I budget my savings. Weird? Maybe. However, it works well for us so I am going to share in case you think it will work well for you, too! Whether you have $10 or $1,000 left at the end of the month, you can use this system to save.
First, decide on your categories.
My husband and I have one loan left to pay off before being debt-free (minus our home). However, even though we want to pay this off as quickly as possible, we also like to splurge a little on ourselves each month. Because of all this, here are the categories we came up with:
- Debt (one car loan)
- My Splurge Money
- My Husband’s Splurge Money
- Vacation Fund
Your categories can change at any time. In the Spring, we add a Home Depot budget because it seems we find ourselves there every Spring weekend; We often need things like grass seed, weed killer, mulch, etc. Before we started attacking our debt, we had a fund for our daughter’s college fund. Loosely following Dave Ramsey’s Baby Steps, we will add this category back after we finish paying off our debt. Additionally, once we have enough money in our vacation fund to pay for our trip to Japan (pending pandemic status, of course), we will stop contributing to that category.
Expenses you know will come, that are not surprises, are what Dave Ramsey calls sinking funds. The idea being, you save up money for what you want and you only buy it when you can pay cash. We always use this rule.
Next, decide on your percentages
My husband and I use a percentage system. This way, no matter how much money we can save, there is always a little big of money going towards each of the categories for which we are saving. Here are our current percentages:
My Splurge Money: 2.5%
My Husband’s Splurge Money: 2.5%
Home Depot: 5%
Vacation Fund: 10%
There have definitely been times where I found myself transferring a measly $6 into my splurge account. It almost seems not even worth the effort in transferring it (especially if you do cash envelopes and have to go to the bank and organize all of your money that way). But, it adds up. And, if you don’t designate a specific place for that $6 to go, it will disappear – I promise. It may be fine for only $6 but, it’s not as fine when it’s$60 or $600. Train yourself to get into good habits!
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