Simplify Your Finances with the 3-2-1 Method

Optimize your money by getting the basics right!

Author

Michela Allocca
June 11, 2025

Hello!! I have been a bit MIA the last few weeks because I was traveling to Japan and Korea!! But I just got back (yesterday) and am getting back into the swing of things. I am sooo excited to be back in a regular routine again ❤️ I will be working on putting together a trip recap so stay tuned!

🚨 Get started on your personal finance journey with one of my budgeting tools! Check out the Personal Finance Dashboard and the Basic Budgeting Template! 

MONEY
3-2-1 Method for Simplified Financial Management

The online personal finance world can feel really complicated. There’s so many strategies and tips and it gets overwhelming- fast.

I’m going to add one more method to the madness - but it’s the last method you really need to know. And the purpose of it is to SIMPLIFY. If you can get these basics right, you’re well on your way to financial success.

It’s called the 3-2-1 Method and it’s broken down as such:

  • 3 account types you need

  • 2 routines to follow

  • 1 tool to bring everything together

Financial success really can be that simple. Obviously, there are ways to optimize and scale. But if you’re new on your journey, or you’re feeling overwhelmed, this is an amazing strategy to focus on at the start.

The goal? Get the basics right.

Let’s get into it!

1️⃣ 3 Account Types You Need

There are so many different financial accounts - and as you move throughout your life, the likelihood that you open more and more will increase. To simplify this, there are 3 types of accounts to focus on.

Make sure each account you open falls into one of these 3 buckets:

  • Cash Flow Accounts: A simple checking account. You only need one, but if you manage your money with a partner, you may have a second.

  • Safety Accounts: A savings account - ideally a HYSA. CDs would also fall into this category. This is for shorter-term savings like an emergency fund or saving for vacation.

  • Growth Accounts: This could be a retirement account (like a 401k or IRA) or a brokerage account. Any account where you are investing in the stock market!

Action Step: Audit your accounts and group them into these 3 categories. Consolidate accounts where you can!

2️⃣ 2 Financial Routines to Follow

The true secret to long-lasting financial success is a financial routine. I know it’s not flashy or sexy, but it’s the truth. Ultimately, you need to be tracking your expenses and reviewing your money on a regular basis to see progress.

There are 2 specific routines to follow:

  • Weekly Money Routine: This is 10 minutes once per week where you track your expenses and adjust your budget.

  • Monthly Money Routine: This is about 30 minutes each month where you review all your numbers and create your budget for next month.

I have youtube videos where I work through both a weekly and monthly routine - check them out!

3️⃣ 1 Financial Tool to Bring Everything Together

Arguably the most important yet highly underrated financial decision you make is the tool you use to manage your money.

You need to have one financial “control center” where you manage your budget, monitor your progress towards your goals, and make financial decisions.

If you don’t have a tool to bring everything together, it can feel like you are floundering and perpetually disorganized.

It doesn’t matter if it’s a spreadsheet or an app - it matters that you enjoy using it and that you return to it.

I personally use the Personal Finance Dashboard - but if you want something simpler, check out the Basic Budget Template!

WEEKLY RECOMMENDATION
Tracking My Expenses on Vacation

I track my expenses while I travel, and you should too. I just got back from a 3 week trip, and I stuck to my money routines while I was there. Tracking my expenses makes me feel more confident in my spending decisions, and also allows me to actually enjoy my vacation without spending guilt or a spending hangover.

RESOURCES
What’s Happening This Week at Break Your Budget

  • This week on Don’t Depend on Daddy: I share how I am breaking up with social media and curing my phone addiction! If you want to enjoy your summer largely offline, you need to give this a listen!

  • Financial Decisions I Won’t Make: A lot of us make financial decisions out of peer pressure. This week, I am sharing some popular financial decisions I won’t be making. Let me know if you agree with any of them!

LOOKING FOR MORE?
Check out ALL of my Money & Career Resources!

xoxo,

Michela