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Our Savings Plan

Tuesday, October 28, 2014

A couple weeks ago I got a question about how much money we have left over from our budget at the end of the month. We have a zero based budget, so we don't have any money left over. A zero based budget means we tell every single dollar where to go, so there's nothing left over.

savings plan with a zero based budget

Our goal for creating a budget was to come up with a savings plan. I don't think of our budget as the way we spend money. Our budget is a guide for our future plans. We know we want to buy a house, a car, go on vacations, and retire well. In order to accomplish those things, we needed a plan, so we created a budget.

savings plan

There are so many articles out there explaining how to start a budget. Most of the articles I've read say to track your spending before coming up with a budget. Another traditional way to budget is to subtract your bills and expenses from your paycheck. We actually didn't use either of these methods when we started our budget.

First, we decided to save everything I make and live off Sam's salary. Then we came up with our savings plan for how we would divide up the money. After our savings plan was in place, we budgeted our regular monthly expenses. After our budget is laid out, we have zero dollars left over.

I remember reading somewhere that people who automate their savings, end up saving more over their lifetime than those who don't. My credit union (I'm pretty sure most banks have this option) automatically takes money out of my paycheck and puts it into my savings accounts. Since I never see that money in my checking account, I never miss it. I started automating my savings way before I met Sam, and we do the same thing with our money.

We currently have 5 different savings accounts and 1 checking account. Right now the bulk of our money is going towards saving for a down payment on a house. We're also saving for vacations, a new car, car expenses (mostly insurance), and building up our emergency fund. The image below is from our Mint.com account that shows our progress in our accounts.

actual saving plan in Mint

When I first started saving money, I only had one savings account for my money to go into. I tried the multiple accounts thing, but it was really depressing how slowly I was going to reach my goals. It made more sense to me as a single person to save for one thing at a time.

I know it can be really hard to only live off one income, but if one of us every loses our job, we'll still be able to pay our bills. It's definitely worth the sense of security! Plus, we're able to save a lot of money to reach our financial goals.

Do you have a savings plan?

Other money posts:

 

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5 Responses to “Our Savings Plan”

  1. These money posts are always great! I totally agree about the automated savings. We have done that at some points and not at others, and we always ended up with a larger amount in savings over the period that we automated. It is just too easy to use the money for something else when you are not forced to put it away!

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  2. Mint.com has been a HUGE help with our budget. Best of all, it's free!

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  3. I completely agree Megan! It's much easier to safe when you don't have to think about it.

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  4. good for you guys! i am so impressed with your financial health. keep up the great work!! it's very inspiring!


    xo

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