We all have different ways of managing our wealth. One of the most popular ways I have heard of is something called a ‘money tree’ or the envelope system. This is basically where every pay your money is divided into different envelopes each labeled something such as groceries, petrol, rent etc. and once the money in those envelopes is gone, it is gone and you cannot spend anymore.
These sort of systems are a great tool for wealth management, but there is just one thing I think you could do to improve your wealth management and that is to use accounts instead of envelopes.
Some things are good to get out in cash and if you know you are not great with a card, even a debit card then definitely do things in cash. If you do your groceries weekly, or need to fill up the car weekly or anything else you do weekly then cash is good. For other things such as quarterly or annually bills I think a better move is to either sit it in your redraw facility or offset account if you have a mortgage and if you don’t to open a high interest savings account so you earn interest on the money.
The principle is the same. Every pay put aside the money to cover, say your land rates or electricity bill. Instead of putting it in an envelope you are putting it somewhere it will work better for you and earn (or save) you money instead of doing nothing.
Most banks let you set up an extra account or 5 for no extra charge so you can manage your money better. You can usually name these accounts as well so you could have your every day account, an annual bills account for land rates, insurance and things, then a quarterly account for electricity bills etc. and finally a high interest savings account for your savings.
Of course this is only smart money management if your bank is not going to charge you fees on these accounts, so look into it carefully.
How do you handle your money?