Money system

“I’m going to do something tacky and talk about money.” That’s how Ellevest founder Sally Krawcheck started her talk at the 3% Conference a few years ago.

During this week that’s nestled perfectly between two Saturday holidays, one build around indulgence and the second around resolutions, I wanted to do the same thing — talk about money, mine and yours.

I’m going to share a couple tips and tools I’ve picked up over the years to better manage my money.

If part of strategy is creating systems, this is mine. It’s been a pure emergent rather than deliberate strategy, informed by experimentation and error. You’ll see a few of each below.

At its core it’s about making fewer decisions. It makes spending a lot more effortless; because I know where every $100 I make is going before I get it, I don’t need to think about what I save versus where I splurge.

Some background:

I didn’t make more than $20,000 in a single year until I was 27. I know that for a fact, not because I was great at tracking but because the IRS sent me a letter around that time listing my income for the previous 5 years: each number was in the teens. Was it a warning? Were they mocking me? It’s impossible to know.

I got lucky to get into agencies at that time and my income rose pretty steadily, from $65,000 (freelance, no benefits) as a mid-level strategist to $100,000 as a senior strategist a few years later.

About three years ago I started keeping a budget. After reading Ramit Sethi’s I Will Teach You To Be Rich (I know… the title is cringey and I’m literally embarrassed to have it on my bookshelf, but the content is fantastic), a better name is a “spending plan.” I’ve included my template here, with numbers for someone who makes about $100k. Take it and make it your own.

Making this was a real eye-opener. It’s taught me:

• Watch your stomach. Eating out was my biggest variable expense and made it hard to save. I addressed that by setting a cap — $600/ month or $150/ week. I find that the latter make it fairly easy to track if I’ve gone big on a couple dinners or had a bunch of work lunches.
• Separate checks. Even when I started keeping a cap, it got messy when I just used my debit card. Early last year I found a Delta American Express that offers double points on dining and groceries. I collected the 70k bonus miles to sign up and now I use that card for all food, and nothing else. (If you want to sign up for this card, use this link and we’ll both get miles. I love free miles/ $.) It should go without saying, but I pay this off in full every month. If you have credit card debt, like the $10k I had at one point, I recommend paying that off before anything.
• Direct deposit is your friend. When I refinanced my student loans, I had to set up a new account with direct deposit and automatic payments to get the best rate. I had a monthly savings goal that I split in half and had deposited into that same account on each payday. Now every month, my student loan payment comes out of that account automatically and I have free money sitting there to either save or invest — but I know this isn’t just fuck-around money because it’s in this separate account.
• Fun has a cost. I’ve invested in a bunch of different stocks, mostly on Robinhood, because it’s fun. But that’s come at a cost. If I’d invested solely in VOO (Sethi recommends Vanguard S&P index funds like this one), I’d be up 75% vs. the 51% I am to date. Noticing that recently hit me like a money hangover.
• Savings isn’t just long term. This is a new one for me. Up until recently I’ve saved via retirement/ 401k or long-term (i.e., investing to eventually, maybe, buy a house). Last month I opened a free checking account (Capital One 360 was super easy) to fund my short-term savings. I’ll use this account for weekends away, new surfboards, or other absolute necessities. I already have $400 in there just waiting for me to invite it to a party.

The biggest benefit of a plan like this is how intentional spending becomes. You use it to set your priorities, and when it comes to spending each month you’ve already decided whether you want to invest 30% of your net or eat oysters whenever they’re on the menu.

As you enter the New Year with big career goals, I hope you can use this year to hang onto more of your money. Whether that’s for a big purchase or lots of fun ones that make your days and weeks more joyful, you’ll be doing it all on purpose.