Evolving Finances

Learning and mastering your finances takes practice and time. Over that time, we evolve along with our finances, myself included. Recently, I realized that I've been going about some things completely wrong. Recognizing these mistakes and figuring out how to rectify them is part of my financial evolution. 

For instance, I pay my car insurance and my phone bill six months in advance. Why? Because paying them in six-month chunks gives me a cheaper price overall, thereby saving me money. However, while I factored in the cost when considering my overall budget, I didn't factor it into my monthly budget folder system. This means I wasn't actually putting aside the money that I needed to pay these two bills on a monthly basis. It wasn't intentional but rather an oversight on my part, and one that needed to be corrected. 

Since I employ credit card churning, I have specific rewards cards attached to these bills to have them pay automatically. I would then just pay the bill when due, but I realized after my last car insurance bill came out that I wasn't putting the money aside. This meant that I was wiping out money from other monthly categories and/or my checking account buffer during that month in order to pay off the card. There's definitely a better way to go about that!
First, I calculated how much I needed to save aside from each paycheck to cover the insurance and phone bill. Once I had that calculated, the next was to decide the easiest way to put that money aside. Fortunately, my credit union lets me open as many savings accounts as I want online, so that's exactly what I did. I opened a new savings account, nicknamed it Insurance/Car/Phone Fund, and deposited the amount needed from each check for those categories. 

This turned out to be such a great idea, that it got me thinking about other categories of spending that I should be saving for in advance. It wasn't long before I opened accounts for Healthcare Misc, and Clothing/Gifts, among others. I calculated the appropriate amount to add to each category and then deposit those amounts in their respective accounts each payday. I will note that a couple of categories are funded by money from my personal spending money.

All of these are now permanent entries in my monthly budget folder and have been calculated into my overall monthly budget. It's similar in scope to cash envelope stuffing but without having to have a bunch of cash sitting around your house.

Here are some categories one could use for their own budget:

* Travel 
* Healthcare 
* Clothing
* Gifts
* Down Payment on a House
* Taxes
* Home Maintenence
* Kids' Sports/Activities
* Christmas
* Wedding

Obviously, the categories are subjective and the kinds are nearly limitless. Basically, anything that you want for the future that saves you from racking up credit card debt and carrying a balance on said cards each month is a win.

How do you manage your household budget? Let me know in the comments!



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