Questions About Barefoot Investor Bank Accounts

[arve url="https://www.youtube.com/watch?v=PyQtkKPCAXI" mode="lazyload" align="center" /] Expanding on my episode about the Barefoot Investor bank accounts I talk in more detail about practically how this way of banking works in my life. Resources From This Episode: Barefoot Investor Book Barefoot Bank Accounts Video ING Bank Accounts $1,000 Project Book Canstar NZ Transcription: I recently did an episode on the barefoot investor bank accounts and bucket, so I told about exactly how the barefoot investor recommends you set up your bank accounts, tried to make it really straightforward for you guys and also talks about the alterations that me and my wife made in order to make it work for us. So the barefoot investor bank account strategy is a great framework. It's a great way to manage your money. We had to make some alterations because it got a bit confusing for us, so we just made it work a little bit better for us and I think that's a good thing. You take the cool concept and you tweak it for yourself and you make it work for you and for your relationship and for your family and your banking accounts, whether you be single or whether you'd be partnered or whatever it may be. Anyway, I received some questions from calum from New Zealand and so I thought rather than just writing back to this email, I would create a video answering these questions because I feel like it would be useful to a lot of people out there who have either read the barefoot investor and I'm interested in setting up these bank accounts or people who aren't quite there yet, but the barefoot investor and what I talked about is kind of peak their interest and they want to learn more. So I hope you find this useful. We're going to go into more detail in exactly how I manage my bank accounts and transfer my money and we're going to talk about things in more detail. So yeah, I hope that you enjoy this. Hi, I'm Ryan. If you don't know me already, I'm from on-property dot com dot a u and I help people invest in positive cash flow properties and achieve financial freedom. And so I love these questions from Callan. So I'm going to go in and read the email to you guys and we'll go through and answer these questions. So callum, I hope that you find this helpful and same to everyone else who's listening. Before I read this email, just want to let you know if you haven't read the barefoot investor book, highly suggest you check that out. Go to on-property dot com, forward slash barefoot and I'll link to booktopia where you can purchase that book and get it shipped out to you. I recently just purchased this book, the thousand dollar project from Booktopia came in a couple of days, so really happy with their delivery and their service. So again, that's on property.com forward slash barefoot. And if you want to watch the previous episode that's On-property Dot Com dot a u four dash 5:10. And that's where I talked about the bank accounts in detail. And so you can check that out. I'll also leave the links to those in the description down below. Let's get into the email. Hi there, appreciate your time. And if you could just answer a few questions I have after watching your video about the barefoot investor book. I'm from New Zealand and uh, found the book to be amazing and I'm determined to set things up for me. I'll be at with the New Zealand version of things, which is one of my points for you also. So they asked a question about that later. So question number one, I liked your idea of the pot and the everyday spending accounts. So do you have a card for each and with the everyday spending, you didn't mention anything about whether put in the 60 percent of your pay or income each time. And so what's the plan there? What do I do? So what the barefoot investor recommends is that when you get paid, 60 percent of your money goes to everyday spending, 20 percent goes to a fire extinguisher to pay off debts and to put out financial fires, 10 percent saving for things that make you happy and 10 percent for a splurge account. And so I kind of altered that a bit. So what I'm gonna do is we're going to look at that in more detail and how exactly the money flows and how I set that up. So I run my own business, that's how I generate an income. And we also received some family tax benefit from the government and anyone that is employed, you know, this would be your employment and so my business pays us a weekly amount so each week money comes from my business and goes into a bank account that we've called the pot and so there's a card attached to this bank account, but basically each week money from the business, it goes into the pot and also family tax benefit is fortnightly that goes into the pot as well. So all of our income is going into this one account and then what we do is we then divvy up from this account into other accounts. And so that's what we're going to look at now. So the pot is just a regular bank account with ing. So if we go to ing, you can see my bank accounts here. So everyday banking you can see I've got two accounts, these both have visa debit cards, so there's the pot, so it's just a regular bank account. All the money goes into the pot. We have our everyday spending, which again has a visa debit card attached to it. And then we've got these online savings accounts which are attached to these accounts. So I can't spend directly out of these but I can move money from these back into the pot or into everyday spending, which we'll talk about in a little bit. And so what I do is each Thursday I transfer money from the business into the pot and then each Sunday, which is the start of our weekly budget. So we decided to start on Sunday to the day that works for us. I've set up automatic payments that divvies up the money from the pot into all of our bank accounts. And so I'll show you that now. So each Monday I have automatic payments. So everyday spending we get 50 percent of the income from my business goes into everyday spending. And so this is for discretionary purchases. So groceries, this is paying for eating out, paying for coffee or that sort of good stuff. Okay. So that's discretionary spending or everyday spending. We also put two and a half percent into smile, which is saving for holidays and bigger purchases, two and a half percent into splurge to spend on whatever you want. Seven and a half percent into fire extinguisher, which is going towards paying off debt or saving towards our Mojo account. And then I put 20 percent into big bills. That's to save up for things like car registration, health insurance, electricity, those sort of big bills that don't come around super often, but they're always there. So a big chunk of our money goes into big bills each week. That account kind of builds up over time and then we'll get a big bill like health insurance that are clear that account out or we might get a small bill and use some of the big bills. Money. Okay. So basically money. It goes into this. I also have the thousand dollar project, which is a new account. I don't have any money automatically going into that one. That's something that I'll talk about in a future video. So basically Thursday money goes into the pot, Sunday money goes from the pot and goes out to all of these different accounts. Now the pot has a card attached to it and out of the pot I do my regular payments, so things that happen every month or every week. So I've got one of my kids goes to Kindie, so that's fortnightly. That comes out of the pot. We've got two cars, so car insurance that's paid monthly that comes out of the pot. Me and my wife both have phones that comes out of the pot. So there's regular sort of monthly things that are direct debits. They all come out of the pot, they don't come out of big bills, they come out of the pot and so there's always a bit of money in the pot for those sorts of direct debits. And so that's why when I've got all this money going out, so 50 percent to everyday spending, that's the business money. So that doesn't include the family tax benefit. So the family tax benefit one just kind of sits in the pot, so that's kind of just like how we worked it out. So what I did to get to this point is that I just looked at my regular monthly expenses. I looked at all the big bills I'm going to have to pay over the course of the year. So it looked at how much those regular expenses or costs, how much the big bills will cost, and then I kind of. So that were the first two priorities because they've got to be paid, like rent has to be paid every single week and that comes out of the pot. And then I worked out, okay, how much do we think we can live off within our means? And then I decided on the everyday spending amount and then basically whatever was leftover was for smile, splurge and fire extinguisher. Now obviously it'd be better to have more money going into fire extinguisher. I splurge and smile, but that's something that I will work on. Upping these over time from two and a half percent to five percent to 10 percent. And for fire extinguisher from seven and a half percent, ideally getting up to 20 percent, so that's something that we will definitely work towards. But for now I decided I wanted to get this process in place. I can't do it as good as I would like to do it, but I'm going to start anyway. And putting two and a half percent, two and a half percent and seven point five percent aside is better than doing nothing. And so that's kind of how it works. Thursday money goes in. That allows a day to clear between the banks and then Sunday the money gets sent around to the different accounts, setting up those recurring transactions really easily. I just got to transfer and pay between my accounts. And then down here you've got a recurring option so you can do weekly starting on the Sunday and then ending with no end date.