To implement this cash management system, you will initially need two checking accounts and two savings accounts. Additional accounts can be added over time depending on your financial goals.

The accounts are used as follows:

• Distribution Account – checking account without a debit card
• Necessities Account – checking account with debit cards for account holders
• Emergency Savings Account – savings account
• Pay Cash Account – savings account

It is best to hold all these accounts at a single bank. Contact your current bank to determine whether there are fees associated with opening and maintaining these accounts and whether minimum balances are required. If your bank charges fees or requires high minimum balances, consider researching other banks to help keep your costs low.

Distribution Account

All income should be direct deposited into this checking account. The Distribution Account is used for fixed monthly expenses such as rent or mortgage payments, utilities, cell phone bills, and insurance. You should not have a debit card for this account, as it is intended only for bill pay and check payments.

Necessities Account

This account is funded through automated transfers from the Distribution Account. It is your variable spending account and covers expenses such as gas, food, groceries, clothing, and similar day-to-day costs.

The amount transferred into this account should be based on your “Know Your Nut” tracking, which includes the following categories:

• Groceries
• Personal Goods
• Entertainment & Dining
• Clothing
• Transportation (gas, maintenance, Uber, Lyft)
• Gifts
• Charitable Contributions
• Children’s Activities
• Club Dues & Hobbies

The Necessities Account is the primary account you will use to monitor spending. If the balance runs low, it serves as a clear signal that spending may need to be adjusted.

Emergency Savings Account

This account is also funded through automated transfers from the Distribution Account. A good initial goal is to build this account to $5,000. It is intended for unexpected expenses such as car repairs, emergency travel, or urgent home repairs (for example, a broken hot water heater).

If you are unable to fund the account to $5,000 immediately, set up automated transfers to build it gradually. Keep in mind that $5,000 is a starting point—not the final goal—for your emergency safety net.

Pay Cash Account

The Pay Cash Account is funded from the Distribution Account and is used for larger, non-monthly purchases such as bikes, iPads, or other big-ticket items. This account is flexible and can be tailored to your needs, but it should always have sufficient funds to cover planned miscellaneous expenses.

How the System Works

All income is deposited directly into the Distribution Account, and all other accounts are funded from it. You should set up automated transfers based on your pay schedule.

For example, if you are paid twice a month:

• Set up a transfer at the beginning of the month to fund the Necessities Account
• Set up mid-month transfers to fund the Emergency Savings and Pay Cash Accounts

Because all variable spending flows through the Necessities Account, you can easily monitor your spending throughout the month. This visibility is one of the main benefits of the cash management system—it helps you stay in control, make adjustments as needed, and spend with intention.