Why Personal Finance Is Like Brushing Your Teeth

This is the situation most people live by: They get their paycheck every month, and feel RIDICULOUSLY RICH for that day. They’ll hit the bars and order like 10 rounds, yelling “IT’S PAYDAY, BITCHES!!!” Then they wake up the next day, nurse their hangovers, and get on with life. They pay off their credit card bill when it comes in the mail, and go “What the hell – I spent THAT MUCH last month? Oh well. Shrug.” And then a friend’s birthday comes along, so they spend some money on dinner. And later on in the month, their phone bill comes, so they pay that off… and before they know it, it’s the end of the month. They catch sight of their balance while making an ATM withdrawal, and go “Crap, I spent THAT MUCH last month?! Oh well. Shrug.”

Most people have no freakin’ idea where their money goes every month. They live in an endless cycle of receiving a paycheck, spending, getting horrified at how much they spent, and shrugging in resignation. And the cycle repeats again the following month. It’s a modified version of the phrase “living paycheck to paycheck” – when you have absolutely no control over what happens to your money, never mind about trying to save and invest. Even if they do decide to save, it just involves checking their balance at the end of the month and going “oh awesome! I still have like $500 left over from my paycheck. I’ll save that.” (Not realizing that the following month, they go for a vacation and spend that $500 they just saved) Sound familiar?

Most people know they should be saving and investing, but very few people go out there and actually do it. Why is that? I think the number one reason is because it involves a huge amount of effort and willpower. It’s a helluva lot of effort to actively try to spend less, to consciously take money and save it, and to plan for investments. Personally, I hate effort. To me, personal finance is like brushing your teeth. It’s necessary, but I don’t really want to spend a lot of effort trying to remember to do it, or how to optimize my toothbrushes and toothpaste. It’s gotta be automatic, it’s gotta be routine, and even better, I’d like a robot to do it for me so that I don’t have to deal with it.

While technology hasn’t caught up in the area of oral hygiene, it’s entirely possible to have a robot take care of your personal finance. How? By creating a financial system that automatically does everything for you with no effort on your part. While I’ve previously blogged about how to automate your finances, I thought I’d give an overview on how everything works together to help you see what I’m trying to say. Check out this spiffy little diagram I created while chilling at McDonald’s this morning (Yeah, some people eat nuggets, some people check out girls, and I create awesome nerdy diagrams).


It looks really complicated, but it really isn’t. I’ll talk you through it. Let’s start with the orange box in the middle. My POSB account (for most people, this would be your checking or current account) acts as a central postman. It receives money from my salary and any other income, and then automatically shovels it into 3 categories: savings, investments, and expenses. Money doesn’t stay in my POSB account for very long – it gets quickly allocated into where I want it to go, so that I don’t even have to think about how much I should save, how much I should invest, how much I need to pay my bills, etc. Almost everything you see here is automatic – the only part that isn’t is my daily expenses, because I can’t regularly transfer money to my favorite chicken rice hawker stall. (Would be awesome if I could though)

Otherwise, my POSB “central postman” does all this for me:

  1. Savings: It adds money to my long-term savings account for retirement and my short-term savings account for guilty pleasures. My CPF (sort of like a 401(k) for Americans) gets automatic contributions direct from my salary, as well as my employer’s additional 15% contribution. (Which is sort of like free money – so awesome!)
  2. Investments: It wires funds into my brokerage account (you can use a variety of brokerages, but I use Standard Chartered for its low fees – more on this later) to invest in ETFs.
  3. Expenses: My bills are automatically paid off when they’re due, so I never incur late payment charges.

That’s it! That’s my entire financial infrastructure, and it saves me countless hours of paying bills, allocating money to save, deciding how much to invest, etc. If you haven’t set up something like this, I recommend that you get started today, even if it’s just setting up one automatic bill payment. You’ll be amazed and how much time and effort this saves you. Setting the whole thing up will literally take you no longer than one afternoon, and you will never have to worry about any of this stuff anymore. And then you can start focusing on the awesome things in life. Try it 🙂

(Hat tip to Ramit Sethi for coming up with this idea – I know, lots of what I do here is totally inspired by him)


6 thoughts on “Why Personal Finance Is Like Brushing Your Teeth

    • Hey Jim! Thanks for your comment – I actually invest in ETFs quarterly instead of monthly (my income currently doesn’t allow me to set aside enough each month to make any meaningful monthly purchases), but I’ll definitely be blogging about how you can invest in regular intervals soon 🙂

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  3. ETFs is a relatively new thing to me and i would love to hear and understand more about it – as well as how to invest in it in local contexts!! Cheers!

    • Hey Qing, great to hear from you! I’ll be writing more about ETFs and how to invest in them in an upcoming book / course that should be coming out in a couple of months, so stay tuned!

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