I posted a Youtube video a while back which outlined how I budget.
Since then, I realized that the assumptions I was making in executing my budget weren’t working for me. The ‘non-monthly’ expenses that I saved for each month weren’t all on the same schedule, and I wasn’t actually moving the money each month into a dedicated place for those expenses. Theoretically, after a year the non-monthly expenses such as credit card fees ($89) and membership dues for Toastmasters ($80) and a professional certification ($400+) would be covered by the money in my main account. In actuality, it wasn’t that easy to track or ensure I’d have enough in the main account to cover each non-monthly expense when it would pop up.
So I decided to include the non-monthly expense total each month (now $107) as a transfer to a separate account that I make each month. Then, when one of those expenses comes along, I can transfer the needed amount back into my main account from my savings.
That’s another thing worth mentioning– I used to have two separate accounts, one for emergencies and one for travel. After we returned from our big trip to Europe last year, I wanted to simplify my finances and decided to close one of the accounts and just have one general savings account. Emergency funds, money available for using to cover non-monthly expenses, and money to devote to travel are all co-mingled in that one account. My goal is to maintain a hefty, healthy balance and pad it whenever possible.
In order to ensure my financial peace of mind, I decided to use what I had in my old emergency fund to pay off bills and expenses one month early. Then I started building up my savings again, but this time it was with actual money that can be saved, not money that could have paid off my credit card expenses for the month. I never carry a balance on my credit cards, but this way, each paycheck is devoted partly to paying off the next month’s expenses, partly to savings. Being a month ahead gives me assurance that I’ll have enough in my main account to cover everything.