Well to be honest, we, in Australia, don’t have pennies – actually, I’m starting to think 5c pieces are useless. Most vending machines no longer take them, and I’m inclined to decline those given to me as change. They are just too small to be ‘worth it’. But this post is about whether I ‘manage’ the pennies – as inspired by An Exacting Life’s post.
The answer is ‘sometimes’. Since going away in October, I think I’ve let me fastidious money tracking lapse. Prior to my holiday, I was tracking every expense, looking for an average ‘normal spend’ so I could start withdrawing just that amount of cash (and hopefully save the remainder). In actual fact, my budgetting works in reverse to most (I think). I set savings targets, and the rest is ‘fun money’. Here’s how it works, on pay day (weekly):
1. Pay mortgage (variable amounts, but a target amount per week, sometimes I overpay if it’s a ‘good’ week, other weeks I ‘under’ pay knowing I’m ahead… I track what I pay, so I always meet my monthly repayment by the due date).
2. Pay bills – this includes whatever is on the credit card from the week prior, plus any utilities/insurances etc that have come in the mail. This may meant moving money from the fund outlines in 3. into the ‘everyday’ account.
3. Pay savings – some of these are automated – I take about about $20 per week to ‘save’ for my annual health insurance premium. I also put about $200 per week away for bills – I have strata payments due quarterly, at a whopping $1250! So if I don’t plan for this expense it can be a RUDE shock! I also put away $50 per week as a savings cushion or holiday fund (I change it up, with respects to the goal), to meet a rewards program with my bank. These are all automated.
4. Spend spend spend – this is groceries, eating out (by FAR my biggest expense, but I’m ok with that mostly), transport (negligible given I don’t own a car, and work pays for everything for my work car). I try to make these around 20% (or about $240 a week) of my take home pay per week. That being said, it doesn’t always work like that!
5. Savings – as Tuesday comes around, if I know I have nothing planned spending wise, I’ll sock away whatever cream is left that I won’t miss to savings, leaving about a $100 balance for ‘emergencies’. Knowing it’s a day til pay day, I seldom have an emergency, but I don’t like the idea of having no ready accessible cash, if only for a day.
Strangely, once the money is in the cushion/holiday account, I’m reticent to withdraw it. Which means I stress myself out when I get down to a nil cash balance, or start putting things on credit cards, even though I know I have a nice big cushion tucked away. I suppose I create a ‘poor’ mentality, so I keep on my toes.
All in all, I work to my money goals, and the rest I try to just take easy – and go with the flow. Given I reach most of my savings goals (such as buying a place, and going on holidays), I feel like my strategy works. That being said, I sometimes feel like my strategy makes me less ‘fun’ as I’m always planning and scheming and find it hard to just live it up – cause I’m always thinking ‘that’s money I could be saving for an awesome business class flight’…
The really thing I grapple with are the ‘slush fund‘ situations that Carla asked about. My philosophy (generally) is that all should come out of my ‘spend spend spend fund’ (like my $30 per month prepaid phone credit). However, given I love to buy stuff for my house (ok, get stuff DONE to my house), not all these expenses fit into this weekly budget. That’s where I grapple with dipping into the savings cushion. I do try to maintain a min balance on the savings cushion (which is my nice name for an emergency fund) of at least $10k. It’s such a balancing act between growing the emergency fund and doing things I long to do in my home. Some weeks I feel like I have no money, and endless ‘to do/buy’ things on my list. But by writing a list last year, I was able to slowly work through all my ‘renovation’ goals each month, and now I’m close to being done. But that’s a subject for another post.