Automated Personal Finance

Today I’m finally switching off of Capital One because of their broken integration with Plaid. For those who don’t know, Plaid is a service that makes it easy for apps to connect to your bank account. So, if you want to do anything interesting that your bank doesn’t offer (spending analytics, smart transfers, etc) and you want to use a cool app to help you with that, you need Plaid to do it. Capital One has been notoriously bad with its Plaid integration, and people (including me) are frustrated.

I have been a long-time Capital One customer, from back when the online savings product was with ING bank. I originally joined for low fees and better than average interest rates. But I ended up staying because of how easy Capital One makes it to open and manage multiple accounts.

It has been a long journey for me to manage personal . For a long time, I had jobs that didn’t pay very well and managed to rack up a substantial amount of debt in my 20s. For the past 10 years I’ve managed that down, and a key tool for doing that has been breaking my financial life up into separate buckets, for various saving and spending goals, and automating as much as possible. This is a trick I learned from the amazing Ramit Sethi and his I Will Teach You to be Rich blog, which I read regularly back in the day.

The way I set it up is roughly this:

Paycheck comes in, gets split 3 ways (this is handled at the Justworks layer): 1/ primary spending account, 2/ overflow spending account, 3/ recurring bills & savings account. Each of these three accounts are at different institutions.

From there, all major bills (mortgage, insurance, car payment, utilities, childcare, etc) are paid from the recurring bills and savings account. And further, that account (until recently at Capital One) splits further into a bunch of smaller savings accounts for dedicated purposes (vacations, home improvements, certain kids activities, general savings, etc — I have about 8 of these I use regularly, and the transfers also happen automatically. I also auto-stash into my Stash account on a weekly basis.

The overflow spending account is for non-recurring large items (for example, some kids activity or a medical bill).

The regular spending is for things like groceries, eating out, random purchases. Essentially, what is left over after big things are handled.

It has been a lot of work to set all of this up in a way that makes sense. But it has been worth it, because now we have a system that keeps everything organized — not just in terms of budget categories and analysis, but in terms of actual accounts which we can spend out of and save towards.

And even so, using additional tools to help (like Personal Capital for overall analysis, or Zeta for couples-based tracking) has not worked because of the broken Plaid integration with Capital One. So enough of that; goodbye Capital One.

The broader point is that financial analysis isn’t enough. Moving money is a core part of managing it. I don’t know how typical a setup mine is, but I have accounts at 5 different institutions just for basic spending and saving, not counting credit cards, investment accounts or crypto. I heard recently that the average consumer has accounts at 4+ financial institutions — I don’t believe this is a high-end phenomenon.

When I look out at the landscape of personal financial products, so many of them focus either on analyzing money or managing/moving it, but not both. Doing this in a holistic manner is difficult, especially with accounts across institutions. But it seems to me that it is the key to having an actually organized and manageable financial life.


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