I’ve recently developed a renewed interest in the FIRE movement. I’ve followed Mr. Money Mustache off and on for about 10 years now, and gone through periods of time of being very excited about the possibility of financial independence, but unfortunately I never seriously put any of the advice into practice, leaving me on a more typical American career and financial path to date.
My wife and I have followed Dave Ramsey’s financial principles since before we were married, which has provided us a really solid framework and language to talk about money together. I highly recommend his Financial Peace University course (we’ve taken it twice). However, his plan is for living financially secure on a typical career path—not achieving financial independence early.
I’ve realized recently that a big reason I have failed to implement more of these FIRE strategies is a lack of systems. I talk with my wife a lot about having systems for things, because they allow me to effectively offload thinking and externalize decision-making. If I can put a system in place that I know and understand, ideally it will for me without me having to think about it going forward. But I found there was a big gap when it came to our finances: I was implementing very few systems to keep us on track, much less to get ahead and move more quickly towards financial independence.
Thinking about this more, especially in this day and age, it’s very easy to set up systems that automate optimizing your finances. The first thing I did was set up a recurring auto-transfer to move money into savings—we currently have a goal of building a bigger emergency fund. Looking back, this is an absolute no-brainer, but we were missing our target month after month because we were not paying ourselves first. Now, it happens automatically, and I won’t have to think about anymore (until we hit our emergency fund goal, at which point I’ll redirect those funds).
Another system that we already do have in place, but are still working to optimize, is having a separate checking account for my wife. The idea is for it to operate similar to Dave Ramsey’s paper envelope system, where we transfer money into that checking account for groceries and other spending each month, and she can spend out of that account without having to keep track of all the receipts. So far, this seems to be working for the most part, except when I forget to transfer money in, or something comes up and she needs more money than is available and just uses the main checking account. So, to optimize this a bit further, I now have an auto-transfer set up to drop money in there each month, and we’ve agreed to discuss any budget adjustments as they come up, in which case we may transfer additional funds into that account.
Finally, I also had the idea of getting account balance texts sent to our phones each day, so we know how much is available in the “envelope” account. However, I couldn’t find a service that offers this—some specific banks do, but not ours. So, that’s not in place yet, but I may end up building a tool to do it…
I’ve also spent time over the years tweaking our budget categories and the annual budget spreadsheet to eke out more efficiencies and usefulness. This minor tweaks are part of the ongoing optimization process to make managing our finances more and more simple and intuitive. The more I can automate with our finances, the more optimized the whole process will be and the less time it will take out of my day to stay on track. I’m looking forward to finding more ways to optimize our personal finances this year.