For those of you who don’t know, my budget consists of figuring out which bills are due during which pay period and giving us a set amount of spending money. The rest is savings. So, for the next month I figured out that 3 bills are due the first pay period. I am planning on paying them all the day we get paid. I have decided on a set amount for spending for the pay period and I’ll leave that in the checking account. I don’t partition the set amount out between categories, it’s just a lump sum to spend as we see fit. If I see a really good sale on something we use a lot, I’ll go ahead and take it out of that spending money – not savings! – and we’ll just have that much less to spend elsewhere. What’s left gets plopped into a savings account.
I know this goes against all of the experts who say to pay savings first, but I make sure that the amount we have to spend is enough for our needs but not as much as what’s left over after bills. I also make sure that we have about $1000 in savings at any given time to cover unexpected things like car repairs or a new dishwasher. That gets built back up any time we use it. That’s separate from our actual emergency savings which won’t get touched unless someone loses a job or gets disabled or the like. I have three months worth of bills, grocery money, and a little extra to spend in there so that, if something happens, we will have three months of savings to live on without it hurting too much as long as we’re conservative. That money is in an entirely different bank so that we’re not tempted to dip into it for stupid stuff.
Living below our means is key though. We set an amount that we’re comfortable with and have stick to it, no matter if we get a raise or a bonus or a tax return. OK, we splurge a little with the tax return or bonus if it’s big, but keep it reasonable and put the majority of that extra money in savings . Once we paid off our bills, it’s amazing how much money we freed up. Especially if you were in debt up to your eyeballs like we were. Fully half my husband’s paycheck was going to pay debt. Now we can save that money toward college funds for the kids and new siding for the house.