I would venture to guess that most people have a hard time saving their money. In fact, 62% of Americans have this problem. Saving your money is a big step on the road to improve your budget. Don’t get me wrong, I know some people who are awesome at it and it has really paid off, but it definitely takes some self-control and perseverance! Michael and I are realllllyyy good at saving up a big chunk of money about every year or so and then deciding that we reallllllyyy need whatever it is that we splurge our savings on. Whoops! Our last savings splurge was not our decision, but at least we have a beautiful (expensive) safe roof now 🙂
Now that I am staying home with E and we are living on one income, budgeting and saving money is even more important, especially for those “unexpected” emergencies. Something I figured out a while ago though is that there really is no reason not to expect many of these so-called emergencies. Here is an easy and helpful little system that I have been using for years and if nothing else, it definitely helps me know if I have money to spend on some of the “extras”.
We have 8 bank accounts. When I used to call my bank they would either laugh at me or tell me I was awesome for being so organized, now when I call I never get any comments so maybe that means this little trick isn’t so tricky anymore? Either way, I love it! We have 5 savings accounts and 3 checking accounts. Did you know that for most banks, it is free to open as many accounts as you want? And my bank does not even require a minimum balance after the initial deposit – organization score!
When I was first creating a budget for myself in college, I realized that it was easy to put money aside for things like gifts, travel, emergencies, car repairs, etc in a spreadsheet, however, it is really hard to not spend that money when it is sitting in your bank account! So if you are like me and not as big of a fan of tracking every penny you spend and in what category – this might be your saving grace! We have our main savings account where we put most of our savings – this is our “emergency” savings account and in an ideal world would not be touched except in the case of a true emergency. Our other four savings accounts are where we save for travel/expensive fun, gifts (including Christmas), vet bills/car repair/misc, and home repairs and improvements. I take the amount that I estimate we will need for the year for each category, divide it by the number of paychecks we get for the year and set up automatic transfers for the amount each paycheck.
To get started, I would list out each and every expense you can think of that does not necessarily occur every month. Some options include:
- vet bills and other pet expenses
- car registration
- car inspection and routine maintenance
- routine home maintenance
- home repairs
- personal property and real estate tax (if not already in an escrow account)
This will really give you a quick idea of how many “unexpected expenses” can really come up in a year. It is amazing how easily it is to forget about something until it hits us in the face. Then we find ourselves scrambling to find the money or falling back on a credit card.
Honestly, I sometimes spend more than I have available to me in these categories – mostly because I am not always able to control when a large vet bill or car repair bill comes in – but at least I know where the money is going to come from to pay myself back. The best part is knowing you need to buy a gift for someone and easily seeing that you already have the money for it. If nothing else, it is a great visualization tool to organize your money.
Our other three accounts are checking accounts. We have one main one that pays all bills, groceries, and gas. Then Michael and I each have another one that is strictly for ourselves (but we still have access to each other’s accounts – I believe this is important). This really helps cut down on the fighting about what each of us has spent money on. It is hard on your relationship if one of you is more of a spender than the other one. I used to resent Michael when he would go out for lunch and spend more than I thought was necessary for a work lunch out. I would also tend to feel guilty if I wanted to buy something unnecessary for the house because I had just finished being mad about money spent by Michael! Sound familiar? These two accounts have really helped. Once the money in those two accounts is gone, we are out of luck until the next paycheck – it really does help, for the most part, to curb spending money.
We are always improving the way we handle our money. Currently, we are trying to really focus on paying off all of our debt so we have steered away from using ALL of these accounts for the time being, but it served us wonderfully for the last 3-4 years of marriage! Remember, you can change how you are budgeting or organizing your finances at any time – it is YOUR money. This or another system may work for your current situation but maybe not down the road. It all depends on what your financial goals happen to be at the moment.
FREE 5-Step Budget Workbook!
If you are ready to take control of your finances, subscribe to my budgeting newsletter and also receive this workbook for free!