Unless you were a finance major, chances are when you graduated college you only had a basic idea of how to manage your personal finances. If you were in a business school, you may have had the luxury of taking a couple required financial courses such as an introductory accounting course or intro to financial markets. These types of courses are beneficial to your overall financial knowledge, but they do little to create a framework from which to build your personal finance system.

Typically, students open up their first personal bank account during their freshman year of college. They get a checking and a savings account and as long as the bank treats them well, there is little incentive to change things. The pain to create a personal finance system does not outweigh the convenience of keeping things the way they are. I was in the same boat until I read Ramit Sethi’s book, “I Will Teach You To Be Rich.”

Ramit geared this book specifically to college graduates who want to get a hold of their finances. By creating a personal finance system, you can overcome the majority of psychological barriers associated with saving and managing your money. Instead of consciously keeping track of where you are spending your money and how much you are saving, Ramit offers a system that takes advantage of automation so you don’t have to worry about where your money is going.

Recently, I decided to use Ramit’s advice and build my own version of his personal finance system. For the last 4 years, I have had a basic PNC account with checking and savings. Now, my personal financial infrastructure includes an INGDirect Orange Savings Account, a PNC Virtual Wallet, and a linked PNC Points credit card.

Using INGDirect, I can have up to 20 different automated savings accounts. I haven’t taken full advantage of these benefits yet because I honestly don’t have concrete savings goals right now. Currently, I have my ING account automatically take $500 out of every pay check to put into savings, but once I get organized I can automatically send money into multiple accounts. For example, I could have it automatically send $20 towards my future wedding, $20 towards my next vacation, $50 to an emergency account, $30 towards a business experiments account, and so on. You can see how powerful this account can be over the long term towards reaching your savings goals. As Ramit would say, it allows you to have “guilt free spending” because you know all of your savings goals are being taken care of.

I also decided to keep my PNC account and upgrade it to a Virtual Wallet. Besides an easy to understand, organized user interface, my favorite feature is that it helps you track your spending. Similar to www.mint.com, the Virtual Wallet breaks your spending down into categories such as restaurants, gas, entertainment, etc. This feature is great because you can clearly see where the majority of your money is going instead of playing the guessing game.

The final piece of my infrastructure is my credit card. Growing up, I always told myself that I wouldn’t get a credit card because it is too easy to get into debt. This statement may be true for some people, but if you have the discipline to live within your means, then a credit card can be a huge asset to your finances. I chose to get a points credit card because I get points (read free money) for every purchase I make. By linking my credit card to my Virtual Wallet, I am able to track where all my money is being spent instead of falling into the psychological trap of just placing it on my card.

Taking the time to set up an automated financial system has incredible long term benefits when compared to a basic bank account. Automation lets me make a decision once and stick to it instead of having an internal argument every time I receive a pay check. Multiple savings accounts give me the peace of mind that all of my savings goals are being met instead of keeping mental notes on one large pool of money. Finally, tracking my spending allows me to analyze my spending behaviors and make educated adjustments as needed.


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