HapiMoney

Today’s guest post has been provided by Alan Perlman. Alan is a travel blogger, and also an economist for a cost-of-living firm based in Cambridge, MA. You can find him online @alanperlman.

Mapping your financial infrastructure is a mundane task. It’s not exciting. It’s not likely to save you big bucks. Instead, it’s the sort of Big Picture exercise that each of us ought to perform from time-to-time just to be sure that everything’s working the way we think it is. If you do this every year or two, you just might catch some inefficiencies that need to be corrected. I did.

J.D. Roth – Get Rich Slowly

Roth is right—while charting your financial infrastructure may not be the most exciting task in the world, it’s helpful. Real helpful. By looking at how money enters and exits your life, you’re better positioned to reorganize and clean up any inefficiencies. Think of it as a spring cleaning for your personal finances.

I tend to map out my finances once or twice a year, mostly to make sure I’m not doing anything too wacky, but also to think about how I can improve my general financial infrastructure. Am I using the right credit card? Should I adjust how much I’m saving, how much I’m investing, how much I’m funding my retirement account? That guy mentioned something about a Roth IRA—do I need that? More often than not, you’ll find a way to improve your current situation, especially if you’ve never sat down and really thought about it.

So, in the spirit of spring cleaning, I mapped out a portion of my financial infrastructure. Enjoy!

Checking and Investing

While I’ve used Bank of America for the last six years, recent instances have driven me away from their services. I now use Charles Schwab for both checking and investing. For the record, my experiences with them so far have been nothing short of fantastic.

Investor Checking Account
Through my employer I have a direct deposit into this account. I travel a lot for work and was looking for an ATM card that minimizes its foreign transaction fees. Schwab reimburses all ATM fees! I use this account to withdraw cash, pay monthly bills, pay off student loans and fund my various investment/savings/retirement accounts.

Brokerage Account
Due to the economic crisis, the stock market has been on sale since 2008! I’ve used the opportunity to put some money into a few different mutual funds. Schwab’s brokerage account lets me do that for $8.95/trade. There are better deals out there, but having all my accounts in one place makes the few extra dollars worthwhile.

Roth IRA
I recently started a Roth IRA to 1) take advantage of the tax system and 2) leverage my retirement savings. Schwab has their own Roth IRA program. Again, all on the same platform. Makes things really simple.

Savings

Here I use ING Direct. Their Orange Savings account has two features that I find attractive. 1) They offer competitive interest rates and 2) You can create and label multiple savings accounts on one screen. For instance, I have one “emergency fund” account that I put money into in case of – you guessed it – an emergency, and another one for a climbing trip I plan on taking in the next couple of years. Setting up targeted accounts makes savings goals more reachable.

Credit Cards

For work, I use a corporate AMEX. I also have a personal Visa (Bank of America World Points), which is now only used for emergencies. My primary personal card is the Citi AAdvantage Mastercard. I received 30,000 American Airline miles (basically a free flight) for signing up. I knew I wanted a credit card with an airline rewards program, and even though they charge an $85 annual fee, the move from BoA Visa to Citi Mastercard made sense.

Syncing It All Together

On the first of every month, I use an Excel sheet to compare the amounts in each account. I also note things like my company 401K, student loan payments, and my overall budget for the following month. Sometimes I log into Mint.com, but I prefer Excel for a simple financial snapshot. The act of logging in once a month to update the numbers forces me to think about my money on a regular basis.

So, that’s my system, more or less. What’s yours?