How to Master Your Cash Flow in 2025

There are two key principles we should establish before we talk about the accounts you use to set up your financial life.

1. You want to be paying this month’s bills with last month’s money.

   Put another way: If you’re waiting for this month’s paycheck to pay this month’s bills, you’ve got a cash flow problem. I’m a big fan of credit card autopay, and I suggest it often. The most frequent rebuttal I hear is some variation of, “But what if there’s not enough money in the checking account to cover it?” If you’re cash-flowing like the true king or queen that you are, this should never be a concern—being afraid that there won’t be enough in checking to cover your credit card bill means you’re spending too much or earning too little (and you can do one or the other from time to time, but you can’t do both!).

2. Your checking account is the landing pad and launchpad for your money.

   The checking account is, for all intents and purposes, the first place your money will go, and the place from which it’ll be sent to other accounts. Unless you want to deal in cash for everything and barter with merchants for expensive furs and land deeds like a deranged Oregon Trail enthusiast, having a checking account that offers easy access and no fees is huge. While it’s still a big bank and not exactly a “no fees across the board” offering, I like Chase for their ubiquity. There are Chase banks no matter where you go and they have the money and manpower to make their digital experiences really good, which I think matters a lot as a digital native. Moreover, Chase’s credit card offering is the strongest for travel rewards (my breakdown is here), and having an established banking history with Chase will (a) help with your credit card approval odds and (b) allow all your banking and most of your credit cards to be in one portal.

How does one start?

Because we just established that the checking account is home base, let’s start there.

If you feel like you have no idea what’s going on in your financial world, the checking account is the best place to take your initial inventory. I recommend opening up your banking app or website and pulling up your checking account, then recording the “events” over the course of a month. You should look for a few things in particular:

1. When do your paychecks hit? Get specific. Which days of the month can you typically expect income? How much?

2. When do you have to pay your rent or mortgage? Most of the time, rent is due on the first of the month. If you pay your rent with a credit card (other than a Bilt card, which is designed for this purpose), I plead that you start using your checking account instead—most of the time, paying rent with a credit card has high fees associated ($50+ per transaction).

3. When are your credit card bills due? I have five credit cards, and they all come due on different days of the month. While I have all my cards set up on autopay now, I used to go in manually on the 3rd, the 5th, the 18th, the 21st, and the 25th to pay these credit card bills. I was bound to forget, so I turned on autopay. It’s good to know when your credit card bills are due for the purposes of this inventory. If you don’t like the fact that they’re scattered on different days (some people are even more type A than I am and like every credit card bill to be paid on the last day of the month for their budgeting purposes), you can actually request a different due date in your credit card portal. (Keep in mind that if your cash flow is set up properly, it won’t matter when the bills are being paid.)

   1. Quick note: For budgeting purposes, I budget for my purchases the day the transaction happens, not the day I pay the credit card bill. For example, if I buy something on December 5, it counts toward December’s budget, even if the transaction is on a credit card that won’t be paid until February 5. I think this type of accounting can throw people off if they’re overspending—if you’re looking at the amount of money coming in for the month of December to determine how much you should spend in December, you’re going to get into hot water because your December expenses won’t actually come home to roost until February when your credit card bill is due, so it’s helpful (and beneficial!) to know what your overall monthly expenses are and verify that they’re well within your income limits so it doesn’t matter when you pay the bills.

4. Do you have any auto-transfers already set up to saving or investment accounts? If you’re a long-time reader of Money with Katie, you probably have auto-transfers already scheduled for your savings and investment accounts. It’s good to note when these happen for the sake of this exercise.

5. What other payments come directly out of checking? This might be a car payment that comes directly from checking every month on the same day or a utility bill set to autopay.

One thing you may notice when you do this is that you have a lot of charges in your checking account for every day purchases. My philosophy is (as alluded to in #5) to put everything that I can on credit cards, unless there’s an additional fee to do so (like the rent example).

It makes me sad that Dave Ramsey has horrified our entire generation into avoiding credit cards, but credit cards are very powerful tools and unless you’re confident that you’ll screw up your entire life by getting your hands on one, you’re leaving money on the table (in the form of free travel, cash back, etc.) by paying for everything out of your checking account directly on a debit card.

Fun fact: Since my identity was stolen by a mischievous fraud ring in Houston due to using a debit card, I’ve since opted not to even carry one. I wouldn’t swipe that thing in a public place if you paid me to do so.

The layers of your financial life

Layer #1: Your checking account, the place through which all your money flows

I would recommend having cash on hand in this account to cover at least two or three months of expenses at any given time as buffer, that way you’re sincerely unworried about whether or not your Chase Sapphire autopay will overdraft it.

Layer #2 Outgoing: Your credit cards, which you use to pay for all your daily expenses

This means that all your spending (except for your rent, car payment, or other utility and loan payments that have to come directly from checking) will be consolidated in “one” place, your credit cards. This will naturally begin to extend the time between the moment your paycheck hits your account and the moment you actually pay for your purchases, because your credit card statement for a particular month will close, and then the bill will come due a few weeks later.

Layer #2 Saving & Investing: Your investment accounts, where you’ll shovel as much as humanly possible

Right? 🙂 The natural other side of the coin when we talk about your cash flow is what you do with the money “left over” every month (I put “left over” in quotes because in a perfect world, you’d make the saving and investing decisions first, then make the decisions about how to spend—but I’m not stupid, and I know y’all have to eat).

Ideally, you’ll get to the point where your income is rapidly outpacing your spending. When I first began working and had no side hustles to speak of like the unenlightened harlot I was, I was taking home about $3,100 per month after taxes and my 401(k) contribution of 10%. I was probably spending about $2,900 per month, which meant I was “saving” $200 per month—and I use saving loosely and within generous quotation marks, because the leftover money would just sit there in checking unaccounted for until eventually enough overflow built up and I’d transfer it to sit in savings and continue to do nothing. Not a good plan.

After buckling down, I managed to trim my spending to about $2,600 per month, and boosted my income with other work such that it varied anywhere from $5,000 to $10,000 per month, depending on the amount of hours I picked up working part-time as a fitness instructor or freelancing. All that extra money has to go somewhere, right? And ideally, we want it to go somewhere that’s going to generate more money on its own.

Investing isn’t saving, it’s spending money on assets. You’re buying assets that will appreciate in value on your behalf without you having to do ANYTHING.

The saving and investing layer of the equation, in more detail

An important layer you’ll probably notice is missing is the savings account. What happened to the savings account?

When your financial life becomes a well-oiled machine, you’ll find that you no longer have any use for the regular ole’ savings account.

Think about it: What’s the point? It’s practically a checking account with half an inch more friction to access, but it takes all of 30 seconds to transfer money between them. Without a meaningful interest rate, the typical savings account is totally useless.

The common question at this point that you may find yourself asking is, Where do I put my long-term savings, then?

Throw them in a high-yield savings account like Betterment’s Cash Reserve and move on with your life.

When you’ve got your financial shit together, you realize very few things ever constitute “emergencies.”

A random $300 new tire? No big deal. An $800 vet bill? I’ve got buffer for that. This is why I have a couple months of cash ready to rock in checking. If you’re living well beneath your means, you’ll always have breathing room in your checking account, because theoretically you always have far more coming in than what’s going out.

Those types of expenses would panic the average American who, according to the Federal Reserve in 2019, couldn’t afford an unexpected $400 expense. But not you, because you’re not average, and you’ve been reading a money blog for the last 10 minutes. Please, use this moment to pat yourself on the back.

Short of a total loss of all employment or an uninsured accident, there’s very little that would create a true emergency situation for a person that follows the above steps—and that feeling of freedom (the “I don’t have to worry about an unexpected bill or a pay cut because I’ve created so much margin in my life”) is worth more than every single bottomless mimosa brunch you’ve ever attended, combined.