Empowered Faith Life Solutions:

Building Wealth Through Paycheck Distribution

Starting your journey toward financial independence involves creating habits that put your money to work as soon as it hits your bank account. A great first step is setting up a system for paycheck distribution that not only covers your immediate needs but also helps you grow long-term wealth.

Why Split Your Paycheck?

Managing all your money in one account can lead to overspending and under-saving. By dividing your paycheck into separate accounts, you’ll stay organized and intentional about how you spend, save, and invest. Think of each account as a specific financial "bucket" with a designated purpose, like covering bills, building savings, or investing in the future. This approach not only promotes better budgeting but also simplifies reaching your financial goals.

Step 1: Define Your Accounts

Consider using two to three separate accounts for different purposes:

1. Primary Checking Account: This is where your core expenses live—rent, utilities, groceries, and day-to-day spending. This account ensures that you’re meeting your basic needs without dipping into savings.

3. Emergency Savings Account: Having a dedicated savings account for emergencies is essential. Aim to save at least three to six months of living expenses to cover unexpected situations. Some people use high-yield savings accounts for this to earn interest on their savings.

5. Investment Account (with Linked Checking): A great way to passively build wealth is by investing small amounts consistently. Many investment apps now make it simple to invest without much upfront knowledge or large initial deposits.

6. Acorns, for example, offers a "Round-Ups" feature that rounds up each purchase to the nearest dollar and invests the spare change in a diversified portfolio. It’s an easy way to get started with investing without any effort beyond initial setup.

Step 2: Automate Your Transfers

Once you’ve opened these accounts, automate your paycheck distribution. Here’s how you might split it:

• 50% to your Primary Checking (for essential expenses)

• 20% to your Emergency Savings

• 30% to your Investment Account (Acorns or other investment services)

By automating transfers each payday, you’re consistently contributing to each of your financial goals without needing to think about it.

Example: Getting Started with Acorns

Acorns is an excellent option for those new to investing. It offers several types of accounts:

• Acorns Invest: This is the core account where you can use Round-Ups to invest spare change from daily purchases. The app automatically diversifies these investments across a balanced portfolio.

• Acorns Later: Specifically designed for retirement savings, this account lets you open an IRA (Individual Retirement Account). Whether you choose a Traditional, Roth, or SEP IRA, Acorns helps you decide which is best for you based on your profile.

• Acorns Spend: This is a checking account linked to your Acorns account, allowing you to save and invest seamlessly. Acorns Spend even includes a debit card, which can simplify budgeting and let you keep closer track of your spending habits.

Each of these accounts can help you build wealth gradually. To get started, simply download the Acorns app, link your primary checking account, and set up the Round-Ups feature. Once linked, Acorns will automatically start rounding up your transactions and investing the spare change into a diversified portfolio.

Step 3: Track Your Progress

Every few months, check in on your accounts. Are your savings growing? Are your investments compounding? Monitoring your progress will motivate you to stay on track, make adjustments if necessary, and increase contributions over time.