I decided to see how I was doing on my budget today so I went over the numbers. I basically budget by what is called the 60 % plan. It is a fairly basic plan when you live off 70% of you income. It is not easy but it can be done. You may not be able to live in the house you would really want to or do as many things as you want.
In the plan 10% is considered fun money. You can buy those designers’ Jeans or eat out. This should include those café Lattes.
30% is then divided in to three savings plans:
I have this taken out from my paycheck so I never see it.
10%: Long term savings (stocks, CD, T Bills and other not very liquid forms of savings
This lack of liquidity means it is hard to do impulse spending on this since it takes a while to get the cash and usually takes a few days.
10% is Sort-Term Savings.
This is money saved for vacations, gifts, appliances, car repairs and other needs. This came in handy this year for me when, Yikes, I owed money for taxes. I found out I no longer qualified for the child care tax credit since my two daughters turned 17.
So how did I do you may wonder. Yes, I have amazingly kept within my goals with an average of almost 15% in the Long-Term and Short-Term Savings. My 401k is, of course, 10% because it is automatically deducted from my pay. I just cahged it to 15% to get my money up there and see if I will be able to do it. Well these results makes me happy. At least I am doing better towards my goals. I am only planning on taking my two children for a 3 day weekend vacation this year to Chicago to see the King Tut exhibition that open this month using the short-term savings.