Wednesday, December 24, 2014

Budget 101: Seperating Funds (Week 2)

Last week we talked about our earnings and our bills.  You can go back to that post here.

This week I'm going to introduce the idea of having two separate  accounts. 

I have two.

I named them.

The first one is the Bill Account.  This is where I deposit weekly (or bi-weekly if you are paid that way) the amount of money needed to cover the bills.

Sticking with the original example:

Income is $800 weekly or $3200 monthly. 
Bill total is $2148.
So if we take our bill total and divide it by 4 (4 weeks to a month - average).  You will see that you need to deposit  $537 a week in your Bill Account to cover all of your re-occurring bills.

Doing this will mean that you will always have the money to pay your bills.  You don't TOUCH this money every!!!  It is set aside just for bills!!

This will mean freedom because the math and the separation is done.

The second account - I like to call it - the spending account.  This is the account you will use to pay for everything else not listed on your bill list (post 1).  So if you buy groceries, gas, co-pays, Christmas presents - it all comes out of this account.  

So if you look at our example - 

paid $800
$537 goes in bill account
$237 is what is leftover for everything else.

Sadly that number isn't wonderful.  You can try to cut down your bill cost or take on a side job - I can't really help you with that.  I can tell you that if you don't spend over the $237 your staying within your means and on budget.  that is a good thing!

 You can find the rest of the series here:

Budget 101: What comes in and what goes out! (Week 1) 

Budget 101: Seperating Funds (Week 2) 

Budget 101 - Giving! 

Budget 101: Thrifty Ideas For Stretching Your Money 

Budgeting 101: Emergency Money (week 5) #budget101

Budget 101: Spending (Week 6) #budget101

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