Although there is debate on how long humans like us have existed, let’s take 200,000 years as the approximate time anatomically modern Homo sapiens have existed, and 40 years as the time since the arrival of personal computers, about 0.02% of the time that modern humans have existed. I’ll state the obvious, that’s not too long to become well adapted to computers and fintech, i.e. digital banking. New technology improves much but does so rapidly, and many times each generation since at least the 80’s. Children are growing up in a vastly different technological landscape from that of their parents, and teaching children good personal finance habits doesn’t land in the same way it might have without the digital chaos of fintech and social media. Imagine some well intentioned parents trying to teach their kid how to save and grow wealth (exciting stuff) in the age of super computer marketing. No formal lessons, just consistent teach by example type lessons and one day the kid announces she’d converted all savings into cryptocurrency and she was
Four decades ago, managing finances often required in-person interactions with a physical bank. Payments were made in cash or check, and credit card bills were settled once a month via check. Many individuals across the United States even balanced their checkbooks regularly. Today, most of these tasks are no longer necessary due to technological advancements. However, I propose that we need a system akin to balancing a checkbook. The method I suggest is as follows:
Self imposed friction points
- Review of at least 3 months of personal financial activity. ALL accounts. ALL balances of any sort needs to be logged, including personal loans due to or due from, even if it was a handshake agreement.
- IMPORTANT - Do this part in good faith. The process will be far less beneficial if not honest about your true financial position.
- Transition all bills and discretionary spending to their own respective accounts, and eliminate all credit card spending except for emergencies.
- Pay bills weekly and pay them manually. Cancel everything on autopay.
- Use and update bill and expense calendar
- Income cash allocation each paycheck or any other income deposit
- S
- Student Loans
- Digital banking
- Efficient digital marketing
Its easy to become disconnected from your finances. The experience is like a mental autopilot without a pilot who knows how to land safely. Who gave this pilot control of the plane? Good question. Doesn’t matter. You have no choice but to be responsible for your finances, because the analogy had to end at some point. And you have no choice but to have a financially solid life or face financial turmoil. And again, as of 2024, financial turmoil is likely the default experience. Spending money with minimal effort, digital banking, variety of payment methods, and a ease of applying for and using credit cards. All this makes personal finances easy to damage. Personal finance apps make tracking income, expenses, and budgeting a seamless process. I argue this is one process that shouldn’t necessarily be easier right now. Many people would benefit from more “friction” in their financial workflow.
This issue is one among a billion similar questions regarding technological advances altering our everyday lives.
In an effort to painfully generalize personal finance habits of the modern human, there are at least three ways people handle their personal finances. There is the micro managing penny pinchers that couldnt dare spend a cent outside their budget. And for sure, with the right job and the right income, these people will amass wealth and glory. Very little of what I write here will help this type, other than the tools I’ve created. Maybe.
The second type are the complete opposite - spend and ignore. Sometimes its the husband or wife who rather ignore their financial situation than address it head on. Sometimes its the whole family. Out of sight out of mind and nothing is sweeter than money spent at a restaurant. Going on trips and racking up credit card debt. We might shame these people and question their sanity. Their kids will be greatly effective by irrational over spending and venturing deeper into debt. How could they do this to them? But how many of these same over spenders know how to balance a checkbook? Well there is no need as of 2024 but imagine if their was a similar requirement before shopping or spending any money at all. I love my conversations with this group…
Then there are those who have an app. Some app that tracks income, spending, and account balances. Maybe you can create a budget, but the app doesn’t reconcile the banking activity too closely. Or certainly doesn't require a user to do the most basic act of accounting for their personal finances. They use to call it balancing the checkbook but accountants will call it an account reconciliation. Its a reality check with what you believe to be the categorized activity of a bank account vs what the banking institution reports is the true balance - bank balance vs book balance. If you cant explain the difference in your balances for any given account, there is an issue. Another way to think of it is a reality check on your accounting. It’s you the operator of your finances checking in to figure out what really is going on here.
Modern fintech and online banking has made spending money extremely easy. The goal here is plain and simple: make spending less easy, and to reacquaint, or introduce oneself with personal finances. For this to be fruitful, some friction is necessary - rules, guidelines and barriers will be put in place.
This is partly where the name of my company came from. Seams or Workflow Seams is a play off the ever present need to have software, integrations and usability of apps to be… seamless. Seamless tends not to be real, or if it is real, the program can be a blackbox. Creating an automated and seamless task between two systems can be wonderful and necessary, but if the rules of that automation aren’t checked or regularly questioned, and the output of the automation reviewed in some manner, the product of such a system is system is questionable.