How to Be Invincible

[Yours truly is still hungover gathering his marbles from this weekend’s financial nerdfest, so please enjoy a great article today by my blogging friend Matt Becker of Mom and Dad Money. And by “killer,” I mean the opposite of that since, ahem, this post is all about being invincible. Take it away, Matt!]

How would you like to be invincible?

Okay, maybe not truly invincible in the video game sense of the word as even Superman occasionally meets his match, but you can be financially invincible.

You can set up a system where anything life throws your way is fixed faster than a speeding bullet. Where you can leap financial mishaps in a single bound. You can even become so invincible that you’re able to fearlessly chase your dreams.

This isn’t a video game so there are no cheat codes or shortcuts. Invincibility takes some good old- fashioned time and hard work. But it is possible. With the right financial system in place, you can be invincible.

Here’s how I do it.

Step 1: Extra cash in checking

My checking account is the heart of my financial system. When money comes in it’s my checking account’s job to pump it out to the right places. A little over here for bills. A little over there for savings. And of course, a little can stay right here for some fun.

Keeping my checking account healthy is the first step to invincibility. As long as it has enough money to do its job, the rest of my financial system will keep humming right along.

I like to keep a little extra cash in my checking account, above and beyond whatever comes in from a paycheck or side hustle, just to make sure I never run out. $1,000-2,000 usually does the trick. With that buffer in place, I almost always have plenty of cash to handle even the spendiest of months without disrupting the rest of my system.

Step 2: Extra cash in a linked savings account

Just in case I actually DO manage to blow through that buffer in my checking account, I have a small savings account linked to it that would automatically transfer money over to handle the shortfall. And because I use an online bank instead of one of the money-sucking big national ones, this transfer would happen completely free of charge. (I use Ally for my banking, but there are plenty of good online banks that don’t charge you ridiculous fees.)

Now, you might ask what the point of this savings account really is. Couldn’t I just keep an even bigger buffer in my checking account and skip this step?

I could, but I like having the savings account for two reasons:

  1. I can earn a little more interest, and
  2. When the money is out of my checking account, I’m less likely to spend it on something silly. True invincibility requires me to guard against internal bad guys too.

Step 3: Irregular expenses made regular

In my pre-invincibility days, I had a sweet-looking budget that would constantly get thrown off course by irregular expenses. Things like car repairs, doctors visits and out-of-state weddings weren’t happening monthly like my other expenses, but they were happening often enough to cause problems when I wasn’t prepared.

I needed to make a change. So instead of just dealing with them when they came up, I decided to make them a regular part of my monthly plan.

For each of the most common types of irregular expenses, I now automate monthly savings into a separate account dedicated to just that purpose. Then when I actually have to spend money on one of those things, I just take the money out of my dedicated account.

Irregular expenses handled. Budget saved. Invincibility growing stronger.

Step 4: Fully-stocked emergency fund

Those first three steps will protect me from any normal kind of financial mishap. If I overspend one month, I’m covered. If my car breaks down, I’m covered. If I want to travel to see my family up in Boston for Christmas, the money will be in my “travel” account.

But for the really big stuff, the kinds of things I hope never actually happen, I have an emergency fund. This is money that never gets touched unless there’s a real emergency like a job loss or extended health issues. In fact, a big reason for all the buffers above is to make sure I don’t have to touch my emergency fund for the small stuff. I need to know that the money will be there when I really need it.

But there’s more to an emergency fund than just protection. One of the really cool things about invincibility is that it not only saves you from bad stuff, but gives you the opportunity to try new things.

I lost my job last November. It was a scary thing to face, but because I had spent the years to build up all these buffers, I had options. And instead of using my emergency fund to keep me afloat until I could find another job, I used it to jump head first into self-employment and start my own business. I could take the risk because my emergency fund meant that it wasn’t really all that much of a risk. The financial protection was there. All I needed was the guts.

THAT’S the kind of invincibility that makes this stuff really fun.

Step 5: Rocking that insurance

Despite all of the above, there are some things life could throw my way that I couldn’t handle with my own savings. So to make myself truly invincible, I buy insurance.

I have health insurance to handle any really big medical bills, especially those that might be ongoing.

I have life insurance to make sure my wife and kids would have the financial resources they need, even if I’m not around.

I have disability insurance in case health issues keep me from working for an extended period of time.

And I have liability insurance in case I accidentally injure someone and need to pay for the damages.

These are big, worst-case scenarios that would be difficult or even impossible for me to handle right now with my own savings. But if they ever came up, my insurance would be there to provide that last layer of protection.

Step 6: Bulletproof habits

This last one is a little different, but it’s actually the key to this entire system.

Our habits are the things we do every day without thinking. Biting our fingernails. Getting out of bed on the same side every morning. That facial expression we make when we’re trying to remember something.

Our habits are just a part of who we are. They’re effortless. And because they’re effortless, every habit either makes effortless progress towards our goals or effortlessly works against them.

The good habits I’ve created over the years made it possible to build all these buffers. And those same good habits keep the system on track even when things go wrong.

Because I do things like make my own lunch, spend family time on free activities like the park and the beach, and negotiate almost every single one of my bills, I have fewer financial obligations and more money available to save. And because I automate that savings, my invincibility grows month after month whether I think about it or not.

Good habits work together to make effortless progress. That’s how you become invincible.

What are you waiting for?

Being invincible won’t remove all your worries. I still worry about things like saving for retirement, whether my business will grow like I want it to, and what our budget will look like as our kids get older.

But one thing I never worry about is whether we’ll have the money to pay the bills next month. Life can do its worst and I feel confident that we can handle it.

That’s invincibility.

And you can do it too. All it takes is time and dedication.

Matt Becker is the founder of Mom and Dad Money, a personal finance blog, and fee-only financial planning practice dedicated to helping new parents build happy families by making money simple. His free time is spent jumping on beds and building block towers with his two awesome boys.

PS: Matt’s offering his New Family Financial Roadmap eBook for free to any Budgets Are Sexy readers interested in it. It’s all about the most important financial aspects of starting a family, and you can learn more/download it here:

[Photo cred: Gareth Simpson]

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  1. MMD September 22, 2014 at 5:40 AM

    It seems like retirement saving would have been part of a good financially invincible plan.

    1. Matt Becker September 22, 2014 at 9:20 AM

      Great point MMD! I definitely think that retirement savings is important, and you’re right that at some point you’re going to need more than this to support you when you either no longer can or no longer want to work.

      I guess the way I look at it is this. Good financial planning is about creating two things: financial security and financial freedom. To me, this is all about building that financial security as strong as possible. You create a system like this (or however you want to tweak it to meet your own needs) that makes it very hard for anything to truly rock your financial world.

      Once you have that in place, it makes it much easier to chase whatever it is that financial freedom means to you. For some, that means saving as much as possible for retirement so they can reach it sooner. For others it might mean changing careers, starting a business, buying a house, traveling, staying home with the kids, going back to school, saving for their kids education, and on and on. Whatever combination of those things is appealing to you personally, having that security in place makes it much easier, and in many cases much less risky, to pursue.

      With all of that said, I think you’re absolutely right that saving at least something for retirement is a good idea in pretty much every single case, so thanks for the input!

    2. Jay @ September 22, 2014 at 10:46 PM

      I agree. You’re shooting yourself in the foot by not investing in liquid assets. $10k in 20 years is over $45k at market return (ie, SPY or another index fund).


      1. Matt Becker September 23, 2014 at 10:44 AM

        Thanks for the input Jay! Just to be clear, we are investing beyond what I’ve described here (you can read this to see what we’re doing). I didn’t include that here because I think it fit with the theme of the post, but I’m glad that you guys are all bringing it up in the comments. It’s definitely an important part of the long-term plan.

  2. Mel @ brokeGIRLrich September 22, 2014 at 6:10 AM

    I loved this “True invincibility requires me to guard against internal bad guys too.” The internal bad guys are usually the worst. Out of sight, out of mind helps me a lot too.

    1. Matt Becker September 22, 2014 at 9:21 AM

      Couldn’t agree more! It seems like we often fight against ourselves more than anything else. Any way we can minimize that struggle is a huge help.

    2. J. Money September 25, 2014 at 3:47 PM

      Haha yeah – that was one of my favorite lines from the article too :)

  3. Jayson @ Monster Piggy Bank September 22, 2014 at 6:15 AM

    Being invincible in terms of finances is having enough or more money savings/resources. Whenever time occurs when there is unexpected spending, you’re are prepared… I also believe that investing matters!

    1. Matt Becker September 22, 2014 at 9:23 AM

      Yep, investing is a great way to go beyond all of this and create invincibility not only for today, but for tomorrow as well. Great input!

  4. Brian @ Debt Discipline September 22, 2014 at 6:25 AM

    We just recently fully funded our e-fund and it certainly has given us a little more of that invincibility feeling, well at least a good helping of security and peace of mind.

    1. Matt Becker September 22, 2014 at 9:29 AM

      Nice work! Isn’t that peace of mind such a great feeling?

  5. Mr. Frugalwoods September 22, 2014 at 6:38 AM

    Good list, but didn’t notice anything about retirement! Long term invincibility requires building that sword and shield by hand in your 20s and 30s :-)

    1. Matt Becker September 22, 2014 at 9:31 AM

      Oh wow, I love that way of putting it! I’ve never heard the “sword and shield” analogy before but I think it lines right up with the “security and freedom” I talked about in my reply above to MMD. Anyways, I’m with you that putting your money towards retirement and/or other long-term goals is incredibly important, and the earlier you start the better.

  6. whiskey September 22, 2014 at 7:20 AM

    This is/would be a very good start for someone who is just starting out and looking to see what they can do. Investing for retirement is something we should all do but sometimes you gotta look out for the immediate and then work your way into retirement savings.
    IMHO a fully funded emergency account is only second by getting debt free. Once thats in place then start by getting your retirement together.

    1. Matt Becker September 22, 2014 at 9:40 AM

      I think you’re spot on that getting debt free is an important part of this journey. To be honest, that’s not part of my story, which is why it’s not in here. But there are lots of great people talking about getting out of debt (like right here!), so I’ll let them lead the way.

    2. J. Money September 25, 2014 at 3:48 PM

      That emergency fund vs paying debt off priority is always a juicy topic in finance. They’re both super important of course, but it’s interesting to hear both sides battle for which is *most* important to do first.

  7. Myles Money September 22, 2014 at 7:54 AM

    Retirement savings and multiple passive income streams would seem like a good idea, so that you’re in reasonable financial shape no matter what life throws at you.

    1. Matt Becker September 22, 2014 at 9:43 AM

      Those are definitely some great goals for going beyond all of this. Especially when it comes to things like creating multiple income streams, I think it can make it a little easier to take some bigger risks there, and give yourself a chance for the bigger payoff, if you have the basics in place first. And saving for retirement is of course a great step in pretty much any situation.

  8. Kassandra @ More Than Just Money September 22, 2014 at 8:03 AM

    Getting to a place where bills are easily being paid, benjamins in the bank and the E-Fund topped up is a really, really good feeling. For many people, their income is limited so they have to prioritize their cash-flow but investing and long-term savings for retirement and other goals definitely should factor in their equation. The way to getting on this track of financial prosperity starts with the right mindset and as you said, developing positive money saving habits.

    1. Matt Becker September 22, 2014 at 9:44 AM

      “The way to getting on this track of financial prosperity starts with the right mindset”. Couldn’t agree more! The mental part of all of this is so crucial.

  9. John @ Frugal Rules September 22, 2014 at 8:31 AM

    Great points Matt! Much of this really isn’t terribly difficult, per se, but it does require some thought and planning which many simply do not want to do for a variety of reasons. We do virtually the same thing with all of these and view it as a way to give a purpose to all of our money. I find that keeps us on track much more and is a great feeling to know that you can handle most anything that gets thrown at you.

    1. Matt Becker September 22, 2014 at 9:48 AM

      I love that you talk about purpose. I think that having a clear purpose for your money is the best way to make all the “tips and tricks” actually relevant to your life and makes it much more likely that you’ll stick with it.

  10. Will @ First Quarter Finance September 22, 2014 at 8:45 AM

    Interesting post, Matt! I find that probably the best part about having some savings is the peace of mind it brings.

    1. Matt Becker September 22, 2014 at 9:48 AM

      Agreed. It’s nice to not have to worry so much.

  11. Stefanie @ The Broke and Beautiful Life September 22, 2014 at 9:00 AM

    As much as I do my best to plan for irregular expenses, there’s always a few that like to come out of nowhere and mess with me. I plan for those by planning for as much as I can remember and including a buffer for the rest.

    1. Matt Becker September 22, 2014 at 9:50 AM

      We do the same thing with a “miscellaneous expenses” savings account. You can’t plan specifically for every single thing, and it really wouldn’t even make sense to try. But having that buffer in place for the “other” stuff gets the job done.

    2. J. Money September 25, 2014 at 3:50 PM

      The buffer’s where it’s at. I keep $1k in our checking for exactly that – we always forget something or do something stupid!

  12. Dee @ Color Me Frugal September 22, 2014 at 9:13 AM

    Love the Superman metaphor! I totally agree that having those safeguards in place helps me to sleep better at night. There are still worries, but not as many financial ones. Although I can totally relate to having concerns about what the budget will look like as our daughter gets older! Diapers and formula are expensive, but I think there are more expensive things looming down the road.

    1. Matt Becker September 22, 2014 at 9:53 AM

      I know right! What about when they starting want to do stuff, like dance, or soccer, or even take someone out on a date? I comfort myself by saying that we handled the first couple of years without really knowing what we were doing, so I’m sure we’ll be able to make it work later on. But facing the unknown is always a little scary!

  13. Kalen September 22, 2014 at 9:16 AM

    I love this! I always keep a buffer in my checking account and I have a money market account linked, just in case of something really big.

    1. Matt Becker September 22, 2014 at 9:54 AM

      Awesome! Just that simple system is a big help.

  14. EL September 22, 2014 at 9:20 AM

    Good post and I am rocking all those tricks right now. The buffer and the online savings account is a good way to avoid bank fees and adding new CC debt for bigger than expected expenses.

    1. Matt Becker September 22, 2014 at 9:58 AM

      So true. I’m loving the no-fee banking.

  15. Aldo @ MDN September 22, 2014 at 9:38 AM

    I don’t need this, I’m already invincible… oh wait, financially invincible? Oh yes, I need to read this carefully.

    These along with a good retirement plan are essential to beat any evil financial mishaps. Good stuff.

    1. Matt Becker September 22, 2014 at 10:01 AM

      Haha! If you’ve got some tips for real invincibility, please share!

  16. Gretchen September 22, 2014 at 10:14 AM

    Love it! We run our checking account pretty close, since leaving money in it allows my husband to see it and he will spend it! He knows it’s a problem and freely support me running our checking account closely, but still…..Having extra money in our checking account would definitely make me breathe easier!

    1. Matt Becker September 22, 2014 at 1:08 PM

      You gotta do what works for you. One way to do it that might solve both problems is to keep your checking account tight, but have a separate savings account that would automatically transfer money over if you ever accidentally overdrew, like I talk about in Step 2. That would keep the money out of sight, but maybe relieve a little bit of the pressure on you. Just a thought. Good luck!

  17. Amy September 22, 2014 at 10:20 AM

    Great overview and plan – thanks for simplifying it so nicely.

    1. Matt Becker September 22, 2014 at 1:09 PM

      Glad you liked it!

  18. Simon Cave September 22, 2014 at 12:36 PM

    “A little over here for bills. A little over there for savings.” It makes me think about this app called SavedPlus. Let’s say you decide to save 10% every time you spend, the app will automatically transfer 10% of your weekly purchases to your savings account. I love it! You should try it out ;)

    1. Matt Becker September 22, 2014 at 1:11 PM

      I’ve never heard of SavedPlus, but it sounds like an interesting tool. Anything that helps people save gets a +1 from me. I’ll have to check it out. Thanks for the recommendation!

    2. J. Money September 25, 2014 at 3:51 PM

      I’ve been hearing that name pop up quite a few times on people’s blogs but haven’t checked out personally myself. Does sound pretty interesting.

  19. Done by Forty September 22, 2014 at 2:03 PM

    Totally fun post, Matt. I like seeing someone defend the notion of an emergency fund, too. People talk about the opportunity costs with having cash. What about the opportunity’s you’re now willing to pursue because of that added security?

    1. Matt Becker September 22, 2014 at 4:35 PM

      Exactly! And honestly, that’s not really something I had thought about much myself until I was actually in that position. But once I was there and realized that our e-fund gave us so many options, it was incredibly freeing.

  20. debs @ debt debs September 22, 2014 at 9:09 PM

    Being a solopreneur makes the emergency fund even more important. We have a large one because my husband is self-employed. If I lose my job, I will have severance, but even then at my age finding alternate employment may be difficult.

    1. Matt Becker September 23, 2014 at 10:37 AM

      You’re definitely right about that. Self-employment can add even more importance to all of this, and may even add another layer to account for the month-to-month fluctuations. Sounds like you guys are handling it well!

  21. Mom @ Three is Plenty September 22, 2014 at 9:59 PM

    I think that making the “irregular” expenses regular is probably the key to your invincibility. Then the e-fund takes the really irregular expenses, like an emergency room visit. Having all of our large irregular expenses planned out has been the best thing we ever did to making us feel more secure.

    1. Matt Becker September 23, 2014 at 10:38 AM

      Nice work! That’s been huge for us too, knowing that all those little irregular things are handled and that our e-fund can just kind of sit there and wait for the really big things.

  22. Kayla @ Red Debted Stepchild September 23, 2014 at 11:34 AM

    Great article! This is where I hope to be someday. Right now I’m pretty much living paycheck to paycheck, but it is getting better as I continue to save more and pay off debt. Thanks for explaining your system for invincibility. :)

    1. Matt Becker September 23, 2014 at 5:32 PM

      Sounds like you’re on the right track! Paying off debt is a great first step towards making all of this happen.

  23. Lance @ Healthy Wealthy Income September 23, 2014 at 11:39 AM

    You can’t time the market and you can’t time your expenses for life. The only way to cover is to be over prepared. Do you ever hear anyone say “Why do I have so much money?” No, because it’s not a problem people run in to. The majority run short because they prepare for the bare minimum and often don’t meet that standard. The only way to prepare is to do more than expected and then spend life complaining about the burden of too much money.

    1. Matt Becker September 23, 2014 at 5:34 PM

      Haha, I think the only person I’ve heard complain about having too much money is Biggie (“Mo’ Money Mo’ Problems”).

    2. J. Money September 25, 2014 at 3:52 PM

      “Why do I have so much money?” — Haha…. LOVE THAT.

  24. Christine @ The Pursuit of Green September 23, 2014 at 12:18 PM

    Love this list. Especially numero 6! I feel like that’s the hardest one to do and keep up with. Habits are so hard to change and it’s so easy to slip up every now and then. Plus if you don’t have good habits then no matter how much money you earn it just slips right through.

    1. Matt Becker September 23, 2014 at 5:35 PM

      Yep, habits are tough to change for sure. The good part about that is that if you CAN create some good ones, they’ll be just as hard to break as the bad ones. That’s why they’re so powerful.

  25. Broke Millennial September 23, 2014 at 12:35 PM

    Good habits is such an important point to bring up, and oddly enough something I never often think of. Sure, in terms of saving I think about it, but not about all the finer details you pointed out. I know one of my terrible habits (being a self-diagnosed TV addict) certainly curbs my income because I spend time watching TV instead of writing and upping my income.

    I also need to snag the idea of automating funds into a non-emergency savings account for those budget busters (OUT OF TOWN WEDDINGS) that keep popping up.

    1. Matt Becker September 23, 2014 at 5:37 PM

      Haha, yeah those out of town weddings can be a total budget killer! Even with the dedicated savings we haven’t been able to go to all the ones we wanted (thanks a lot kids! haha) but it definitely helped us make more than we would have otherwise.

  26. Danielle September 23, 2014 at 1:06 PM

    I really need to rock that insurance, namely rental insurance. Otherwise I’m pretty good on points 1-3, working on 4 and I guess 6 will come with time :D

    1. Matt Becker September 23, 2014 at 5:40 PM

      Renters insurance is a great idea. It’s usually wicked cheap too. Good luck with those habits!

  27. Mrs. Bookworm September 23, 2014 at 8:19 PM

    Matt, your steps 4 (emergency cash fund) and 5 (insurance) really resonated with me since my husband and I are working on these at the moment!
    I just wrote about the emergency cash fund a few days ago to go over why it’s so critical to have the amount liquid and easily accessible. For a long time, we were relying on investments and retirement plans to cushion the blow of big emergencies and disasters, which hasn’t worked out well for us.
    One thing we haven’t figured out is how much is enough for this fund since expert opinions vary widely. How many months of living expenses do you recommend to keep in the emergency cash fund?

    1. Matt Becker September 24, 2014 at 12:29 PM

      First of all, nice work! I couldn’t agree more that having a dedicated e-fund is a huge help, especially instead of relying on retirement accounts. So good for you for making that happen!

      In terms of how much you should have, I would say there’s no one-size-fits-all answer. The standard goal is 3-6 months worth of expenses, and I think that’s a good starting point. But to give you a little more detail, here’s a post I wrote on this topic that gets into different variables that might cause you to aim higher or lower: How Big Should Your Emergency Fund Be?.

      And here’s another one that talks about building your emergency fund in stages.

      Hope that helps! Feel free to reach out any time if you ever have more questions. Good luck!

      1. J. Money September 25, 2014 at 3:54 PM

        Thanks for linking out to some of your posts brotha – super helpful for people! The “how much I need in emergency fund” question is always coming up.

  28. Jean @ NearlyRetired September 23, 2014 at 10:33 PM

    Wow, great points all of them. I completely agree with you, the peace of mind you get from having your financial ducks in a row is tremendous. Having a solid emergency fund (and budgeting for those irregular events) has allowed me to take career risks without worries. Yay!

    1. Matt Becker September 24, 2014 at 12:30 PM

      That’s awesome! And really, making the risks less risky is my favorite part of having a system like this. It’s so much easier to take those big leaps when you know that the fall won’t be very hard.

  29. Ced @ FuggingDebt September 27, 2014 at 12:24 PM

    Having consumer debt can really hinder you from becoming financially invincible. Credit card debt, along with car loans suck away all the cash from your checking account causing a domino effect of not being able to save. Great post