As a financial coach, I get a lot of people asking how I optimize and automate my finances. I’ve been through periods of high, low, stable, and fluctuating income, yet the tricks have always been the same.
These tips have been especially helpful when I’ve been on a tight budget. They've helped me realize that having less cash-flow isn't the end of the world, it just means you have to be more organized 🤓
Here are some of my tried-and-true tips:
Keep it simple with just one personal spending account ☝️
I have one central account (KOHO, of course!), which I then divide between money for bills vs. spending money. I try to pay my bills right on pay day and for those I can't, I create a goal for them within KOHO. I fund most of the goal right away so that the money is out of my 'Spendable.' I then use my KOHO card for my everyday spend. Using just one card makes money management so much easier than having multiple bank accounts.
Tip: I also find it super useful to have a separate Joint Account with KOHO for my shared expenses, as explained here.
Treat savings or debt payments like a bill 💵
I have a portion of my income dedicated to regular savings, which I move from my KOHO account to my savings account each pay day. The ultimate goal would be 15-20% of my income, but in certain periods I’ve had to temporarily adjusted it to a lower amount. Yet no matter what, I never spend more than I make. I don't own a home, but if I did, the principal payments on my mortgage would technically be part of savings.
Tip: In periods when I’ve had debt, this amount went to pay it down rather than savings. Debt with interest rate over ~4% should take priority over savings.
Don't use credit as a way to buy things you can't afford 💳
Using an account like KOHO can be your secret weapon to stay out of credit card debt. With a traditional credit card, you can lose track of expenses and end up with a balance you can't pay off. If I ever do use credit, I pay down the balance in full at the end of the month. Life happens, which is why having an emergency fund or float of 2-3 months expenses in a separate savings account is key.
Use KOHO Goals to save for big expenses and vacation🌴
If you’re already stretching your paycheque thin, it can be a struggle to plan for things like vacation and other big expenses. I now use KOHO Goals to save up for these expenses, which has been a game-changer! It feels so good to have the cash for a vacation ready-to-go, instead of using credit or dipping into my emergency fund.
The path to organized finances can be slow, but the mission of KOHO is to help you get there. We want to help you feel empowered by, not scared of your finances 💪