Life Admin - I’m Changing Banks
23 Apr, 2023
During a Phone A Friend kōrero, I often notice and comment that we all start off with very simple financial lives. One bank account. Ta-da! Job done; a complete personal finance system that works beautifully. When you are 14 years old.
But then we start to add things to our simple system:
An extra account, or three (or more), for savings
Perhaps a Sharesies account to begin investing
A KiwiSaver account when we get our first job
Then how about adding a little and then a lot of debt into the system:
A student loan
Credit cards, stupid Afterpay and an even stupider car loan
Then a mortgage and a confusing array of offset accounts. And a tiered loan structure to make the debt seem less unsurmountable
Then we get a partner and add their own unique and ever-evolving financial management system to our own. Or we keep their complicated system running independently and tell ourselves through gritted teeth that this is all just working perfectly.
And if we say it often enough and vehemently enough, we begin to believe it.
The years roll on, and we keep tacking new things onto our financial system. Until it starts to creak and groan under pressure. Our finances become overly complicated.
The clouds have been brewing.
My banking system was 80% fine and working well, but there were a few areas under strain, and as our working situation has been changing this year, our banking needs to change with it. I’ve procrastinated long enough; it’s time to do something about it.
It’s time for - sigh - a banking restructure.
Which has the same appeal as poking myself with a sharp stick. I’ll avoid it if I can. If ever there was a reason to have joint finances, then this is it. I don’t have to do it all myself; this will very much be a collaborative effort.
Teamwork is our secret weapon which is making this reshuffle easier. I can’t stress enough what sharing your money with your significant other means. We have shared the load of staying on hold, filling out paperwork, scanning documents, and speaking with our accountant. A problem shared is a problem halved.
So, although it’s annoying - honestly, I’m all for mega security with banks, two-factor authenticate me all day long - but re-jigging your banking structure is a temporary, complicated, annoying, full-time, unpaid job. I don’t know what the secret is to get your bank to answer their phone, but if you know it, please tell me.
Why now?
You know how you sometimes walk into a room and want to have a huge chuck out? There was a tipping point, and you just tipped over the edge?
A change to our banking structure had been brewing for some time. It reached a tipping point.
And much like when you decide to reorganise just one part of your living room and before you know it, the whole place is in chaos, the same is true for when you decide to change your finances, in our case, a complete and thorough revamp of our banking structure.
I’m proud of how we handle our money, but nothing stays the same forever and from time to time, we need to have a huge chuck out and rearrangement to set our course for the next few years. The way we had things structured well and truly served its purpose, but things have changed and our banking needs to keep up. As I always say, it’s never one and done with personal finances. From time to time, you always need to make changes.
I wish I could say I set an annual calendar note to review and tweak, but I’d be lying if I said I did. Instead, it's about the general vibe and the energy I have available to get stuck into making some changes. Because one thing always leads to another, things are rarely as simple as they seem.
In the beginning.
Because 1st April was the start of a new financial year, we took the advice of our accountant. In March, we began completely separating the blog finances from our personal finances. Over the years, the income from The Happy Saver has slowly started to grow, and I have always kept that income, plus the tax I need to pay, in its own bank account within my usual bank and under my name.
But because the blog is a team effort, we wanted to have it under both our names and long story short, the easier way to do this was to open up a business account with a completely different bank. So, that is what we did. We now bank with two New Zealand-owned banks; neither is great at answering their phone/email.
And you guessed it; it took far longer than we thought. Endless amounts of time were spent on hold, and that was after waiting for days for email responses that never came. We are now well into April, and the simple act of joining a bank and setting up accounts is ongoing. Don’t believe the glossy ads you read; navigating banking systems, particularly in the digital age, is never for the faint of heart. Once you get someone on the phone, they are great, but they clearly run on a skeleton staff. In fact, the whole time I was writing this post, I was in a call-back queue. They never called me back. Hopeless. I’m probably still on hold as you are reading this.
So, there goes our nice clean start to the new financial year with all transactions coming and going from our shiny new business account. Instead, we had some transactions in the old bank, and now some in the new one. Oh, well, we tried! And thank goodness for PocketSmith because I keep a thorough track of each transaction, so Nigel, our accountant, won’t have a fit at tax time!
One thing leads to another.
Now, we could have stopped right there. The Happy Saver and our personal banking are now even more clearly defined.
But.
Because Jonny is now a PAYE employee, he no longer has any need for the bank accounts he has had for years (in his name) as a freelancer. Shutting down that side of his work life also means shutting down those bank accounts. However, it makes good sense to run bank accounts concurrently until you can be sure that every payment and outstanding invoice is accounted for. So, his bank accounts are close…ing.
Do you see what I mean about one thing leading to another?
PLUS…
The elephant in the room.
There has always been one thing that I/we have never quite gotten around to doing. Apart from his business banking accounts, Jonny and I have always had completely combined finances. Any money that hits the bank account, no matter who made what is considered OUR money. We earn as a team, and we spend as a team. We manage our money together for the good of our whānau of three, and we never argue about money. It’s all rainbows and kittens. But there has been one minor bug in the system. All of our bank accounts are in my name only.
Why?
I’m not 100% sure why!? I think it was because we had paid off our mortgage, I was at home with a new baby, we were changing banks at the time, and Jonny was at work all day. I think the answer is that it was easier for me to fill out the paperwork, and there were tax advantages to me having it in my name because I had zero income. Or something like that?
For all these years, it’s worked just fine. The odd annoying glitch has happened, but we just papered over those cracks and kept going. It was not irritating enough to get us off our butts and force us to fix it.
Both of us know all the login details, have access to the accounts, and it's our money, so it’s all been fine. Although, if I’m being honest, I’ve been too lazy to change because I knew it would get complicated. And I have not been proved wrong.
So, why now?
Because now that The Happy Saver has been moved to a new bank, now that Jonny is in the process of shutting his business bank accounts, we decided to create more digital paperwork and properly structure our personal banking too.
There is a lingering concern in my mind that if I died suddenly, would he really have complete access to our money, or would he have to prove it was also his? That thought of causing additional heartache when his heart was already aching is a thought I’m tired of having.
A good revamp will, without a doubt, further streamline our finances, which should serve us well for several years.
I’m writing this blog post as we are, by my calculations, 50% through the banking restructuring process. Hopefully, by the end of May, we will have achieved the following:
The Happy Saver is in its happy place with three bank accounts at a new bank: everyday banking, tax, and a sinking fund for saving up for blog-related stuff.
Jonny’s bank accounts for his freelance work all closed down.
Joint bank accounts are up and running for Jonny and I with our existing bank. Each of us with our own debit card. With different bank accounts for our various sinking funds: emergency fund, holidays, insurance, health, car maintenance, schooling, pets, investing, winter power bill, and donations.
Of course, that won’t be the end of it either, you know that, right?
My net worth spreadsheet will need to be updated and adjusted to reflect these new and closed accounts. I also imported my new bank accounts into PocketSmith, and it took all of two minutes. That’s easy, and I enjoy doing that.
But I was looking at my spreadsheet, comparing it to my Sharesight overview (no matter what I do, they never seem to quite match), and then I was looking at the different places we have our pūtea invested. And I couldn’t help but notice there are one or two tiny lingering investment balances, some in my name only, with providers I no longer add money to, which should be closed and reinvested elsewhere. It is time for a sell-off and a clean-out.
But, nah, not right now. That’s a mid-winter job when it’s too cold to go outside. I’m knowingly procrastinating about doing that for now.
So, what about you?
Have you been putting off doing something similar? Have you been adding to your already clunky financial structure? Is it teetering on the brink of collapse? If Scott Pape, The Barefoot Investor, asked you to write down your monetary system on the back of a napkin, could you? You should be able to; personal finances shouldn’t be complicated, and they should reflect where you are now, not where you were 5, 10, or 20 years ago. If it is outdated, the only person who can fix it is YOU, so what are you waiting for? Is it time for a bit of life admin, perhaps?
