So in light of the fact that we may potentially have to
*We'll obviously be paying our bills and buying food, since no one has figured out how to live for free yet (though Dillon is working his hardest on that ha), and will be saving the rest. It sounds simple, right? But the day to day is harder than you think!
So in order to help us only spend money on bills and groceries, and not on impulse buys or things we think we need or just plain want, we are only allowed buy things (that we need) on Saturday. That includes groceries or things that may pop up in the week that slipped through the cracks even after planning ahead. That gives us the opportunity to use up what we have, do without, and really evaluate if we need it. More often than not, we haven't needed it--it was just more convenient.
With groceries, we are planning meals ahead of time for the entire month and then shopping at the beginning of the month, and that's it. If you looked at our pantry right now you would see that we could live for a few months on what we've got, so no worries in the food department. That's lucky for us since we can whittle away at our stockpile and save money at the same time.
And speaking of savings, we needed to devise a better system that works for us because Dillon isn't a salaried employee so his paycheck varies. That makes it hard to just throw the same lump sum into savings every paycheck, though we have been saving diligently already. We just really want to explode our savings.
Here is an in depth look at how we figured that out, using fake numbers and fake percentages for the readers' sake. It gets dry, so stop now if you don't really want to know the details ;)
We sat down and totaled our expenses (which is still a fair amount even though we are a one car, debt free family with no "extras"). We do pay for our own health care and retirement plans since Dillon isn't a salaried employee (yet--we hope someday!) and that is our largest chunk besides rent. We wrote out everything so we could budget in everything and have a real number for our expenses.
Once we had our total we figured out what percent of a month's income that equaled, gave ourselves some wiggle room, and then figured out a percentage to save.
For example, because just words are confusing:
Say Dillon's paycheck for the month is $1000 (thank goodness it is not or we'd be living on the streets) and our bills total $800 (too bad that number isn't real!). That means our expenses are 80% of the paycheck ($800) and we have the opportunity to save 20% ($200)! We added in wiggle room to be there for things that come up despite all our planning. If at the end of the month we haven't needed it, it goes straight into savings. So instead of saving the entire 20% ($200) upfront we would put in 18% ($180) and the remaining 2% ($20) is wiggle room.
But what if Dillon worked overtime and got $1100 one month? That would change all our percentages--our $800 in expenses would only be about 73%--awesome. We wanted to keep our wiggle room dollar amount the same so it would still be $20, but $20 of $1100 is 1.8% and that would make our savings percentage even higher, 25.2% wooo!
It goes the reverse if he were to make less than $1000 a month as well, so our system is just a little chart that has paycheck ranges and the corresponding percentages we would automatically throw into savings. Our little formula is paycheck minus expenses minus wiggle-room-dollar-amount divided by expenses equals savings percent per range.
Example:
$900-$999= 9% saved
$1000-$1099 = 18% saved
$1100+ = 25% saved
Sorry if it's confusing or overly complicated, but so far it's been working great for us! Maybe you have a system you'd like to share with us? We're always interested in being more efficient and saving more money!
With both the fiscal fast in place and our savings chart we've watched our savings account grow more quickly and it feels awesome! We're excited to keep seeing progress.
I Like!!!!!
ReplyDelete