Street Smart Money Hacks : How to Retire Rich By Starting Small

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Smart Money Hacks

I looked up the definition of hack, and funnily enough there are two relevant definitions:

1. to reduce or cut ruthlessly; trim:
e.g. The Senate hacked the budget severely before returning it to the House.

That’s the boring kind of hack.

The other definition of hack you should be looking at is this:

Informal: a tip, trick, or efficient method for doing or managing something.

Now we are getting somewhere.

A real money hack is an efficient way for managing something. So to me the best money hack is an efficient system for managing your money.

Because let’s face it, very few people want to be personal finance experts (I count myself as one of those few, but I’m weird).

Your money is just a tool to help you live your life. You don’t want to obsess over it, you just want it to be there for you.

I’m going to show you the exact money system I use, that is perfect for pretty much anyone who wants to be comfortable with money, set yourself up for a good life, and be able to forget about money.

How to Retire Rich by Starting Small (The Proven System) 

So, without further ado, here’s the system you need.

First, you need to calculate THREE numbers:

A. Your total net monthly income

After tax, 401(k) or retirement contributions, etc.

B. Your total monthly spend on recurring bills – rent, energy, phone bill, gas.

Anything you can calculate to the nearest $10 with 95% certainty month-on-month.

C. What’s left: A minus B.

That’s your disposable income.

Then you need to set up each of these different bank accounts:

1. A main bank account

Into which all your income gets paid, and from which all your recurring bills go out.

This is the mothership.

The general.

The leader who tells all the other money where to go. It should be a simple checking account, no fees, no minimum balance.

2. A 401(k) account/pension fund/investment account.

If your company offers any sort of match, maximise it.

Shovel this cash into tax-advantaged accounts before you even see it.

This is your insurance policy. Put it all towards a low-cost index fund, and forget it exists for 40 years.

Even if you screw up hugely, you’ll still have a nice retirement.

3. An emergency fund savings account.

This should be a regular cash-savings account, at a different bank to your main account, with no internet banking access.

This is another insurance policy.

You want this money to be easy enough to access in a crisis, but difficult enough that you don’t reach into it when you want to buy another round of drinks at the bar.

4. A second savings account

This is for longer-term savings goals like a house deposit, capital to start your own business, saving up for a car/vacation, anything like that.

This should be at a third bank, and should be even more difficult to access.

You can use certificates of deposit or another vehicle that locks your money away for little bit, as long as it’s no-risk.

5. A fun money account.

This should be a checking account that’s super easy to access. It’s where all your day-to-day spending will come from.

Restaurants, video games, drugs, gambling, baseball cards, alcohol, Starbucks, whatever you want to spend your money on.

It’s yours to do as you please.


It must be an account with NO OVERDRAFT FACILITY.

This will make sure that if you try to spend more than you have, your bank won’t let you.

Once it’s gone, it’s gone.

6. Another investment account (If necessary) 

A Roth IRA if you’re in the US, a stocks and shares ISA if you’re in the UK.

If you can and want to keep investing money, here’s the place to do it.

That should take you a couple of weeks to get set up.

Now you need to link them all.

Street Smart Money Hacks

Your main account should be where your salary gets deposited directly.

All your recurring bills should be on auto-pay out from this account.

That’s pretty simple.

– Take 10% of that and set up an automatic transfer each month to your emergency fund account, until you have 3 months worth of expenses in there (expenses being amount B that you calculated).

Once you have 3 months of expenses, switch this to auto-transfer to your other investment account.

– Take 10% of it and set up an automatic transfer to your long-term savings account.

– Take 70% of that amount and set up an automatic transfer to your fun money account.

– Leave the remaining 10% in your master account as a buffer, just in case.

Forget about this too, and just let it build up over time.

Here’s an example of how this works in practise. I’m using a monthly pay cycle as an example, because that’s how I get paid.

All these numbers are made up, and I’m ignoring taxes entirely, but it’ll show you how it works:

1st week of the month

I get paid $5,000 straight into my master bank account, and another $500 goes straight to my retirement account, matched by my employer.

2nd week of the month

All my bills go out: rent, electricity, property taxes, car insurance, phone bill. Total outgoings is $2,000 (leaving $3,000 remaining).

3rd week of the month

I have automatic transfers to my emergency fund ($300), my long-term savings ($300) and my fun money account ($2,100). I leave another $300 sat in my master account just in case.

The remaining week of the month

I have only one bank account to manage — my fun money — knowing that this needs to cover my food, entertainment, and anything else for the month.

I can spend that money however I want, safe in the knowledge that I’m saving $600 per month towards other savings goals, and funding my retirement accounts as well.

If I spend all the money in this account on stupid shit, I can’t get into debt, because my bank won’t let me.

In fact, if anything, I usually end up getting to the end of the month with money left over in this account.

Anything left in this account by the start of the next month, I manually transfer to my second investment account.

So with this set-up you:

1. Eliminate Risk

You’ll always have an emergency fund and a buffer of money in your checking account.

2. Automatically Fund Your Retirement

No need to worry about that, it’s already taken care of.

3. Don’t Need to Worry About Bills

They’re on auto-pay and you’ll always have enough to cover them, you just need to manage your fun money spending.

4. Can’t Get Into Debt

Because your bank won’t let you.

After 1-2 months of spending all of your fun money before the month is over, you automatically learn to be careful with this.

5. Spend Less Time Worrying About Money

Because it’s all on auto-pilot. You can just go and live your life.

That sounds like a pretty good money hack to me.

Set it and forget it, and live your life while you quietly get rich in the background.

Andrew Lynch is a publishing manager at Book In A Box and a qualified accountant. 

Let me tell you a personal story.

I remember about 4 or 5 years ago when I told a close friend of mine that I operate 6 bank accounts with three different banks.

He screamed.

And he told me to stop and start operating one account in all seriousness.

I did not take his advice then. And I have never regretted it.

What is your best street smart money hacks?

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