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As this channel focuses on quantitative finance and risk management, I tend to focus on financial topics specific to the industry and not personal finance. Due to many requests over the years I will explain how I manage my personal finances.

I use a waterfall approach. I have a value selected for the maximum amount I need in my checking account. That amount is enough to cover my daily expenses such as rent, food, utilities, clothing, and typical splurges. You can determine this from a 12 month average of your spending. You need a positive cash flow to live life. Part of creating a positive cash flow is reducing unnecessary expenses such as streaming services, buying junk you only use once, and other luxury items that aren't needed to live. You can also invest (spend) money and time on improving your skills for your day job or career that you are working towards.

After you have some positive cash flow (extra cash beyond your daily living), I divide it into three accounts.

1) Retirement (401k, IRA, and other financial investments)
2) High Yield Savings Accounts
3) Paying Down Debt (extra payments towards principle)

I tend to put about a third in each however you can weight them however you want. The retirement investments are for your long-term well being. The high yield savings account is for your short-term well being. It can be used to pay for unexpected expenses, vacations, interesting investment opportunities, and MOST importantly it should be there as a safety net! Try to grow your high yield account as large as possible as it will generate income for you. Don't forget that if it gets near $250k, you should open another account at another institution so that all of your savings is protected by the FDIC. The final "account" is paying off your debt faster. Get out of debt! Debt is a risk in the sense you always have to make a payment regardless of your employment status. You also pay extra in interest to use debt. By paying off your debt early you'll also increase your cash flow and financial stability.

****THIS IS NOT FINANCIAL ADVICE****
This is just how I manage my financials.

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