![]() Use a high-yield online savings account such as Emigrant Direct, HBSD, or ING Direct. Every time your paycheck is deducted, have a scheduled transaction transfer a set amount from checking to savings. Make these payments automatic, so you don’t need to worry about them. If you can’t pay electronically, have your bank send out a check to the vendor. These would be most of the bills in the first category above - utilities, rent or mortgage, cell phone, Internet, etc. As much as possible, pay your bills online. I recommend simplifying: just use broad categories like food and gas and spending and utilities. Those can be useful if you want to track all that stuff, but I don’t. A lot of budget software asks you to fill in a million categories and subcategories. 10 percent: Fun money - you can spend this on eating out, movies, comic books - whatever you want.When these expenses come up, you will have the money for them, instead of trying to pull them from other budget categories. For this savings account, be sure to spend the money when you need it - that’s what it’s for. 10 percent: Short-term savings - this is for periodic expenses, such as auto maintenance or repairs, medical expenses (not including insurance premiums), appliances, home maintenance, birthday and Christmas gifts.You still need to have an emergency fund, but while you’re in debt-reduction mode you can either create a small, temporary emergency fund out of the money from this category or the next. Once your debts are paid off, you can switch this to long-term savings. But if you are in debt (not including a home mortgage), I would advise that you use this portion of the budget to pay off your debts, and even draw some from the other categories such as retirement to increase this to about 20 percent for now. It’s best to invest this in something such as stocks or an index fund, and this can serve as your emergency fund. 10 percent: Long-term savings or debt reduction.10 percent: Retirement - and if you’re doing it right, this is being automatically deducted from your paycheck for a 401(k) investment.This is the part most commonly thought of as a budget. ![]()
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