saving percentages

[twest]

I have a question about how you all do your savings for things like car maintenance, house maintenance, vacations....etc? Do you have one account you put all your money in or do you have different accounts for each of these categories? Do you have certain percentages that you use for each category...for ex 3% to house maintenance or 2% to vacation?

We now have some more savings available now that we are debt free. We have our fully funded emergency fund. We contribute 15% to retirement and we also do some money for our son's college in a 529. I just don't want to spend home maintenance money on a vacation only to get back and the dishwasher has broken down and us not have the money. Maybe I am making this all too complicated? Any advice is appreciated

[MonkeyMama]

Personally, I keep all my cash in one account. I think of them in categories such as short-term, mid-term. (True long-term savings should be invested in stocks, mutual funds, etc.).

Home maintenance goes into my mid-term savings. (Probably won't need it this year, but will need eventually). The rule of thumb is to save 1% - 3% the value of home. We have gone with 1% since our home is brand new (needs no maintenance to speak of) and cost of homes is relatively high. If your home cost a lot less, 3% maybe makes more sense. Don't limit yourself to the rules of thumb if your situation is unique.

Vacation and car repairs? - Goes into short-term savings to be spent within a year. If I were saving many years for a big vacation, I would just consider it mid-term savings.

You can make it as simple or as complicated as you want. Important thing is to think about it and make sure you have ample savings for things that will likely come up. Unfortunately, most people don't think these through or plan very well. Whereas, simply saving a small amount every month in anticipation of these type expenses adds up very quickly.

I'd also consider investing above and beyond 15% to retirement. (Whether you put that money into retirement funds or taxable investments). I think of 15% as more of a minimum. If you are doing well and have your bases covered, definitely put more away for the long-term.

[artwest]

We have an envelope for "emergency minor home repairs". We try to keep $150 in it just to cover or at least help cover any minor emergencies that may arise, like last year when the spring broke on our garage door. We fund another envelope every month with $50-$60 for lawn/home maintenance.

We have a separate savings account that we save for vacation and Christmas.

As far as car maintenance, we have a savings account that includes multiple items like car maintenance, license plates, real estate taxes, etc.

If we have something coming up that we think may need replaced, we just throw money into our emergency fund.

The way we get our figures is not by using percentages but by simply estimating how much we will need and what we can afford. For example, if it costs $65 to get our oil changed and tire rotated and we do that 2 times a year for 2 cars, that is a total of $260. Add a little cushion of $156 per year and you get a total of $364 or $7 per week to put in that account for car maintenance.

[MonkeyMama]

Originally Posted by artwest

The way we get our figures is not by using percentages but by simply estimating how much we will need and what we can afford.

I think this is a good point. We do the same for just about everything. Kind of work backwards from what we need - which I didn't clarify.

Home maintenance is just kind of that big "who knows, but should probably save a decent amount!" IS the only thing we use percentages for. & even then, we look at it and make sure it makes sense.

[BMEPhDinCO]

I do it by the year - so I estimate how much we spent over the last year and then up that by 10% if I can and fund the account as soon as possible.

For example, I know we need new tires for DH's car, oil changes for both of us x3 each, registration for both cars and thus I estimated $1,200 for the year...if it's more then I'll take it from another account or dip into the "never go below amount" (I keep $3k in the car account for higher than expected bills, insurance, etc) and then refill it as quickly as possible to the minimum amount.

I tried percentages, but honestly our house is doing pretty well and so I only put in $900 instead of the $1,500 estimate (1% of value)...but we have money in there from last year as well.

Finally, with a fully funded EF, you can always dip into that if you have more expenses than you budgeted for, the funds aren't going to cry if you mix them up for an emergency situation!

(PS: I also second trying for 20% retirement if you are doing well other places)

[Slug]

I opened separate accounts that get set amount of fund transfers in each month: my play $, wife's play $, vacation $, property tax $. The rest goes into the Paying this month's bills/emergency fund.

I definitely prefer this method, but you need to look at how your handles regulation D violations since you are federally limited on electronic transfers. My credit union seems to realize that this rule is as ridiculous as it actually is.

[disneysteve]

We do not segregate our money (other than retirement and college). When expenses arise, we draw as needed. We are fortunate to earn enough to cover everything we need to cover and we do our best to keep costs down - no exotic travel, high-end cars or designer clothing.

[snshijuptr]

I have subaccounts for my savings.

We have a "Frivolous" account that I put 15-25% of extra money (earned income above our budget). This is our vacation, concert, and other entertainment account.

I have an "Annuals" account that covers holidays, regular car maintenance, insurance premiums, membership dues, etc. I put into this approximately how much I expect to need for the year. After we buy a car next year I will also add my current lease payment to that money and make it the car fund also.

We don't own a home so that's not included right now. We also have a fully funded E-Fund for anything unplanned that came up.

So basically 3 accounts: fun, planned not monthly, and emergency.

[twest]

Personally, I keep all my cash in one account. I think of them in categories such as short-term, mid-term. (True long-term savings should be invested in stocks, mutual funds, etc.).

I like this idea MonkeyMama. Thanks

I do it by the year - so I estimate how much we spent over the last year and then up that by 10% if I can and fund the account as soon as possible.

Ooh now I have thought of it this way...doing it by the year and dividing by paychecks or something. Never really considered increasing by 10%...thanks for that idea

We do not segregate our money (other than retirement and college). When expenses arise, we draw as needed. We are fortunate to earn enough to cover everything we need to cover and we do our best to keep costs down - no exotic travel, high-end cars or designer clothing.

Yea DS we are pretty frugal as well. I am probably making too much out of this. We usually have the money we need when things arise so we are definitely blessed.

[GREENBACK]

I have a pretty decent mental picture of what I need for most situations and I tried to keep enough cash available for that. I only have one truly liquid account that is used to pay for various repairs and other small emergencies. I know that I could access much more if something really serious occurs but it would take more time.

I used to like the idea of laddering CD's and various money markets for different purposes but low interest rates have pretty much made this a wash.

[bjl584]

I have one account for my EF, car fund, etc.

I used to have multiple accounts, but it's easier for me to have everything in one place.

[LivingAlmostLarge]

1 account but with my spreadsheet i budget and track what I think I need like 1% home repairs, etc. Plus like others I have been doing it for year so I know I spend around $2k on cars a year or something.