Choose a bank and map your money

In this playbook, I’m going to take you through building automations that allow you to have a clear handle of your finances, from invoice receipt to retirement savings. It’ll look like this:

The foundational step of money management is understanding what you have in each of your accounts (if you have more than one) and where it's going. 

To set up the automations we cover in this playbook, you’ll need to have at least these five (5) accounts:

1. Personal checking account

2. Personal savings account

3. Business checking account

4. Tax savings subaccount (business)

5. An investment account

Subaccounts and separate accounts are a relevant distinction to make because if you’ve ever tried to do bookkeeping while having multiple, separate bank accounts, it’s a nightmare. 

A subaccount is a separation of cash within one checking account so for accounting purposes, there are no transfers or separate accounts to keep track of. Within the banking app, the accounts look separated but on the foundational banking level, they aren’t (which is perfect). 

Not all business banks offer this feature so if you want to have separate accounts, keep it simple and stick to a checking account and a savings account. You can tell if an account is “regular” or a subaccount by determining if it has a unique account number and routing number.

The reason you want to have a subaccount rather than a separate account is that you have to record every transfer to a different account and it can get confusing. With a subaccount, because the money is technically inside the same checking account, you don’t have to worry about documenting everything and only have to record one transfer when you withdraw the funds to make tax payments.

To get started, the workbook includes a template that helps you map out and visualize your different types of accounts. I’ve entered sample accounts on the chart to help you see what a full financial “stack” looks like, but you’ll want to remove and enter your own account types.

Choosing a business bank account

If you don’t already have a business bank account, Pollen has another playbook to walk you through that here. However, I highly recommend Novo Bank for automation purposes. They’re the only bank I’ve worked with so far that lets you automate dollar or percentage amounts and holds the money within a subaccount rather than a separate account.

A few additional thoughts on choosing a bank account:

💰Fees → You shouldn’t be paying any account fees. Always double-check for account minimum fees, deposit requirements, and any other associated fees. They should be listed on their website and the account agreement before signing.

💰Minimum deposits → Some banks require a certain amount of deposits each month before they waive account fees. Make sure that if you choose a bank that has them, your business income meets the requirements, even during your slower months.

💰Check deposits → With most banks being digital, not all offer reliable check depositing services. Try to get an understanding of their policies and ask around to see if other customers have experience with it if checks are a regular part of your payment methods.

💰Automation → It’s hard to see this from the outside, but your bank should offer meaningful automation features. Their website should show what tools & features they offer, but don’t be afraid to contact their Support Team and ask questions. Most importantly, there should be an “automated withholding” feature. For example, Novo lets you set a certain percentage or dollar amount aside from each incoming payment. Relay Financial lets you set up buckets for specific purposes, though the automation features are less robust than Novo as of the time of writing.

💰Ability to add multiple accounts → Surprisingly, some banks limit you to one account. This may not be an issue initially, but as you grow, you may want to add multiple accounts or subaccounts for different purposes. You want a bank that can scale with you because switching banks means updating countless accounts and payment methods - do proper research beforehand.