Read the pilot post/explanation here

Read the pilot post here

Thursday, February 7, 2013

Savings accounts for the periphery

If you don't have time for my long, rambling post, I'm suggesting here that you have money automatically deposited into sub-accounts on payday. You won't even feel it and the accounts will grow and be there for ya.

And now, the post.

Ryan and I often joked that there was nothing to celebrate about a tax return because it was always wiped out the month or so prior to its deposit. Inevitably, some catastrophic event would ensure that we would need the extra funds to dig ourselves out. We’d have the van break down, or need to fly out for a funeral, or be given a once in a lifetime opportunity to go on a very special vacation.

Invariably, someone would ask the dreaded question, “is this in the budget for you guys?” And I would explain to someone that our "budget" was basically a motto: don’t spend anything

-and it really wasn’t working.

One day I had the realization that we weren’t even set up for such foreseeable expenses as Christmas! -or family vacations and home improvement. We’d leave Home Depot with a 400 dollar bill and think “gosh, that'll put a wrinkle in the old checking account.”

We were frugal; we never went nuts and got into crazy debt, but it didn’t feel good to just snag a few hundred from checking. I figured there must be a better way. Instead of our money being hijacked without a trace, we ought to have it in place

So I got online and looked into setting up sub savings accounts under my checking account in our bank. It was so easy!

And this is what it looks like: 

Ryan and I discussed how much we’d need throughout the year for different things like gifts, travel, and home improvement. Then I divided those amounts by 26, which is how many paychecks my husband gets in a year. I set up each account to be funded on the Thursdays Ryan’s paycheck is deposited. After a couple months I was really, really excited to see that the accounts had grown! The following Christmas, we spent the money in our Christmas gifts account. When we bought his car a few years ago, it needed a new clutch, and we were able to take it to a shop, instead of Ryan laboring over it for a week or more. Last year, Ryan and I went to England and paid for it! Paying for these expenses was stress-free because the money was there, just waiting to be used.

Honestly, the initial set up might take you a couple hours, but you will never regret it. I can't recommend this enough. 

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