Episode 186 - Do You Have A Wealth Building Account?

ryan_burklo:

Hello, everybody, welcome back to beer and money. My name is Ryan Burklo,

alex_collins

Alex Collins,

ryan_burklo:

And on today's episode we're going to be talking about establishing what we call a wealth building account and we're goin to be talking about five steps on how to do it and the reason why,

alex_collins

Yeah, so we're gonna like we've walked through this concept in general before, but we're gonna walk through some more specifics. Get into some more details. Talk about the house, the wise, all of the all of the fun components of dealing with the wealth building account, and why you would want to

ryan_burklo:

Absolutely

alex_collins

before we go there, Brian. What are we drinking today?

ryan_burklo:

So we're drinking a beer called Anti Session. It's from Drew brew, which is one of my favorite local breweries here in Washington. They've got a spot actually up in snow, so qualm the past there and I happened to be up there skiing with my family and grabbed a couple of beverages up there, so I thought we would try it out. It's a triple I, p. A alchol content. because triple pas quite quite higher. It's nine point nine with an I v U of eighty.

alex_collins

Yeah, so this has. It's a darker, more amber type color. Um, let's let's try this thing out.

ryan_burklo:

Yeah, it is. Um. it's not my favorite. You can definitely tell that the alcohol content. You can definitely tell it right away. Um, this is not. this is. Maybe if I drink it more might be one of those beers that. the more you drink it, the more you like it. but first taste a little put off.

alex_collins

Yeah, I mean, it's not really what I was expecting from a triple and I think that has to do with the darker color and what not? But this is. It's a very solid beer. It's drinkable like as much as you said like, Yeah, you taste the nine point nine you're not. You're not smacked in the face with with hops like you are typically with a triple. Um, And this is a good beer.

ryan_burklo:

This isn't a hop slap. That's for sure. to me, it was more of an alcohol slap and it was just missing a little bit of. maybe, depth is maybe what I was looking for in this one. but if I were rate this out a bottle cap, I'm probably giving it like a four or five,

alex_collins

Yeah, I'm going to give this a seven. I like it. It's not what I was expecting from a triple, but I like it

ryan_burklo:

So check them out. Though Jube got some awesome beers out there. We've got. We'll probably testing a nother one here shortly that I know that I like, so I'm looking forward to try that one out. So without further ado, Alex, let's let's dive into this right. So we've talked to our clients about establishing a wealth, building an account for the purposes of. We've all heard that that saying of Pay yourself first,

alex_collins

Right.

ryan_burklo:

And yet most people struggle doing that right. like the normal cash flow. The normal way that people's money moves into their household is it gets deposited into their checking account, and then they spend it on lifestyle paying bills, and then whatever is left over is really what they save.

alex_collins

Yeah, and so the design of this is to really kind of flip that script. Um, so a wealth building account at its core is just a checking account. It's an account in which you can deposit money into. you can withdraw money from you can set up like aches, an electronic fund transfers. You got check writing ability. It's just a normal account, but the point in purpose is for it to be out of your normal banking relationship. So it's a different account and a different financial institution. Um, to try to break up the thought process that you have around it and we want step. The mechanics of it are we have our pay check going into the wealth building account, and then money coming from the wealth building account into your normal checking account. So this isn't a replacement. It's an addition to. Um. So why

ryan_burklo:

It's a

alex_collins

we?

ryan_burklo:

buffer. It's a buffer between between it right and the reason we set it up, and you brought up like opening this account up at a different banking institution. We say that for it to be mainly out of sight out of mind, right,

alex_collins

Yeah,

ryan_burklo:

The whole reason that foreign cases work really well for people is it comes directly out of their pay check that money never enters their checking account. I would be willing to bet that money entered their checking account and they had to push another button for it to be deposited to their, Or. when K. there would not be nearly as much money being put into that retirement account.

alex_collins

A hundred percent even for the clients that we have where like where they are self employed, and so like it comes into their bank account and then goes out. They typically don't save as much as a result,

ryan_burklo:

So this wealth building account. Essentially, how did you pay yourself first when you go through five steps to the the five mechanics of setting this up, and step number one is you have to know what your current monthly spending is.

alex_collins

And like we're not looking for you to lie, spread sheet this, and have it down to the penny and things of that nature. Because expenses are variable like we understand that what we're looking for is like Okay. On average, How much do we spend unto? We want to go ahead and do things like. Oh, if you pay your property taxes twice a year, like what happens in Washington. Like? Okay, Great, let's take that the number that you have to pay twice a year and divided by six, so that you have like some amount of dollars that are Up in your checking account, and you know, ultimately you still have like a amerancy reserve savings account and things of that nature, And we want there to be some amount of float in there where your checking account increases and decreases and we know that there's certain expenses that like, like, I think you mentioned tires. Like where you had like an unexpected, like fifteen hundred or two that got spent on tires. That those things are going to happen and we want that to Live within the normal float of your account, positive and negative, so we're looking for kind of a moving average of what we think our expenses are going to be

ryan_burklo:

Yeah, so so step one is understanding what is it you're normally spending right? Step number two is opening up the wealth building account right, so

alex_collins

Okay,

ryan_burklo:

find a different banking institution and open up that checking account at that institution. And again, we'd like to say it's away from your current bank that you're currently at. So if you're utilizing like Bank of America, we wouldn't suggest opening up another Bank of Americo account. We would suggest you open up a different account at a different ban, For the purpose of it being more out of sight out of mind,

alex_collins

And for our own clients like, we typically wind up opening up, Um, a specific type of account that has some additional tracking on it. That has like some additional benefits and things that we can go ahead and do with that wealth building account. M. and like this isn't about that, This is like you can create whatever type of structure or system works for you. The goal here is to explain like how and why, and like what you're ultimately trying to do.

ryan_burklo:

Which takes us a step number three. and this is a step I think a lot of people forget to do because right now you've told your employer to be depositing it into your current checking account that you're used to to switch it up. You didn't you have to tell your employer to now deposit your pay checks into this wealth building account that you just established

alex_collins

Yep,

ryan_burklo:

Like that's. That's a big step. Don't forget about that. Otherwise you just open up account and no money will ever flow into it,

alex_collins

This is where the rubber meets the road, if you will, of like actually taking action and implementing the strategy.

ryan_burklo:

Which then takes us to step number four. Right So now you've you've your employer knows to deposit your pay checks into wealth building account. You now need to tell your Wealth building account to distribute the dollar amount that you need to live the life that you're customed to, right. So you're going to just like you can do in your current bank, where you can probably set automatic distributions or savings into different accounts. You're doing that with your wealth building account right.

alex_collins

M.

ryan_burklo:

For example, if your paycheck was, you know, if your month The income was, say five thousand or eight thousand dollars, and you're living off of. I'll go back. Let's say your monthly income is eight thousand dollars. Right and your life style is five thousand dollars. Right. that means you would want to distribute five thousand dollars to yourself to live that life style, which means you're capturing now that three thousand dollars a month.

alex_collins

And we'd recommend making sure that you have like fifteen thousand dollars sitting in that checking account, So the five k comes in, bumps it up to ten, Then you spend it back down to somewhere in the eighborhood. Fifteen. And like what we're looking for is we're looking for that fifteen to just stay there and I go up and down as throughout the throughout the month. If we see it start to dip consistently below fifteen, That's an issue. We need to then recalebrate and figure out like Okay, How many dollars do we really need? Is it more like fifty, five hundred or six thousand, or like, What's the actual spend on a monthly basis?

ryan_burklo:

Yeah, and to add to that right, like most people, get you know either by weekly pay checks or maybe two pay checks a month. you would essentially be telling Okay, You're expecting ex amount of dollars to get deposited per pay check. You would. Then is the divide like the amount of money you need from that pay check? That's what you're sending out. So every pay check that's coming in the door. that's when you're also sending a dispersement, So if you get paid twice a month, you're sending two dispersements from your wealth bolting account to your normal checking account.

alex_collins

And the nice thing about this wealth building account is that you don't have to follow the normal structure. If you want to get paid once a month, you can do that. You want to send three grand on the first and two grand on the fifteenth. You can do that. you need to switch it up or do whatever like. There is more flexibility with this because you have more choice and more flexibility.

ryan_burklo:

Yep, which takes us to step number five. Which number five is you're still living out of your normal checking account that you've been accustomed to. You've just set up kind of a net to capture the savings first before the rest of the money goes to your spending an account, which is really your checking account.

alex_collins

Yeah, and the reason to go ahead and do this is because, as Americans, the vast majority of us our gold fish. What do I mean by that? Whatever comes into our checking account, our primary checking account, we spend, Like the concept of a checking and a savings account are total misnomers Whenever we ask clients like, Hey, what do you do with your savings account? Like not the vast majority of time? the answer is, Oh, well, I'm saving up to By X. And so in their language, they're saying that they're saving, but really it's just a delayed spending account. They're not actually saving money. It's not something that is growing over time for most of it. For most Americans, it is a temporary place to store money for a purchase that's going to be made in the relatively short term, And that's what we're trying to disrupt. is that concept where we have tricked ourselves into thinking that we're saving And really, it's just delayed spending

ryan_burklo:

For more information, If you want to read about this and get the visual side of stuff, We have a blog at Quantified Financial Dot Com. Click on the blog and there will be an article there for you. Met. Fact will put the link in the in the notes here for you to go to that article so you can read that. Share it with your friends. Obviously share this episode. If you're getting any value out of this, definitely share this information. because oftentimes when we go over this concept or the strategy of building a wealth building account, most people like that, that's a really good idea and they do it so we know that Works and we know B. it's a good idea that a lot of people don't do. So let's keep pushing that information out there, which takes us to the question of the day, Alex.

alex_collins

Question Today is what is your plan for systematically saving and keeping your left style inflation in check

ryan_burklo:

So head over to Beer and Money Dot Net, and there's a spot at the top there to contact us to answer that question. Or if you have questions on today's episodes, that's still a great spot to send us the question. We started this podcast to hopefully lighten the mood around talking about money, which is you know we want. When we first started doing this, we bought everyone of beer and we just had to open fireside chat about money. That's what we want this podcast to be. So If you're liking this, share it please, Because the whole purpose of this is to help you take action with your money to be better, so you can live the life that you want. We hope this episode is valued before you, and as always, R. Collins.

alex_collins

Cheers!