Who’s it for: Unorganized people who want to be organized.
What’s it about: Building a money structure that actually fits your existing habits and behaviors.
You know who I find annoying? Really organized people.
People that have a system for everything.
It’s not that they’re bad people, it’s that everything just seems so easy for them.
I am NOT a particularly organized person. My desk is a hot mess of old coffee cups and papers scrawled with thoughts I swore were brilliant at the time.
But I want to be organized. I feel like so many of my problems would be solved if only I could find the perfect system.
Maybe if I try that app? Maybe if I use this program? What if I just do exactly what that person does?
… but more often than not, it doesn’t work.
Except when it comes to my money.
Over the years, I have slowly become better organized with my money. I now have a system that actually works for me, and makes my life quite a bit easier.
And so that’s what this piece is about… How I built that structure, and how you can start building one for yourself.
Lesson 1: Don’t annoy your brain
I’ve been fairly organized with my money for years now. I pay myself a salary. I budget. I save for things that are important to me…
… but this summer I realized that I had kind of checked out of that system.
I wasn’t using my budget. I wasn’t keeping up with my savings.
At first I assumed I was just failing as a human.
“It was bound to happen”, I said. “Clearly I am a terrible adult and my hypocritical blog and financial planning practice must crawl into a hole and die an agonizing and lonely death.”
Luckily, I stumbled across a different answer before I had finished my death hole.
You see, it wasn’t the budget’s fault at all. It actually had nothing to do with my income or expenses.
The problem was that every time I sat down with my money I had to make 7 transfers to get things where I wanted them to go. I had to haul out the pen and paper and use the calculator app on my phone. I had to log in to two bank websites and go back and forth between them just to keep up with this ‘organized structure’ I had built for myself.
It was so annoying.
And so, even though I didn’t deliberately decide to, I just stopped using it.
My brain made an executive, behind-closed-doors decision to cut off this activity that only caused stress.
Lesson 2: In order to get somewhere… you need roads
People don’t talk about money structure very often. They talk about budgets. They talk vaguely about ‘organization’ or ‘keeping good records’. But not about basic structure.
Why does it matter?
Picture your country. Think about how much stuff gets shipped from one end to the other. Avocados from California, Lobster from Cape Breton.
What would happen if you replaced the interstates and major highways with dirt roads?
It would take longer to get things from one place to another. It would be more expensive. It would take more time.
And you probably wouldn’t be making guacamole nearly as often.
Your money structure is the way your money moves from place to place. If it’s well set up, then saving and spending is easy. If it’s not… it can be annoying and hard, and it’s another reason to ignore your money altogether.
Lesson 3: You have to start from the beginning
So money structure helps your money do what you want it to do.
What do you want it to do?
When I realized my structure wasn’t helping me I went back to ground zero.
I wanted to make sure that it was easy for me to do two basic things: spend and save.
So I took out that dreaded paper and pencil and started from the beginning. What are the tools I use everyday to spend and save money (see below).
Then I took a look at how I was actually using those tools. On what? How much did I actually use them? I pulled out the sheet where I track my spending/saving and made a note of which of those those tools I used for each transaction (see below).
This is not an exercise about what you want to spend on, or save for. Structure is all about mechanics… the actual moving from place to place. And it can’t be based on some ‘ideal way of using money’.
It has to be based on how you already use money.
By taking a look at your day to day behaviour you can build a process that actually makes your life easier… instead of trying to change your day to day behaviour to match the ‘ideal system’.
Lesson 4: The best bank actually makes your life easier
Banks are KEY parts of any money structure, and if you’re serious about reworking the way you organize your money… you have to at least consider changing the bank that you use.
People don’t like to change banks and the banks like to encourage the thought that changing is ‘hard’ or ‘disloyal’.
Banks are a tool, and I want you to make sure that that tool lines up with how you want to use your money. It doesn’t have to have the most features, it just has to have the features that you use (and hopefully at a reasonable cost).
I have accounts with two banks: TD and Tangerine.
I had specific reasons for picking my banks: TD had the e-series investment options, which I used for long term savings, and Tangerine had no-fee accounts, lots of savings options, and free email transfers.
The problem was that when I looked at how I used my money, my banks weren’t helping me.
I was using Tangerine as my business bank, but it was also the place my partner and I had our joint spending and savings accounts. Which meant that Tangerine wasn’t all business… it was kind of a gray area mix of both.
It was also a key part of my ‘7 transfers a week’ problem.
When I looked at my spending/saving from lesson 3, I realized I had specific demands from my business and personal banks.
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My personal side needed:
- easy transfers from my business account for monthly salary
- ATM access for cash
- easy transfers to joint accounts
- easy payment of credit card
- easy transfer to retirement accounts
- easy method to transfer small amounts of money to friends
My business side needed:
- easy transfer to my personal acccounts for salary
- a few e-transfers a month
- easy payment of credit card
- photo cheque deposit
Wait? Do I need two bank accounts for my business?
I use separate bank accounts for business and personal money (you can read more about why HERE), and I think it’s an excellent idea. It helps separate the two worlds. It helps collect income from a bunch of different sources and distribute some to personal needs, and invest the rest into your business.
But it’s not the only way.
If that seems like too much right now, that’s okay. Go through this process and make a system that works well for your spending and keeps things clear for the way you think.
More is not better. Having 11 savings accounts, 3 chequing accounts, 7 RRSPs, 4 budget programs and a cat might seem like a really professional thing to do… but it’s no better than having one account that makes total sense to you.*
*this all changes if you’re an incorporated business… if you are… talk to someone about how you need to be setting up accounts and keeping records.
Lesson 5: Your credit card points don’t matter
What credit card should I choose?
It has to be one of the most popular Google searches.. and also something that doesn’t actually matter for most of us.
Yes… you can get sweet cash back and travel points by using the right credit card. Yes, you can read a thousand articles about why this VISA will change your life.
It’s the wrong question.
Here are the three questions that matter when picking a credit card:
1. Is the balance easy to check and pay off?
- I use the Tangerine credit card because it’s right there on my bank dashboard. Easy to see the balance. Easy to pay it off.
2. If you often hold a balance on your card, does it have a low interest rate?
- This is the only number that matters. A credit card can be a really important tool for weathering the variable income storm. If you often have a balance on your credit card… get as low an interest rate as possible.
3. Does it work for where you spend?
- There’s an AMEX card floating around with the best points system ever. I love it. The problem is… none of the places I shop accept AMEX. So it’s useless. Look at where you spend your money, and make sure your credit card works at those businesses.
Lesson 6: Simple sometimes doesn’t look simple
It was so interesting to go through this process.
Here’s what my money looked like before….
And here’s what I changed it to….
How does money come in? Business checking – allows photo deposit, allows e-transfers, easy to find ATMS for cash deposit. Paypal – linked to business checking (free transfers to linked account).
How I save in my business: Tax account – free transfer from checking. Emergency fund – free transfer from checking.
How I spend in my business: Credit card easily paid from TD dashboard, cheques are affordable (and I still have hundreds of them), e-transfers are easy (standard pricing).
Paying my salary: Free transfer between TD and Tangerine easily done through Tangerine dashboard.
How I spend from my personal account: Free e-transfers, access to ATMs, Tangerine credit card easy to pay from dashboard, debit card.
How I save from my personal account: Free transfers to joint accounts, free transfers to savings accounts, easy to open new savings accounts/TFSAs.
I realized that TD was a better bank for my business than for my personal finances. I realized that even though my retirement accounts were still there, I could easily just treat them like a paystub deduction (I automated the payment for the last day of the month) and then transfer the rest of my salary over.
Now I have one transfer between accounts. No pen and paper math. And my daily money use is just … cleaner.
On the surface the system doesn’t look any simpler, but now it actually matches my behaviour and makes the things that I do… much simpler.
Lesson 7: It doesn’t have to look like that
I really liked sketching out how my money looked. It helped me see it in a whole new way.
But it doesn’t have to look like that, here are a few other artists’ money structures.
This is one I drew for another opera singer based in Canada but who works in the US a lot.
This is one a friend sent me. He may insist he’s not an artist, but he’s a great writer and his system balances regular income with self-employed income in a really interesting way.
It’s also fascinating to see someone else’s way of drawing their money.
There’s no right way.
And here’s a quick sketch of an artistic couple, and how they could potentially use separate and joint accounts to make their money work better.
As artists, sometimes looking at things in a new way can help us get the perspective we need.
If you feel like your money is a mess or you just can’t seem to engage with your finances… this might be a great place to start.
Sit down with a pen, or maybe some markers, and draw out your money structure.
It might never hang in a gallery, but it might be the most important thing you create this year.
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Low key (and FREE) weekly money coachings… but they’re limited so sign up NOW.
Want to start getting control of your money? How can I help?
Financial Planner/Opera Singer
Money never came naturally to me. In fact… I was a bit of a disaster. I remember (very clearly) what it feels like to be ‘financially out of control’.
And honestly, I still get stressed about money… that doesn’t stop… the difference is that now I have the tools to deal with that stress.
And those tools are what’s made it possible for me to build a life full of the things I want: art, creativity, travel, family and more.