We are very much a fan of money systems like the one created by Ernst-Jan Pfauth, CEO of De Correspondent. Ernst-Jan, this is how we automated his money system with Flow.
Ernst-Jan’s money method explained
A money system provides peace of mind: without thinking about it, your financial goals are fed and your budgets are filled.
Many money methods, such as those of Ramith Sethi and Ernst-Jan Pfauth, are time-based: on day 1 you receive your salary, on day 2 you schedule transfers, from day 3-4 the pots are filled. The bills arrive spread over the month. If on day 1 your salary (or invoice) does not arrive, then your system collapses like a house of cards.
With Flow, we set up the same actions, but we wait to perform them until your salary actually arrives.
Then the money can be distributed to the goals from Ernst-Jan's money system. We would pay the "fixed payments" from a separate outgoing account and not leave them in the base account. This way you turn your base account into a kind of inbox.
Ernst-Jan works with a Financial Buffer. You can deposit a fixed amount in this every month, but at some point the buffer is full enough. When the target amount is reached, all the money that is left goes to the investment account.
Now Ernst-Jan here gets a salary, fixed amounts, in principle quite predictable. But if he were a self-employed person, his income might be less predictable. In that case, he can work with percentages:
In his business account, the invoices arrive. Here he can-after he has set aside the VAT and IB-with a Profit First method divide his money. Including paying himself a salary as soon as the invoice arrives.
How did Ernst-Jan Pfauth react to this?
Ernst-Jan himself responded to our suggestions in his podcast “A podcast about media” along with Alexander Klopping
“That feels good doesn't it? The idea that these things are automated, I get such a relaxation in my body.”
- Alexander Klöpping on Flow
“Yes, it works in the background for you, you can then also start to trust it, that's what I like about it.”
- Ernst-Jan Pfauth on Flow