's a fun one because this is the area, once all of these things are done and once I've completed all these things, I put this in my invest more category. Meaning that, you know, once I've done all the things that I wanna do and then I want to invest more dollars or get more dollars working, if you have extra cash on hand or if you've increased your income and worked really hard to increase your income to make sure you have extra cash on hand, then you can start to invest more.

And maybe you can't do all these steps yet. That's okay. But I want you to see ultimately where this can take you and where this can go. Because in my invest more category, I've already hit my retirement goals and, like, the things I wanna do in step one. And so in this category, you could do stuff like maybe you wanna invest in crypto.

Maybe you wanna buy a little gold. Maybe you wanna head on down to Costco and get one of those Kirkland gold bars or maybe those Kirkland silver bars. I'm thinking about doing that with my kids and kinda taking them down there and having them each buy a Kirkland silver bar. I'm not gonna buy them gold, but silver bar, 'cause it's, like, seventy bucks, and it'd be a good lesson on just seeing commodities, feeling, touching, holding, tasting, you know, those types of things.

Not tasting, but we'll get back to that later. Uh, but anything else that's out there, uh, that could be, you know, of, of interest to, to them. So I think there's just cool things that you can do like that. Uh, if you're interested in Pokemon cards, go for it. I don't care. If you're interested in buying more stocks like I am, that's mainly what I do, is I buy a lot more stocks and investments.

Uh, that's something you could do. If you're interested in buying real estate, if you're interested in buying, you know, businesses, if you're interested in all these different things, this is the time to do it, is the invest more time and starting to put cash aside for stuff like that. Now, this could also fall into the category if you're, like, thinking about real estate.

It could fall into the category of savings and future goals Absolutely. Nothing wrong with that whatsoever. Uh, and so I think for this, this could be an area where you think through, uh, exactly what your priorities are and then make adjustments based on those. But these are my priorities. These are the ways that I am actually thinking about this and how I'm actually managing this.

Now, let me give an example of this. So I did a walkthrough and put together an example of someone, let's say someone had a $6,000 paycheck. Well, if you followed my system on how this would work, I want you to kind of think through exactly how you would do this, okay? So my example is someone with a $6,000 net paycheck.

They get it twice a month. They are a dual income household with $8,000 in credit card debt and no emergency fund yet, okay? So one of the things that you could look at is on day zero, you get your 401match, and you take $300 to your Roth IRA. On day one, $1,200 goes right to the credit card. Day two, $2,800 goes and auto-pays your bills.

Day three, $500 to the emergency fund until it hits that initial emergency fund goal of having one month of expenses. And then, and then you can start to spread out some of that money once the credit card is paid off. So like, for example, if you have the credit card paid off, then you go to day three, which is $200 across, you know, things like vacations and Christmas buckets, or $150 towards your home and car repair buckets, or $150 towards your 529 plan buckets.

And the remainder of the money can stay in checking, or it can add a buffer, or you can just spend it on things that you actually enjoy. And so that's an example of something that you really could think about and how you could set this up in a way that makes sense for a lot of people. And so if you wanted to set this all up in a weekend, like if you wanted to have this system set up in, in one or two days, it doesn't have to be a week, it can be a weekday obviously, what I would do is look at, okay, first, go look at the show notes down below.

Open a high-yield savings account, because this is an important, uh, category that you need to think through. Then set the 401contribution limit with your HR department. Making sure that you're contributing to your 401is really important. Scheduling transferring money to your IRA or your Roth IRA, making sure you schedule your debt transfers, your savings bucket transfers, and your payday transfers are all really, really important.

Then you can move every single bill you have over to auto-pay and then review it once a quarter. Making sure that you are on top of this is, is also important. And when you look at your paycheck routine When you think about how this is gonna work, one of the things that I would do is I would then ensure that this works for you, and if you need to move things around, you can.

But spend 10 minutes a month just thinking about, okay, is this working? Is this working properly? Is everything automated? Is everything working the way that it should, or should I adjust a few things? That's where you really need to think through this and, and reflect. Be introspective when it comes to some of this stuff, and make sure this is hitting your values exactly where it needs to go.

Again, we have the Automate Your Money in One Weekend challenge inside Mastermind Academy if you're interested in that. But really, I just want you to work on this so you can really get to the point in time where you feel as though you're comfortable with managing your paycheck. Now, perfect. That is the exact system I use to manage every paycheck.

Again, it's investing first, making sure you're taking care of your retirement and future you, then making sure you're taking care of debts and bills, funding that emergency fund, and then from there, getting to the point in time where you can start to spend money on things that you enjoy. So I really hope you enjoyed that breakdown.

Now I'm gonna jump into a couple of your questions. All right, so the first question comes up. It's from Daniel. So Daniel says, "Andrew, one thing that I fight myself on is the fact that my emergency fund of six months is just sitting in a high-yield savings account getting 3.75%. I know what you're supposed to do.

I understand that. But what I would like to do, and what I fight myself on, is that that $45,000 I could put in a taxable brokerage account, invest it, and possibly get 7% to 10% a year. Because let's be honest, 3.75%, yeah, you can see the interest build over the year, but by the time you pay taxes on that money at the end of the year and add in inflation, you're basically just breaking even."

That's completely right, Daniel. You are breaking even for the most part. "If I put it in a taxable brokerage account and it makes 7%, 10%, possibly 17%, now I feel like I'm getting somewhere. And you know as well as I know that if I have an emergency, I can still sell some of the stocks, transfer the money into a checking account, and pay for emergencies essentially at the same time and be able to, to utilize that money.

And I have a credit card with a $20,000 limit that I use every month and pay off every month the points. What emergency am I going to run into that I can't pay with $20,000, pay it off with my credit card, and sell some stocks and transfer the money to pay off the card at the end of every single month? Now, I know the money invested could go down, and I could have to sell when the market is down.

I understand the risks, but we're talking about 16 years before I retire. At $45,000, it can grow over to $154,000 in 16 years at a modest 8%. When I'm 62 and I retire, heck, I could sell all of my investments, leave it in SPEX, and use that money for my two-and-a-half, three-year cash buffer because I also put 25% in my Roth 401, and I max out two Roth IRAs every single year.

This is my one dilemma that I do struggle with. Maybe this won't be talked about on your show, but I would like to know what you think about this." Daniel, welcome to the show. It's gonna get talked on the show. All right. This is a really good point And it's a really good question, and it's something that I think all of us wrestle with from time to time.

And one of the things that we need to think about here is if we have a fully funded emergency fund and it's sitting at that 3% int- like right now it's like 3.1% interest rate, and we're struggling on what to do with it because money is just sitting there. I get it. You want that money to grow. You put it in a compound interest calculator, and you're saying to yourself, "This could grow to so much more.

The potential here is, is here. And if I have all these other opportunities to protect my wealth, well, what could go wrong?" Well, here is the worst case scenario. Here is what could happen, and the reason why we are protecting our finances is I don't like risk. I don't like risk whatsoever. And so when a risk comes up where you need to have your emergency fund on hand, this is some of the things that I wanna talk about.

Okay, number one is, as you stated in your message here, the market could have a pullback. But let's say, for example, we have a pullback like two thousand and seven, two thousand and eight, two thousand and nine. When that happened, we had a market pullback of fifty percent. So now your forty-five thousand dollars is worth twenty-two thousand five hundred dollars.

Okay? So that market pullback happens. You have twenty-two thousand five hundred dollars currently sitting in your brokerage account. But also, at the same exact time, what was happening during that recessionary event? Massive layoffs. Now, could you get laid off? Maybe. Could you not get laid off? Maybe. But your job is going to be an impact on if you want to keep all of this money in your high yield savings account or not.

If you have a job that you feel as though is secure and you want to invest a portion of this, I wouldn't do it. I'm not telling anybody else to do it, but it could be a consideration if you wanted to go that route. But I would never tell somebody to do this. Okay? Secondly, if you have dual incomes, meaning if one, you or your spouse lost a job, then maybe you have a little bit of additional diversification.

Or third, if you have like rental properties or things like that that help diversify your income, then maybe you have some other optionality there. I still am a huge proponent of the six-month emergency fund in cash, even though it's breaking even, even though it's not really getting you anywhere because of job loss, because of this worst case scenario, recessionary environment.

Now, you have to decide for yourself what you're comfortable with and what your risk tolerance is, because if you are comfortable with taking a portion, investing those dollars and growing that money, I see where you're going with this. I understand the appeal. I don't do it, and the reason why I don't do it is because I want to protect my wealth.

And at the expense of long term, I have seen worst case scenarios happen to people. I have seen people who have had a ton of issues with their home, for example, they're homeowners, and, you know, a natural disaster happened. They didn't have enough insurance on hand, and so they had to come up with enough cash on hand out of pocket to do this.

This just happened to my mother-in-law, for example. We had a hurricane come in. She had insurance. It didn't cover everything, and so she had to come up with tens of thousands of dollars out of pocket just to replace things to get her house back to normal again. I saw somebody else that we've coached that had a tornado go through their house, and they had to figure out a way to get enough cash on hand to make sure they could actually cover all those expenses.

Or let's say, for example, you get into an accident and, you know, somebody gets hurt and you get sued. There's all these... And you don't have enough umbrella insurance. Those types of things could happen. And so there's way more emergencies than just like the obvious that could pop up that we are not thinking about.

I own businesses. If one of those businesses begins to struggle, I've had this happen in, in the past before. I've had to take my emergency fund and actually help put it into the business. I've done this at fifty thousand dollars at a time before where I've had a business struggling, and to make payroll, I had to take fifty thousand dollars out of my emergency fund and put it into that business That's not fun.

And so there's all these different reasons why you would have an emergency fund with more. Medical emergencies, there's, there's a lot of different things. And so that's why I keep it in cash. But it depends on your risk tolerance. I have a very high risk tolerance for investing, and so every extra dollar I try to invest.

I try to invest every extra dollar I can. But I, I keep that six, seven, eight, nine, whatever you wanna have on hand, keep... Six months is my minimum for everybody, but I keep that six months on hand for those reasons. So many times I feel as though you are correct. Like, you can do this. There are people out there who have said, "Hey, why don't you invest some of your emergency fund?

It's gonna be okay. You can still pull it out." The, the worst that could happen is it goes down 50, 60, 70% and you still have cash there. And if you're comfortable with that, then you can make a choice based on how comfortable you are with that But I'm personally just not gonna do it. But I think this is a wonderful question.

I'm so glad you brought this up. I think this is a great conversation, and I think it's something that is worth debating. It's worth having the conversation about, because long term, the person who invests those dollars most likely will have more money in that account. They most likely will. But we don't have this cash on hand for that purpose.

It's not for the opportunity cost, it's for the protection. It's for-- It's building the economic moat around our personal finances so that they can't get derailed. Because if they do get derailed, then all of a sudden you're missing out on the opportunity cost of being able to invest every single month.

You're missing out on the opportunity cost of being completely debt free. You're missing out on the opportunity cost of being stress free. You're missing out on the opportunity cost of so many different areas. And so that's why I have the emergency fund, is for those big pillars. Those are most important to me.

Those are most important to most people. They need to have six months on hand. And I think when you think about your SWAN number, your sleep well at night number, that's the most important number for most people. But don't get caught not funding enough in your emergency fund because you don't see some of the risks that could come down the pipe.

Okay? So that's the way I would think about that, is thinking through it in that way. But again, awesome question. I love this conversation, and I think this should be talked about more. All right, the next one is from JR. So JR says, "Truly enjoy the podcast and find a lot of really good, interesting points in your work.

My question is, what is the budgeting strategy for those of us already in the thick of it with our family lives? We have an established mortgage, student loans, and down to one car payment. Still need room for other parts of life like gas, bills, et cetera. I work two jobs, so my wife is home with the three kids, one just having started preschool.

And every time we drop an expense example, the car payment of two hundred and fifty dollars, then preschool payment starts at two hundred and eighty dollars. This will only go up next year when the second child goes, and then the second child goes, the other car payment will be gone in the same month. I imagine it will be the full four hundred and seventy dollars for both of them.

We do save about ten percent every single year for retirement. That's a plus, and we always wanna do more, but the where and the how is the feasibility issue. Our debt is all low interest, under five percent. Thanks for all the info and resources you provide. And PS, why do you never recommend zero percent balance transfers on consumer debt?"

Well, on the PS, we do have a full episode on that, on zero percent ba-balance transfers on consumer debt, as long as someone is going to pay it off. If you have a plan and enough cash on hand, and you make enough money and have enough delta to pay it off, I have no issue with that whatsoever. Now, when it comes to managing money on an already established household There's a couple of things that need to happen here.

One is you need to evaluate how much you're spending in the major categories. So the baseline expenses are one. How much are you spending on your baseline expenses, your needs? If it's more than 60%, then you may be over-leveraged in a couple of different areas. One is, since you have kids in preschool, I know how difficult that can be.

I have been paying for preschools for the last, now, how old are th- for the last eight years, and so... Crazy. So I am still paying. My youngest now goes to preschool. She absolutely loves it, and it's one of those things that I feel as though one of the biggest struggles for young families just like yours, and it's not talked about enough.

It's basically like having another mortgage, and it's one of those frustrating things that we have to try to work through. Now, here's a couple of things I wanna talk about with this. This episode today about money management should be very helpful for you. If it's not, shoot me a message. But B, I want you to consider maybe something like the reverse budget, where if you're not gonna use a line by line on a budget, which I would use, but if you're a type B person when it comes to managing your money, then you can use the reverse budget.

Now, the way that the reverse budget works And we will link this up down below if you haven't checked it out. But what, uh, we're working on right now is the Millionaire Blueprint, okay? And in the Millionaire Blueprint, we're actually gonna have a reverse budget calculator in there for you completely for free.

And what it is is basically you save off the top, like we talk about w- the way I manage my money, and then you spend what is left over. Well, if you get your savings done first or the, the stuff that you really need to get done, then you can spend whatever is left over on the things and the resources and the stuff that you have on hand.

But if I were you, I would currently sit down and put together my budget of what are my needs and what's the percentage there, what are my wants, and then how much am I spending on other things like debt payments, things like that. And that's gonna help you really get this nailed down so you know how much extra cash you have on hand.

But this comes down to sometimes we have to do a spending and budget audit to understand where we are, then we can automate everything else and make adjustments. But sometimes when you're first starting out, you just gotta do this so when you're living paycheck to paycheck and trying to get by, you can just do this once.

So sometimes-- This is just like spending an afternoon, like an hour or two, figuring out where you currently stand, then you can make decisions based on that, okay? So that's really, really important as you begin this journey. Uh, but I really appreciate you sending over this question, and I feel the pain of the daycare costs.

It is not easy to get through that part. I am still gonna be paying this for another couple of years, so in the end I will have ended up having a daycare payment for over ten years. And I think many of you, if you have two kids or three kids, you c- feel that struggle, you feel that pain of what that feels like.

And I think it's really important for us to make sure we budget out for this, we plan our money out for this because that expense is no joke. So awesome, awesome question. I truly appreciate you sending that in. And for anybody out there who wants to get started investing, even if you're starting from zero, you have five dollars to invest, ten dollars a month to invest, fifteen, twenty dollars a month to invest, or you have ten thousand dollars a month to invest, I want you to join Master Money Academy.

I want to invite you to join Master Money Academy. Master Money Academy, I teach you exactly how to build a portfolio for financial freedom so that you can become financially free one day. You have the ability to invest your dollars, have them grow, work on autopilot while you sleep. And that is the entire goal, is to build wealth while you sleep.

And so Master Money Academy teaches you exactly how to invest and exactly how to do that. So if you're interested in Master Money Academy, there's a seven-day free trial that we are offering right now. It is linked up down below in the show notes. So here's the cool thing is I also am on coaching calls with you on a weekly basis.

We do group coaching calls every single week, and you can ask me questions when you get stuck. So join Master Money Academy. Would love to see each and every single one of you there. I get to know everybody in there. It's really fun. We've had a ton of different wins that we just went through. Uh, we just had a member who just realized she is $9,000 away from being a millionaire, so shout out Krista.

That is absolutely amazing. So there's just so many cool things right now happening inside of Master Money Academy, and I would love, love, love to invite you to join. Also, if you wanna do one-on-one coaching with me, shoot me an email, andrew@mastermoney.co, and let me know that you're interested. If you make over $100,000 per year household income, or if you have $100,000 to invest, we can help you there as well.

All right. Thank you so much for being here. I truly appreciate each and every single one of you, and we will see ya on the next episode