Today I want to talk about an extremely useful method for saving money: the three-account model. It's a simple and effective way to achieve your financial goals. I have also implemented it into my life and it has made me very disciplined. Here's how it works:
Structure
Cashflows Your salary or other income sources will be transferred to your consumer account or checking account. From there you then set up standing orders on three separate accounts. There can also be subaccounts, which are now very present at NeoBanks such as N26 or C24. Perhaps the most important part is the investment part. You pay this portion first, so you pay yourself first before you go shopping or pay bills. This rule is essential and books like Rich Dad Poor Dad describe the importance of this rule in more detail. Part of this is then transferred to the normal spending account, from which you can buy groceries or create reserves in case of an unforeseen expense. The money can be spent directly from the fun account and you can use the money for exactly that with a clear conscience.
1. Emergency fund: In addition to standing orders, you can also create an emergency fund in your checking account for unexpected expenses or financial emergencies. This gives you security and protects you from unforeseen situations.
2. Investment account: This account is intended for long-term goals such as buying a home, saving for retirement, or funding educational expenses. By investing wisely, your money can work for you and you can benefit from it in the long term. I personally have been using Scalable Capital for this for 5 years.
3. Fun account: This is about enjoying life and treating yourself to something special every now and then. No matter whether it's a weekend trip, a new gadget or a special experience - this account has space for the little joys in life. The C24 app is very convenient for having a fun account and building up an emergency fund. I also use it and am very satisfied. You currently (03/2024) get up to 3.5% interest and can create sub-accounts, which is perfect for your finance automation
Why is the three-account model important for a mindful life? By clearly defining your financial goals and dividing and automating your money accordingly, you will learn to be more conscious about your expenses and make your everyday life easier. You'll develop a better understanding of what's really important to you and be able to direct your resources accordingly. In this way, you not only contribute to your financial stability, but also to an overall more balanced life.