Having trouble making a budget you don’t hate, building up your emergency fund, or reaching one of your financial goals (hi, down payment fund)? The right money management system could help. Enter: Sahirenys Ortega Pierce, a personal finance influencer and educator, and her High-5 Banking Method. She created the method to organize her own finances and reach her money goals, and below she explains how it can help you money better, too.
What is the High-5 Banking Method?
The High-5 Banking Method is a simple way to organize your finances purposefully through the use of multiple, individual bank accounts. Each account has a specific purpose to help you budget and hold yourself accountable. The method is composed of five bank accounts: two checking accounts (one for your bills and the other for your lifestyle expenses) and three savings accounts (for your emergency fund, long-term goals, and short-term goals).
How can this method help me manage my money?
When we think about money management, the first few thoughts that come to mind are budgeting, saving, and the overall flow of how we delegate our money. For years, we’ve been told to simply focus on budgeting better. But an ignored a major piece of the puzzle is where we place the money. If we want to make sure our money is flowing the way we want it to flow, then we need to bank strategically to make it happen. As a financial educator with a background in finance and financial planning, I’d say that people need a clear structure to keep those dollars going where they need it to and this is a great way to start.
What’s the order I should open my bank accounts in?
Always start with the first three accounts, as these are the fundamentals. First, start by prioritizing your bills’ checking account because, at the end of the day, we all have bills. Second, shift your focus to getting an emergency fund savings account, just in case life doesn’t go to plan. Last but not least, set up your lifestyle checking account. Which includes your eating out and play money, if your budget allows it. So regardless of your income or situation, the High-5 Banking Method lets you be real with yourself, take care of yourself, and remember to be kind to yourself. These three foundational accounts can help you do just that.
What mindset shifts will help me view budgeting as a tool for achieving financial wellness rather than as a chore?
For me personally, the core of financial wellness is getting clarity on what you need and what you want. Getting those thoughts on paper and then organizing your finances accordingly is a key component of that. What I love about the High-5 Banking Method is that it holds so many financial planning principles while accounting for your well-being at the same time. Let’s be honest, there is no better feeling than coming home from a chaotic day to a clean and organized home. This is exactly what I want my finances to feel like: clean, organized, and clutter-free. The High-5 Banking Method is like The Home Edit but for your finances.
This interview has been edited and condensed for clarity.
FAQs
Shoutout to Poised Finance Lifestyle for making us aware of what is called the High-5 Banking Method. With the High-5 Banking Method, you'll have 5 accounts total: two for checking- bills and lifestyle; and three for savings – emergencies, long term goals, and short term goals.
What is the high 5 banking method? ›
Shoutout to Poised Finance Lifestyle for making us aware of what is called the High-5 Banking Method. With the High-5 Banking Method, you'll have 5 accounts total: two for checking- bills and lifestyle; and three for savings – emergencies, long term goals, and short term goals.
How you will use banking to help you manage your income wisely? ›
Online and Mobile Banking.
You can transfer money from one account to another, check balances, pay bills, and set alerts like a high or low balance, large transactions, and more.
How do you upgrade finances? ›
10 things to do to improve your finances
- Unsubscribe from marketing emails. ...
- Calculate your debt and start paying off the one with the highest interest. ...
- Consider applying for a cash-back or travel rewards credit card. ...
- Negotiate your monthly bills. ...
- Calculate your net worth. ...
- Pay yourself first.
Most banks now have apps that allow you to manage your account from your phone which allows you to:
- Deposit a check.
- Pay for merchandise.
- Schedule reoccurring payments.
- Transfer money between accounts.
- Transfer money to other people.
- Find an ATM.
- Take advantage of tools for budgeting and saving.
The regulation requires that multiple purchases during one business day be aggregated and treated as one purchase. Purchases of different types of instruments at the same time are treated as one purchase and the amounts should be aggregated to determine if the total is $3,000 or more.
What are the 7 C's of banking? ›
The 7 “C's” of Credit
- Capacity. Do I have experience running a business? ...
- Cash Flow. Is my business profitable? ...
- Capital. Do I have sufficient reserves, or other people who could invest in the business, should unexpected problems or hard times arise?
- Collateral. ...
- Character. ...
- Conditions. ...
- Commitment.
The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
What can I do to grow my money? ›
A balanced approach that involves investing in a diversified portfolio of stocks and bonds works for most people. However, those with higher risk appetites might prefer dabbling in more speculative stuff like small-cap stocks or cryptocurrencies. Others may prefer to double their money through real estate investments.
How do you manage and grow your finances? ›
Here are some ways to manage your money wisely:
- Create a budget: Making a budget is the first and the most important step of money management. ...
- Save first, spend later: ...
- Set financial goals: ...
- Start investing early: ...
- Avoid debt: ...
- Save Early: ...
- Ensure protection against emergencies:
Browse through each to determine if there's room for improvement or if you are good to go:
- Get your overspending under control. ...
- Create a new budget. ...
- Find a budgeting app you like. ...
- Make a will. ...
- Protect your savings from inflation. ...
- Prepare for rising interest rates. ...
- Prepare now for your next major life event.
7 financial habits to help make you smarter with your money
- Automate whatever you can. Automate your savings, automate your loan repayments, automate your bills. ...
- Have specific, meaningful goals. ...
- Invest. ...
- Don't spend that unexpected cash. ...
- Prioritise high interest debt. ...
- Track your spending. ...
- Learn however you can.
7 Money Management Tips to Improve Your Finances
- Track your spending to improve your finances. ...
- Create a realistic monthly budget. ...
- Build up your savings—even if it takes time. ...
- Pay your bills on time every month. ...
- Cut back on recurring charges. ...
- Save up cash to afford big purchases. ...
- Start an investment strategy.
Get started on path to financial success with these three steps: determining budgets, tracking spending, and creating realistic savings goals.
What is the most effective method to help you manage your money? ›
Create a budget
It will take a little effort, but it's a great way to get a quick snapshot of the money you have coming in and going out. Setting up a budget helps you keep track of your money, so you to when you can spend and how to avoid going into the red.
What is the high five savings method? ›
High five banking is a simple, effective way to organize your finances using multiple bank accounts for budgeting. By designating each account for a specific purpose, you can more easily track your incoming and outgoing funds. This account functions as the central hub for your necessary finances.
What is the 5w in banking? ›
Execution without answering the who, what, where, when, and why of change can lead to more roadblocks, like resource spending without returns and lost buy-in from the board, employees, and customers. These five questions can help banks identify what to monitor and how to act on that information.
What is the 5 25 rule in banking? ›
As per the 5:25 flexible structuring scheme, the lenders are allowed to fix longer amortization period for loans to projects in the infrastructure and core industries sector, for say 25 years, based on the economic life or concession period of the project, with periodic refinancing, say every 5 years.
What are the 5 Ps of banking? ›
Since the birth of formal banking, banks have relied on the “five p's” – people, physical cash, premises, processes and paper.
