My 3-Part Cashflow Model

I don’t know if it’s my training as a physiologist or just the way my brain works, but I’ve always thought about money the way I was taught to understand the body: as a dynamic system in constant flux.

For example, our body manages complex, dynamic processes, like keeping blood sugar in balance, by regulating the rate of glucose flow in and out. When you eat, blood sugar rises, and your body adjusts by accelerating glucose clearance from the bloodstream into cells (via insulin), bringing blood sugar levels back to a safe range.

Weirdly, or amazingly, money works the same way.

There’s always movement, and the key is creating stability by managing the flow rate.

To do this, we must think of our money as a series of “pools,” each with a different function and rate of change:

Spending account or credit card

This is your most active pool, where you must control outflow for everyday purchases. If you use a credit card, you can monitor and limit spending while keeping cash in your checking account longer and treating the monthly total as a single bill payment from checking (the next pool). If you prefer debit, a separate “spend” account can serve the same purpose. This pool fluctuates frequently, just like blood sugar, and needs frequent monitoring.

Checking account

This is your next most active pool, where money flows in (income) and out (bills, spending, saving/investing). It fluctuates with a monthly rhythm, so requires intermittent monitoring.

Savings account

This pool moves more slowly. Money flows in from regular savings and occasional windfalls (like tax refunds, bonuses, or extra biweekly paychecks), and out for bigger, less frequent expenses, like annual bills (e.g. insurance premiums, taxes), other irregular bills or spending (e.g. vacations, Christmas), and all those unexpected costs (e.g. repairs). This one requires a “1000-foot view” approach to management, typically looking at stability over an entire year, like getting your lipid panel checked.

The advantage of seeing your money this way is that you stop treating every single expense as an isolated decision. Instead, you focus on keeping each pool balanced and managing how money moves between them.

For example, if a home or car repair pops up, you ask, Which pool does this come from?

If it’s a relatively larger and infrequent or unexpected expense, you pull from savings, ensuring you’re also funding savings throughout the year at a rate that supports your draw rate.

If it’s absorbable as an everyday cost, it’s part of your spending pool or monthly/weekly “budget.”

When we think of managing money this way, budgeting becomes less about obsessing over every transaction and more about guiding the movement of money over time. You take control of the flow, adjust as needed, and create a system that works, just like a well-regulated body.