The EXACT System I Use to Manage Every Paycheck

The Personal Finance Podcast

Host Andrew details a comprehensive, automated system for managing paychecks by prioritizing wealth-building before expenses. The episode ou

Key takeaways

• Treat investing as a non-negotiable bill to ensure you 'pay yourself first' with a target 20% investment rate.
• Utilize 'bill clusters' by moving due dates closer to payday to simplify cash flow and reduce surprises.
• Pay off credit card balances weekly to prevent the accumulation of revolving debt and maintain better oversight.
• Maintain an emergency fund in a High Yield Savings Account (HYSA) even after it is fully funded to provide a financial buffer.
• Implement specialized savings buckets for predictable costs like car repairs, home maintenance, and holiday spending.

Main topics

• Automated Paycheck Management
• Retirement Account Strategies (401k, HSA, Roth IRA)
• Debt Repayment Methods (Snowball vs. Avalanche)

Notable quotes

Investing should be treated as a bill.

Conclusion

The episode provides an actionable blueprint for transforming financia

Transcript preview

Speaker 2 (0:00) On this episode of the Personal Finance Podcast, the exact system I use to manage every paycheck. What's up, everybody, and welcome to The Personal. Finance podcast. I'm your host, Andrew, founder of mastermoney.co. And today on the personal finance podcast, we're going to be diving into the exact system I personally use to manage every paycheck. If you guys have any questions, make sure you join the mastermoney newsletter by going to mastermoney.co slash newsletter. And don't forget to follow us on Apple podcasts, Spotify, YouTube, or whatever podcast player you love listening to this podcast on. And if you want to help out the show, consider leaving a five-star rating and review on Apple Podcasts, Spotify, or your favorite podcast player. Now today... On the show, we are going to be diving into the exact system I use to manage every single paycheck. But before we dive in really quick, just in case to get this out of the way, if anybody is interested in working with me one-on-one, we are launching one-on-one coaching and we're going to do a very specific program for people in one-on-one coaching. If you are interested in that, shoot me an email, andrewatmastermoney.co. and let me know you're interested. You have to make over $100,000 per year to qualify. And in addition, you also have to be willing to put in the work. I'm going to give you some systems and processes to put in, and you have to be willing to do the work in order to be able to qualify. So if you're interested in that, let me know. And if you don't qualify or you don't meet those qualifiers, join Master Money Academy because I literally coach you in Master Money Academy as well if you have not seen that so far. All right, so let's dive into the exact system that I use to manage every paycheck. Now, my goal with this episode is to make this simple for a lot of you out there so that you understand, oh, this is the order I should be thinking about my money when it comes and starts to trickle down to me so I can understand where my dollars need to go. And the problem is most people run their paycheck in the wrong order. Most people flip this entire script, but instead I'm going to show you exactly how to do this. Now, one big key to this entire system before we dive any deeper is I want you to understand how to automate your money. If you don't automate your money currently, you're going to see how automation works with every single thing that I do, but you really need to get your money automated. This is why in Master Money Academy, we have a program in there called literally automate your money in one weekend, because we want you to get some of the financial foundation done as quickly as possible so that you can get the ball rolling on investing. We teach you investing in Master Money Academy. That's our entire goal. And I want you to get to investing as fast as you possibly can. And as you see, once you have the foundation set up and you understand kind of where you are and what you're doing currently. then we can really get the ball rolling and get more dollars invested so that you can start to build wealth towards financial freedom, so that you can take those extra dollars and actually become financially free. That's where the progress is made is through your investments. But we got to get that financial foundation set up first so then you can get to the point in time where you're investing is working on autopilot. Now, the way you manage your money is going to be really, really important because if you can get money out of your hands so you don't go and spend it, Boy, oh boy, is that going to change the way that you think about this. And so when it comes down to automation, I want you to automate a couple of different areas. One is I want you to automate your bills. If you are manually paying your bills, as you're going to see in a second, I don't want you doing that. I want you to automate your bills and then checking to make sure things get paid with a very simple system. Number two, though. is I want you to make sure that you are automating your investments. And number three is I want you to be automating your savings. This is going to be the three areas that once you get all three automated, all of a sudden you start to build wealth on autopilot. You start to pay down debt automatically. You have the ability to do a lot of really, really cool things. Now, this order priority is, in my opinion, in order of importance for my situation. And so I want you to think through, okay, well, is there some things that you really want to make sure that you are working on? If there's something you're really focused on right now, you can start to think about the order priority. And if you have a question on this, shoot me a question over and I can help you. But this is going to be one of those things I think for many of you could be very eye-opening. I would also love to hear down below for wherever you're listening, you know, what your order of operations is as you start to listen to this episode. All right, that's enough yapping. Without further ado, let's get into my exact system on how I manage. every single paycheck. So the first thing I do, step one, is every single time money hits my account, I want to make sure I get it out of that account as fast as I possibly can. Now, you may be saying to yourself, Andrew, what are you talking about? You want to get money out of your account? Yes. I want to move money out of my checking account as fast as I possibly can. Your checking account is just a flow through account. That's all you should see it as. Money flows through your checking account and goes to the places it needs to go. And so the first place, I want my money to go is towards investing. Investing should be treated as a bill. Investing should be something that you do first before everything else. And this is after you have your emergency fund set up and after you have your high interest debt paid off. You need to make sure that you are getting your dollars investing. So this by far the most important thing. This is called paying yourself first. See, many people do this in the reverse order. They start to spend their money on bills or they start to spend their money on fun things before spending money on themselves. But when you pay yourself first, that means you can keep those dollars, but also get those dollars working towards your financial future. And so this needs to happen as the very first thing. Now, whether you get a 401k match or do other investing is going to be how you want to think about this. Now, a lot of times before you even get your paycheck. things like your 401k contributions are going to come out. Now, how many of you out there listening to this podcast have ever looked at your 401k balance and said to yourself, wow, there's a lot more money in there than I ever thought there could be? Well, the reason for that is because you automated this and the process of automation allows you to have way more cash on hand than you ever thought there would be. So your 401k contributions are going to come out first anyways before they even hit your paycheck. And so what I would recommend is trying to look into things like your 401k. And I like the Roth 401k best. And so that is going to be for me what I am really focused on. Now, the Roth 401k, if you don't know, is similar to a 401k in contribution limit, but very similar to the Roth IRA and how it operates, meaning that money goes in that's already been taxed, meaning it came out of your paycheck and was taxed. Then it grows tax-free and you could pull the money out tax-free. Now, this is very powerful because you can get 20 % $4,500 per year into a Roth 401k. Why is that great? Well, if you start at the age of 25 and start maxing out your Roth 401k, I know it's a lot of money, but let's say you're making good money and you are able to max out your Roth 401k from the age of 25 to the age of 65, you would have $10.8 million inside of that account at a 10 % rate of return. And guess what percentage of that money? is going to be completely tax-free. It's going to be the growth. About $9.8 million is going to be the tax-free growth. Literally, you never pay a dime in taxes on $9.8 million. Plug that into your tax bracket and you will see the amazing savings of a Roth 401k. The ability to get $24,500 per year, having an employer match, having the ability to really fund and front load that cash is really awesome. So I love the Roth 401k, one of my favorites. You also have the traditional 401k if you want to go that route. So these are accounts where money goes in. money grows. And then when you pull the money out, you get taxed. And the thought process here is, well, hopefully when I'm retired, I'm going to be making less money. So I'll be taxed at a lower rate than during my working years. And so that's why we want to contribute to something like a 401k, for example. Now, the 2026 limits for the 401k are also 24,000. $500 per year. Another place that you could be contributing to is the HSA, the health savings account, which has triple tax benefits, meaning money goes in tax-free, it grows tax-free, and it can be pulled out tax-free as long as you have a qualified medical expense. But you must have a high deductible health plan to qualify for an HSA. So we used to call this the super retirement account because it has those triple tax advantages. And so having an HSA as part of your arsenal, as part of your retirement plan, can be really, really important. In addition, one of the other places that I love is obviously the Roth IRA. And for many of you out there, the Roth IRA is a wonderful place to put your dollars because it gets $7,500 per year into something that grows tax-free and you can pull the money out tax-free once it's in there. Now, remember, the number one mistake that people make when investing their dollars is thinking that the account is their investment. No, instead, you need to still invest the money inside of that account once you have those dollars. working for you. Now, you may be saying to yourself, Andrew, how much do I need to be investing every single month? Well, our goal always here at the Personal Finance Podcast is to start you off at 20%. And so one of the things that I want you to do is as you begin to think about that 20 % number, you may be saying to yourself, well, I can only invest 10 % right now. Well, what we need to do is increase our income. decrease our expenses, increase our income, decrease our expenses. Say it over and over and over again to yourself, because if you can increase your income 10 % and decrease your expenses 15%, all of a sudden you have a 25 % delta that gets you 25 % more that you could be putting towards wealth building. And that's what we want you to do. So as you start to think about this, I want you to figure out ways, how could I get closer to increasing my income 10 % this year and decreasing my expenses by 15%. Now you can only decrease so much. You can increase and every single year. And so once you get those expenses under control, then your main focus should be going towards that income. Now, if you're starting from zero and you don't know what to do, just start by investing 1%, then 2%, then 5%, then 10%, and start gradually getting your dollars working as you get comfortable. That's why in Master Money Academy, I tell people in there, you could start from zero and I'm going to be able to help you here. I'm going to be able to transform your finances and help you get started investing because that's my goal is to get as many people investing as possible so they can become millionaires. Now, why is this important for me to do first? Because I want to get my... dollars working for me so that I don't have to think about this anymore. Your money can work so much harder than you ever can. And so this is why it's number one on my personal list. Now, if you are still in high interest debt, meaning if you have credit card debt. If you don't have your emergency fund funded yet, those are the first two things you need to do in your foundation. Then you can get to the point in time where you're investing first. So still focus on those two if you haven't done those two yet. But in my situation, I invest first and I'm showing you exactly what I do. Speaker 2 (11:12) When I started the personal finance podcast, I had no idea how big it could become. I just knew I had something I wanted to share, so I started putting it online. And looking back, I definitely wish I would have started a decade earlier. One of the horror parts about building something online, though, is making it look professional. A website used to mean hiring a developer, figuring out design, and potentially spending thousands of dollars. In fact, on my website, I spent tens of thousands of dollars. That's what impressed me when playing around with Hostinger's AI website builder. I told it what kind of website I wanted, and I built the first version in minutes. No coding, no designer or developer needed. And Hostinger doesn't stop at launch. 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Sponsored jobs posted directly on Indeed are 95 % more likely to report a higher than non-sponsored posts. That's a huge advantage when you're trying to grow your business. Spend less time searching and more time actually interviewing candidates who check all of your boxes. Less stress, less time, more results. When you need the right person to cut through the chaos, this is the job for Indeed Sponsored Jobs. And listeners of this show will get a $75 sponsored job credit to help get your job the premium status it deserves at indeed.com. podcast. Just go to indeed.com slash podcast right now and support our show by saying you heard about Indeed on this podcast. Indeed.com slash podcast. Terms Speaker 1 (13:35) and Speaker 2 (13:35) conditions apply. Need to hire? This is a job for Indeed sponsored jobs. Now, if you watch this podcast on Spotify, Apple Podcasts, or YouTube, you probably noticed the wood slat walls behind us. We wanted this podcast set to look professional, but also not be a project that was overly complicated. And I found these slat walls on Wayfair and it completely changed this space. And it's now basically the background that you see in every single podcast or piece of content that we record. And that's one of the things that I love about Wayfair. You can shop thousands of products across different styles and budgets, use customer photos and reviews to see how things actually look in real homes and find something that fits your space. They also have Wayfair verified products that are hand vetted by product specialists using a 10 point quality inspection. And with more than 20 million verified five star reviews, you can feel a lot more confident about what you're ordering. I've used Wayfair for this studio and our home and I. Speaker 2 (14:53) Every style, every home. Speaker 2 (15:01) All right, what is step two? Step two for me is to pay down any debt that I have. So I have a number of different ways I get paid. I have businesses that pay me. I even have a W-2 that pays me. And so because I have all these different ways I get paid, I manage money on a weekly basis instead of a biweekly or monthly. So if you're biweekly, this is still gonna work. If you're monthly, this is