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https://github.com/fractalcactus/banking-framework


https://github.com/fractalcactus/banking-framework

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README 

        
# Banking Framework by Malcolm and Gabby



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### What is this?

Managing your money is hard. And sometimes scary. I'm tackling this head on.

I'm not an expert, but I want to share what I've learnt so far.



![banking image](Banking Framework (1).png)



Here is a description of an account framework that a banking guru shared with me. It ensures that you prioritise paying your bills, actually stick to your budget, and track your cash flow. I hope this helps other people make a start on untangling this stuff! 



My personal situation: I am a freelance software developer, living a fun but unpredictable life with varied income. I don't get regular payments, I go through times of abundance and dry spells. I want be in control of my money, know what is sensible for me to spend, and save. 



I bank with [KiwiBank](https://auth.kiwibank.nz/oauth/authorize?client_id=4uogpevo0xheiw5t0blubj4zwibte61&login_hint=guest&redirect_uri=https%3A%2F%2Fjoin.kiwibank.nz%2Fauth%2Fkiwi_connect%2Fcallback&response_type=code&scope=openid+email+profile&state=8c15dce365538b187e351a3b66ab3bd690777f7ee1eedb73), who have incredible service, and make it super easy to set up an account with them. They have two great features called [Sweep](https://www.kiwibank.co.nz/personal-banking/clever-stuff/sweep/) and [Paystream](https://www.kiwibank.co.nz/personal-banking/clever-stuff/paystream/) which take a lot of effort out of putting your money in the right places. Kiwibank also allows you to link two accounts to an EFTPOS card, on on each button. I link cheque to SPENDING, and savings to BILLS.



### This is a starting point that you can edit to cater to your own needs. 

All percentages and numbers should be adjusted to what you need



# The Account Framework



### The SUPER SIX:



* SPENDING

* BILLS

* REIMBURSALS

* CREDIT 

* SAVINGS 

* TAX (if you pay your own tax)



### BILLS

* BILLS is the FIRST PLACE money from work income hits your accounts.

* It gets distributed to various other accounts after entering through here. BILLS is the account that splits the money across other accounts using [Paystream](https://www.kiwibank.co.nz/personal-banking/clever-stuff/paystream/). When a payment is made to BILLS, 40% goes to SAVINGS, 20% goes to TAX (if you're a contractor), and the remaining 40% stays in BILLS.

* BILLS pays the Bills. BILLS holds a mountain of bill money - say, a 6 week buffer to ensure it always has enough, especially when you get paid sporadicaly. 

* Set up Automatic Payments to pay your rent/internet/power e.t.c from this account. 

* Also, setup a weekly or fortnightly auto-transfer from BILLS to SPENDING. This figure is your weekly/fortnightly budget, what you want to have access to to spend.This means that my EFTPOS card (which has a button linked to SPENDING), will show I don't have the funds if I go over my set budget, and I won't eat into bill money, or what I intended to save.

* Apart from the basic necessary automatic payments of rent/internet/power e.t.c You can also choose to treat BILLS as all the other boring spending, like groceries, and transport.

*e.g when you're at New World, you can pay for your groceries by using the savings button linked to BILLS on your EFTPOS card, but when you're at a cafe buying cake, you can use the cheque button linked to SPENDING on your EFTPOS card.*

This separates the frivolous purchases from necessities when you look over your accounts and see where your money is going. 



### SPENDING

* SPENDING is where you make your fun day to day purchases. Eating out, Novelty Socks e.t.c all come under spending. 

* It is linked to the cheque button on your EFTPOS.This separates the frivolous purchases from necessities when you look over your accounts and see where your money is going.

* It is fed by BILLS, which has a weekly or fortnightly auto-transfer from BILLS to SPENDING. 



### CREDIT

* This account is either a credit card, or another account linked to another debit/Eftpos card (not the card that links to SPENDING and BILLS)

* It exists so that when you buy things for other people, it doesn't 'mess up' you tracking your spending. 

* *e.g if you own a credit card: you go shopping for your flat, you spend $250. You don't want to see that in your BILLS account, because it's not a personal bill. Instead, by using the credit account, everyone else in the flat of 5 can pay you $50, to your REIMBURSALS account, which is easily trackable, and you then move that $200 into credit. you can pay $50 into CREDIT from BILLS, and you can clearly see that your grocery bill was a personal $50*

* *e.g if you own a debit card: treat it like a credit card, load it up with say $500 that just sits there, and you can have the same system as above. The $500 becomes the '0', so that if you saw the balance was $450, you would know that someone needs to pay you back. You would then check REIMBURSALS, see that they had paid and tranfer the money from REIMBURSALS to CREDIT* 



### REIMBURSALS

* REIMBURSALS is for people reimbursing you, so it doesn't get lost in your accounts. 

* It makes it really obvious where the money is coming and going from. It also routes your money around the paystream system set up in BILLS

* If there's money in REIMBURSALS then you know you need to do something with it.

* *e.g you pay for a friend's $30 concert ticket. If they paid you back through bills, the payment would get split, into BILLS, SAVINGS and TAX. Instead, the money gets spent, and reimbursed in one piece*

* *eg. I pay for 5 peoples tickets, $20 each on my credit card and mine as well, which costs $120 all up. 5 people repay me $20 and I transfer $20 from my spending account to REIMBURSALS. Then I transfer the 120 from REIMBURSALS on to the credit card in one payment, which matches the original purchase.*



### SAVINGS

* SAVINGS is your 18 week buffer for emergencies and financial security. 

* Once you have an 18 week mountain piled in SAVINGS, you're ready to start building another mountain invest in a Term Deposit, or buy Shares e.t.c



### TAX

* TAX ensures you have saved money for paying tax, if you're a contractor.



### Sweeping

* To make sure that your Bills are always the first priority, you can enable [Sweep](https://www.kiwibank.co.nz/personal-banking/clever-stuff/sweep/). "If your balance falls below your minimum, money is swept back from another account, so there’s always enough for your everyday expenses."

* *E.g Make sure that BILLS always has at least enough to pay your rent ($200). Set up a sweep of $200 from Savings when BILLS falls below $20*

* You can also set up a sweep to make sure that an account doesn't hold TOO much money

*  *e.g Money over $500 in SPENDING gets swept to SAVING*



### Other Considerations

* remember to enter KiwiSaver, and pay for it if you're a contractor. 

* If you have regular income, and it's possible, you should pay your bills such as Rent, 2 days after you get paid. That allows a day for the money to transfer if the system/person paying you messes up. 



Good luck, let's win at this money game together :D

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