Cash Flow Blues 3: The Reckoning

The first two episodes in this series laid the groundwork for you to take control of your finances. If you missed them, read episode 1 here and episode 2 here.

If you followed the exercises in the first two episodes, you’re armed with the knowledge of where to cut your spending and start saving. So how do you make it easier to implement? What are those “insanely clever hacks (ICH)” I promised?

Split your money

When all your money is in the same bank account, it can be difficult to understand what money is for necessary expenses (mortgage, insurance, etc.) and what is for discretionary expenses (travel, entertainment, etc.).

Try separating your money into multiple accounts: necessary, discretionary, travel, emergency fund, investments, retirement, etc. Think about setting up the accounts at different banks.

These additional accounts may add complexity to your finances, but there is an important benefit here. You will be able to understand easier if you have enough to cover your necessary expenses. Also, you’ll know how much you really have for discretionary spending. Plus, it’s tougher for you to “steal” money from protected accounts (like savings) for discretionary spending.

Cash Cushion

If you have irregular income (commissions, self-employment income), it is helpful to keep a small cash “cushion” in your necessary spending account. Think of this as a 1/2 to 1 month’s worth of necessary expenses.

This cushion releases you from having to monitor your bank account frequently and ensures you have money to pay bills when they are due. Plus, this tactic facilitates the next “hack.”


Put your bills on auto-pay. Especially the necessary expenses, but also regular discretionary expenses when possible.

Stop worrying if you paid your mortgage. If you’ve done the work described in this series, you should be able to confidently set your bills to pay automatically without frequent monitoring or getting hit with overdraft fees.


Any system needs a periodic review to see if you’re sticking to your savings goals and if it’s still the best way to allocate your money. Once a month, review your various accounts.

  • Any larger-than-normal necessary expenses?
  • Have I kept my discretionary spending within my budgeted limits?
  • Do I need to invest cash savings?
  • Am I spending money on something I don’t need or want anymore?

I hope you enjoyed this series and that you’ve moved from cash flow “blues” to cash flow “clues.”

If you want more help with cash flow management, click the button below to schedule a free one-hour consultation with Savvy Home Office Services.

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I don’t provide financial planning or investment advice. I won’t make any recommendations as to which savings goals are best for you or how much you need to be saving. I won’t provide recommendations as to the purchase or sale of securities. The content of this article is for entertainment purposes only. Cuz’ aren’t you having fun right now?

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