How to Use Each of Your Accounts with Steez

After 3 months on the Pacific Crest Trail, my good friend Willie The Wizard offered me a jar filled with food.

I hesitated to accept it. But then he said, “I pick up my next resupply box tomorrow. I have enough till then.”

At that point I felt okay to accept the food. I took my first spoonful. And I nearly fell over from an intense mouth-gasm. The rice, bean, and veggie mix was better than what I cook for myself at home.

The Wizard chuckled at my reaction. He said, “I prepared my meals before hitting the trail.”

From The Wizard’s preparations, he knew three things: 1. He knew when his next resupply box would come. 2. He knew the amount of food he'd eat before reaching his next resupply box. And 3. He knew the amount of food the new resupply box would provide.

Because he knew these things, he decided it wouldn’t hurt one bit to share his food. So he offered me a jar.

The same plays for you. Well, if you want to be a freedom wizard that is...

To start, figure out when your resupply boxes reach you. Or in The Hidden Green lingo, find out when you get your paychecks. A great amount of us will receive a paycheck either twice a month, once every two weeks, or once a month.

If you have an unpredictable pay schedule, talk to your boss. Let them know you are getting your personal life in order. And that you would appreciate the help of a sustained pay cadence that works for both you and the business. Harness the courage and do it. Your boss will respect you more if you ask this. Trust me.

If you run your own business, find a way to transfer the money from your business bank account to your personal bank account at an ongoing cadence that works for both you and your business.

Once you find your pay cadence, draw a timeline showing when you'll receive 6 future paychecks. I’ll use twice monthly as an example.

During the period between The Wizard's resupplies he would slowly eat the food from the package. For you during the period between your paychecks you will spend money from each paycheck's income. Add this spending period to your timeline:

timeline2

Looking good! We're starting to see something here.

Now, The Wizard didn’t just know when he’d get his resupply boxes, he also knew the amount of food that would be in those resupply boxes. Just like The Wizard, you need to know how much will be in your resupply boxes. You need to know how much will be on your paychecks. Use mint.com. Find your average paycheck amount.

If your paycheck amount varies greatly, find your average pay over 5 or 6 paychecks. Use that.

Add your average paycheck amount to your timeline:

The Wizard needed one more ingredient to comfortably offer me his jar of food. The Wizard needed to know how much food he’d eat before his next resupply. If you want to offer yourself a big ol’ jar of freedom, you need to know how much money you will spend till you reach your next paycheck.

If you’ve been with us from the start, you’ve already picked your savings ratio. You looked over your mint.com account. You chose freedom over certain purchases. And you axed 10, 20, or 30 years off your working life.

If you haven’t chose a savings ratio yet, get over to this article. Read about two surfers, Lindy & Dave. Read about how they lived their lives. Choose whose life you’d like yours to be most like. Then follow the action at the bottom of the article and bring your savings ratio to reality.

Once you have your savings ratio, subtract it from 1. This is your spending ratio. After finding your spending ratio, multiply it by your average paycheck amount. This is your spending per paycheck. We will also call this your freedom spending -- the amount you can happily spend between each paycheck while still reaching financial freedom in the years you chose.

spendingratio

Add your spending per paycheck to your timeline:

timeline4

Awesome. We now have a timeline that shows your cash flow for the next three months.

But we missed one thing. Oh, we missed when The Wizard handed me the jar of mouth-gasmic food. Ok, ready to feed yourself this stuff? Great. Now you simply hand yourself a jar of freedom in between each of your resupply box pick ups. I mean, you transfer the money left over after your freedom spending to your savings account. This is your savings per paycheck.

savingsperpaycheck

I like to transfer this money to my savings account as quick as I can for the reason that it’s fun to watch my freedom stash grow. And also for the reason that then I never think of that money as for my day-to-day spending.

If you get paid via a direct deposit, set it up to split the deposit between your savings and checking accounts. Send your freedom spending per paycheck to your checking account. And send your saving per paycheck to your savings account.

If you get paid by check, deposit it in your checking account. Once the deposit clears in 1-2 days, take your phone out and transfer your average savings per paycheck to your savings account.

moneymovement

The money in your savings account is mostly for investing. Don’t let that scare you. We’ll understand it well soon.

I also use the money in my savings account for making a fat purchase like a car or a vacation. But I boost my savings ratio for a few paychecks before making the purchase. The heightened savings ratio covers that expense and doesn’t cut into my freedom stash.

The money in your checking account is for everyday life -- things like rent, food, and fun! I sometimes use the money beyond my rent and food for larger purchases like a surfboard, a snow jacket, or a kite harness.

Either way, when I make a large purchase I do not use money from my freedom stash. I either heighten my savings ratio to cover the purchase or I use the money I've allocated to "fun" because the purchase is going to up my fun-score.

Now you -- the freedom wizard -- are set to walk the trail of financial freedom by knowing three things: 1. When do you receive your paychecks?, 2. How much money will be on those paychecks? And 3. With your savings ratio in play, how much do you have to spend in between paychecks?

Welp, I’m going to get back on the trail -- listening to the winds and meeting the other hikers. I’m probably gunna surf too.

For you? Go prepare for your money’s movement! Then I’ll see you out there!


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