Money is awkward to write about because we all have such different circumstances -- jobs, priorities, budgets, etc. But one of the questions I get asked a lot because I've written rather transparently about our budget is how much money we have in the bank. I'm not going to give specifics because that's just TMI. As well, retirement + college savings are a whole, extremely personal/different animal for another day.
Still, I think it's worth starting this discussion because one of the most difficult parts of deciding to stay at home was figuring out if we were doing OK financially. I compared myself to friends and family and ultimately ended up feeling either really good about our $$$ or really bad. In the end, it boiled down to what we felt comfortable going forward with in our specific situation.
I thought I'd share the guide we follow . . . and where we're at currently.
CHECKINGI've read in various financial guides that it's prudent to keep a month's worth of expenses in your checking account plus a cushion. We try to follow this "rule" -- so we keep a month's worth plus around 20% -- but have honestly been somewhat sloppy about where our money falls in our accounts. In the past, we've just kept a lot of money in checking in case of emergencies, which is really just a way of making sure we didn't overdraw funds because we don't use credit cards. It's not the best method, though, since knowing we have lots in checking makes big purchase decisions easier.
SAVINGSNow here's where things get personal. I have friends who have wild, wild savings, and more power to them. However, when you're living with tremendous student loans and other financial obligations, sometimes pitching thousands into savings just isn't feasible. The goal here, at least for us, is to have 6 months of our monthly living expenses saved up.
We had more than this amount a few months ago, but house downpayments and moving expenses, etc. later -- we're hovering more around having 4 months. And Stephen is a teacher, so he doesn't get paid during the summer. So, I'd say by the end of summer, we'll have closer to 3 months of expenses in our savings account.
DEBTWe have student loans (low interest, but still hefty) and a car payment (that ends in 1.5 years) and a brand new mortgage. Otherwise? We don't carry any debt. We used to have a modest credit card payment, but we got rid of that a couple years ago. Otherwise, we try to live within our means, though we do carry a card if something incredibly unexpected happens. This is one reason we're trying to hold off as long as possible with buying another car. More things, more money, more headaches.
PLANCatching up on our savings shouldn't be too difficult provided we stick to our budget. I estimate it will take us around 6 months to catch back up to the level where we want to be after Stephen starts getting his normal paychecks again. This doesn't mean we don't have savings goals of our own, but for the time being -- we're just trying to get these basics under our control . . . and we feel pretty good about where we are at this stage in our lives. At this point, we hope to get smarter about the accounts and how we divide up our funds to start maximizing on interest and all that jazz. We both aren't terribly numbers-minded, so it's difficult.
What do you have in the bank?
Next week I plan to have a quick tip for each day for how we try to save money here and there -- baby steps, if you will. I hope you'll join me! And if you want a few right now, you can check out my video about 5 Easy Ways to Save Money!
Planning Number 2: Budget Edition
SAHM: Money Matters
SAHM: Budget + Sacrifice
Piecing Together Income from Different Streams
Making On Car Work For Our Family
Like what you just read? Browse more of our posts + recipes on Pinterest. You can subscribe to the feed of these posts, chat with us on Twitter or Facebook. And you can always email us with your questions and comments.