While working on getting out of debt, I feel it is imperative that one should work on building your EEE fund. Especially if your income can be as volatile as mine. I never put much thought before into how monies are divided, but it seems that this has been foremost on my mind lately.
As I mentioned before, I use a 50/50 split from short-term contract job payments. I put 50% of that income into various savings/planned spending pots. The other 50% is used to supplement this month's spending plan or set aside for next month.
The breakdown would be something like this:
A current contract job earned me $350.00. I split the money 50/50 into 2 sides, savings & spending.
Saving: $175.00
EEE - $77.50 (50%)
RRSP - $35.00 (20%)
XMAS - $35.00 (20%)
FVAC - $ 8.75 ( 5%)
HOME - $ 8.75 ( 5%)
Spending: $175.00
RENT - $61.25 (35%)
TRANS - $26.25 (15%)
FOOD - $43.75 (25%)
DEBT - $26.25 (15%)
ENT - $ 8.75 ( 5%)
MISC - $ 8.75 ( 5%)
This is the method I use to keep things balanced for me. If I had an additional unexpected winfall, then I could use another method for that. It could be a 75/25 split; 75% going to debt repayment and 25% going to fund the EEE fund. It sounds like a great method, but it isn't likely one I am ever going to use. The reason being that I like some amount, however small, going into each of our savings goals. If we save a downpayment for a house by depositing only $8.75 at a time, then so be it.
We don't really have a percentage method like you describe, but I think it sounds great for someone with highly variable income.
ReplyDeleteThis is what we do over here:
Hubby gets paid once a month and his entire paycheque covers all the fixed expense and some of the variable expenses.
I get paid every other week. The last paycheque of each month is put towards the variable expenses for the next month till they are fully financed. If there's any left over, it goes into savings. My 2nd paycheque each month makes up any shortfall towards variables if the first paycheque didn't quite cover it all, or if it isn't needed for variables, it is my "savings" paycheque.
As for how we divide up the savings, we are first and primarily focused on building up our Emerg Fund, so the bulk of any savings goes there. Whatever is left over funds the RRSP, RESP as our 2nd priorities, and our 3rd priorities are House Maintenance/Planned Spending Fund and the outstanding self-debt that we are paying back - it was a lump sum we borrowed from one account to purchase a new (used) vehicle last May. We still owe that account $4500, though it isn't a debt in the true sense of a debt because we only owe it back to ourselves.