Personal money methods
February 20, 2009
Stacking Pennies talked about avoiding money hacks, except for two, the other day, and J.D. shared the monthly checkbook sweep.
I wouldn’t call myself a money hacker since I enjoy playing with money and methods to maximize savings with minimal effort. There’s no need to thwart myself, unless we’re talking about cash which just up and disappears, I just need to develop more efficient systems. Then again, a very efficient system kind of takes the fun out of the money bit, so if there’s thwartion afoot, it’s much like how I create messes because it’s fun to clean. [Uh, yeah, I know that’s weird.]
In that vein, I do a few things that allows me to create good surprises instead of obsessively tracking every penny.
1. Ignore the windfalls: they all go into savings. Tax refunds, money saved for specific goals that goes unused, extra paychecks, reimbursements, overtime. All go into savings.
2. Allocate money to be spent: After calculating monthly expenses down to the dollar, that total is all the money I get to keep from paychecks. Everything else goes into some kind of savings. This is akin to the monthly checkbook sweep, except the sweep happens immediately. A little remains as a cushion against uncashed checks – finally learned my lesson with this one – or is outgoing for bills.
3. Divert some e-fund savings into specific accounts: this way neither my e-fund nor my expense fund gets gypped when a regular, non-monthly expense crops up.
This works for me right now, but I’m looking forward to landing a job with regular salary and streamlining the system further.
Ha, I know what you mean about “very efficient” taking the fun away. Besides the extra cash, I like having those windfalls just because I get to make a new plan for it (which savings fund should it go to?!?). Now cleaning, not so much.
Your system seems straightforward way of saving without tracking every dollar.
Yeah, I’m not sure I understand the “money hacks.” I plan how much I want to spend and how much I want to put into savings. If I have more left over, it goes too. If I have less, I mentally berate myself and swear off shopping/eating out/using ellectricity for a month or so.
stackingpennies: Yeah, windfalls are fun, deciding which account gets the windfall is even more fun.
paranoidasteroid: It’s nice to know exactly where everything is, right?
Seems you really know what are you doing. But usually it’s no problem to make a plan (ok, it’s not so easy to make a GOOD plan), but the key problem is to follow this plan. Discipline is the factor of identifying people who can manage their money…
Good luck!
Lorne
the only trick or hack i follow is my grandmother’s method (which she said was based on laziness and a dislike for numbers): i round up every expense in my running checkbook register to either the next dollar or the next five dollars. it makes the math easier, and it means that i always have a cushion in my checking account. then, if i’m in a pickle, i can easily figure out the true amount that’s in there OR i can just sweep the extra aside quarterly. i start every new pay period *as though* my checking account was at $0 when my check was deposited.