Financial Outlook
Money is something where if I have to inconvenience myself for a few percent, I’m not going to do it. I value free time over absolute maximal returns (which may or may not contradict myself later)
And, of course, the golden rule - live within your means. All of my purchases are made using credit cards and buy now pay later (BNPL) instruments although these are all things I can already afford and am choosing to stretch those payments over time simply because I can.
Main account - Monzo
- Salary comes in
- Bills come out
Savings - Monzo
Instant cash ISA which is flexible. As mentioned at the top, I’m quite lazy although have quite a lot of self control. So, I, like many others, have been toying with the idea of this flow for managing money:
- Salary comes in. The whole lot goes into the cash ISA
- Instead of paying bills as my salary comes in, I pay my bills at the END of the month so the value cost of all my fixed outgoings can earn interest
- As soon as the bills go out, I temporarily head into my overdraft and I add the difference back to pay said bills
- This means I earn X% interest in all of my essential outgoings since all the cash I need right now is being held in an account generating interest rather than my current
- Because this is a flexible cash ISA, I can actively withdraw and deposit from the ISA in this manner. Absolutely perfect for my use case as you could unintentionally exhaust your entire ISA allowance very quickly with a traditional, non-flexible ISA
I know I said I was lazy at the top although I have recently automated the entire process above which means anything Monzo related has access to my savings account with most of it generating some level of interest instead of having to store it in my current account. This is mostly essential cash such as bills, mortgage etc. Money you know you need immediately thus can’t invest.
So now, when I wake up in the morning, all of my bills are “paid” and I don’t incur overdraft fees. Additionally, I don’t have to keep chucking money into my current account for the 1p savings challenge. My current account manages itself and I absolutely love that.
Emergency fund - Premium Bonds
I could hold this as cash although I’m currently benefiting from being luckier than average holding premium bonds as well as like the fact it’s (almost) instant access as well as protected.
Expenses - reward credit cards/BNPL schemes
Since my bills kind of pay themselves with my automated set up, I pretty much never use cash or debit for expenses. I balance all expenses between:
- Amex - cash back for something you’re buying anyway is cash back
- Virgin money cash back credit card - for everywhere else which won’t take Amex
- Monzo Flex - for larger purchases you don’t mind paying off now, but want the flexibility to drag it out over time (always the 3 month option here)
- Some sort of 0% credit card - for large purchases you want to draw out
I’d usually put an annual holiday on the 0% card full well knowing I have the cash to pay off the full amount now, although there’s no much point doing so. To quote a friend, if somebody is willing to let me spend their money, then I’m going to take it.
The cash I hold in the flexible ISA within Monzo exceeds the value of all of these credit cards which means I can invest anything off the top with absolute confidence.
As mentioned, I have a lot of self control so might not work for everybody but this is perfect for me.