Help With Money – Step 4: Managing Your Money

“Your balance on account number 6726654 is £2,765 over drawn. Main menu.”

I used to detest checking my bank account. That sentence still reverberates around my mind like a dull ache. The robotic monotonous voice of the lady changing my mood as soon as I had dialled my banks telephone helpline. Of course, it wasn’t the robots fault – it was my fault – but I hated her all the same. Everyone needs someone to blame, and when it came to my consistent lack of funds I blamed the robotic lady from Barclays Bank.

These days everything has changed. I am no longer scared of checking my bank details and instead I make it a regular part of my Thinking Journal process. In fact, I actually enjoy checking my bank account each and every day. So what has changed?

Managing my money has started to become fun

In my previous money management post entitled Help With Money Step 3: Don’t Spend What You Don’t Have I outlined the process that I use to create a monthly personal budget forecast. This post takes that process one step further by explaining how I manage the flow of money, from its journey in the tributaries of the outside world, to the small lake that is my personal bank account.

Choosing a Bank Account

I have been with Barclays Bank since I first opened my account when I was a teenager. I am lucky, because Barclays Bank contains a very flexible way of managing my money. As managing my money has become a daily activity I need instant access to my account, and Barclays offers a great Internet banking service. Amongst its many services is the ability to create multiple savings accounts and transfer money in between these accounts.

This flexibility allows me to divide my income as soon as it hits my bank account. The whole process takes minutes and it makes sure that my money is syphoned into the correct account for that particular month.

Here are my accounts: –

1. Tax and National Insurance

As I am self-employed I have to take care of my own tax and national insurance contributions. If you are employed then you can probably skip this section as PAYE probably covers you. I make sure that 29% of all my income is immediately syphoned into a different account. Realising that this money is going to grow and be in my account for 12-months, gives me the opportunity to make some passive income. Due to the very low interest rates at the present time I choose to purchase Premium Bonds with this 29%. Who knows, maybe I will be the next Premium Bond millionaire?

2. Christmas

Children want every day to be Christmas Day but for adults it can be a very stressful time, and for years I have gone deep into debt when purchasing Christmas presents for my friends and family. These days 5% of my income is syphoned off into a separate account called ‘Christmas” and I no longer have to worry when the bells start jingling.

3. Las Vegas

Each year I head off to Las Vegas to work, and play, at the World Series of Poker. In the past two-years I have spent six-eight weeks in Sin City, but this year I plan to only stay for four. Las Vegas is an expensive place and so I make sure that each time I receive income a percentage is immediately syphoned off into an account called ‘Las Vegas.’

4. Holiday 1

For years I missed out on family vacations because I was consumed with debt. Not anymore! 9% of my income is syphoned off into an account called ‘Jude Holiday’ so my only worry is what fantastic place to visit?

5. Holiday 2

Another holiday fund, another account and another 9% syphoned anyway in order to ensure my girlfriend and I have a wonderful time.

6. Home/Marriage/Children

Whether I decide to purchase a new home, get married or have more children I am going to need more money. Waiting until these things happen on a whim puts pressure on you to go into debt. 7% of my earnings are syphoned away into a separate account that will only be used for one of these three amazing moments.

7. Retirement

I have a two separate pensions from my days in the Railway but I want more. You would be surprised how many people have a pension and have no idea how much it will actually be worth when it matures. I know how much mine will be worth and I know how much money I want in order to live a stress free, debt free life. With this in mind I need another savings vehicle and so 8% of my income goes into a ‘Retirement’ account. My next step is to get a little savvier about investing so I can put this money to good use and let it grow for me.

8. Jude College

Given my current income levels it is going to be difficult for me to cover 100% of my son’s college fees, but I am going to try my very best. The world is littered with people in there forties who are still paying debt they accrued from their College and University days. What a way to start your adult life! I don’t want this for my son and so 7% of my income is stored for his future. Once again, when I get more understanding of investments, this money will be put to good use.

9. Charity

Most people give charity to a host of different organisations. I really struggled to decide whom to give my money to. Then one day I realised that I would rather give it to those closest to me. So I syphon 2% of my income into a separate account so I can use it to help my friends and family in time of need. This could be anything from fixing a broken boiler to giving someone I love a holiday of a lifetime.

10. Investments

In the great book The Richest Man in Babylon by George S. Clason I wrote about the great piece of advice: paying yourself first. With this in mind I syphon 10% of my pre-tax earnings into a separate bank account to use for investing. I have also started taking 10% from everything that my son earns (he is 11-years old) and have created an account for him called the 10% fund. We are hoping that by the time he is my age we will have saved around £100,000!

11. Business Training

I love self-improvement and as a self employed whatever I am, I need to have money set aside to improve my set of interpersonal skills. With this in mind I save 2% of my income for use on personal training.

So what are the benefits of this system?

1. It is great practice for any business and you are a business!

2. Your money gets moved immediately. This stops your fingers from getting caught in the cookie jar. It makes you become more professional about your money.

3. It reduces stress by having funds available for all of the most important areas in your life.

4. It shows you quite clearly that if you want more, you either find more fat in your expenses, or you earn more income.

Photo courtesy of 401 (K) 2012 cc @

Help With Money Step 3 – Don’t Spend What You Don’t Have

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  1. M8, either your earning bundles, my maths is shot or you have a very cheap day to day life. does that lot not add up to 86% plus no % for Vegas ?

    So you can live off 14% of your income day to day ?

    Or do you take your day to day living expenses then do this with the rest ?

    Also, from a personal perspective. Pensions aint worth shit. Use the money that is classed for them and invest. In what I don’t know but I dont have a pension (have a frozen one from previous job) as when working in a company that dealt with them (plus various insurance, assurances) I could not believe the rip off. In simplistic terms, you gotta live probs 20 years after retirement to get back a pensions worth !!!


    • Hi Coggy,

      My living expenses (and all other expenses) are deducted before I syphon off my savings. I create a budget forecast withdraw the money I need for living expenses and then distribute the rest between my savings accounts.

      My living expenses are very low because I live with my parents, but this is soon to change.

      My pension is frozen and cannot be touched and it definitely is not ‘worth shit’ as you put it. It will form the bedrock of my income when I retire. In terms of ‘Pension’ as long as you have some form of saving mechanism for when you retire then it doesn’t matter what you call it. I am sure there are rip offs and perfectly adequate pensions. Either way you must have something. Some form of retirement plan.



    • PS: Some of my % were a little off so I have changed them, thanks for noticing though 🙂

  2. Seriously. No savings, and some meassley pension as previously mentioned. Wont be worth enough for a pint a week in 25 years tho !!!

    I guess I always look what I will inherite as my saver, but even without that I would not voluntarily put a penny into a pension. I don’t know the exact maths of it, but, if you have a company match it type thing (they put in 5% and will match a further (up to) 5% which is also taken from your salary pre tax), it might be worth it, but I’d rather have (I need) that money now.

    Look into it more tho (you may have done) and speak to people who know this stuff really well but aren’t telling you stuff for their own benefit.

    It’s just my opinion installed about 15 years ago when on a pensions training course and continually throwing the ‘teachers’ by questioning how everything they were saying was viable let alone legal !!!

    I do like the money planning in general tho, good luck with it al and the house move


    • Coggy,

      I don’t think I explained myself clearly enough.

      I joined the Railway when I was sweet sixteen and paid into my pension for 20-years. This wasn’t a choice it just came out of my pay packet each month. I did choose to open a second contributions scheme a few years later and my deposits were matched by the company. In this exact moment I pay no pension contributions and I won’t be entering one. I am instead saving money to invest in different vehicles. So when I retire I will have my two pensions from the railway, state pension and my other investments.

      Make sense?


  3. Wow, Lee–You gave me some food for thought. My husband, who is not well, is so concerned that I won’t be able to function should he ‘leave” first…because I feel his “way” of taking care of business is too “heavy” for me, and that I am capable of finding a way that feels right to me. Your way of dividing up the amounts for this and that feels right to me. I will tuck this away in a corner of my heart, should he ‘leave’ first…thank you for sharing it.

    • Hi Charlene,

      Welcome to the Needyhelper.

      Your comments has reminded me of a situation that my parents find themselves in. My father has always been the bread winner while my Mum has raised four children. If I were a betting man I would say my father will ‘leave’ sometime before my Mum. This worries me because I don’t believe he has organised himself financially should this happen. My Mum doesn’t know what the plan is and I don’t think my father has one. He certainly has no pension or any savings that I know of. This leaves just a small life insurance policy and the equity in the house.

      It is vital that they both discuss what happens in the event of one or the others death. Not having this discussion is so critically wrong. I wrote about this in Preparing for Death: Get Yourself Organised. But I know they will avoid it until he inevitably passes and my mother is left lost and lonely.

      If you would feel more comfortable preparing for the future differently, then I would speak to your husband about it.



  4. Aha, that makes more sense. similar to me then, except I’m currently not planning at all. Other things to work on ATM.


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