Monthly cushion?

[corn18]

Do you build a cushion into your monthly budget? Just so you don't have to dip into an emergency fund or savings for unplanned stuff? If so, how much?

I was looking at 3% to 10% / month and if I don't need it, it goes into savings. This is for non E fund type stuff. Like my daughter needed new tires that I forgot to budget for ($830). Not an efund expense, but nice to have the cushion to cover it. And the b-day present for my mom that I didn't plan on but wanted to give her ($222). That came out of the cushion. Seems like cheating to me.

Thoughts?

Tom

[Krasay]

I do sinking funds for car expenses/repairs and family gift giving. Along with Christmas fund, and house repair. I set money back monthly for these items and have a cap for each one. If the cap is reached then it goes to debt. I am on baby step 2 of Dave Ramsey's plan.

Caps are car fund 1500, house 6000, Christmas 1200, gift $200. I also have the $1000 emergency fund. Once the debt is paid off, i plan to grow the emergency fund to 6 months of expenses.

[snafu]

Our bank gives a long list of free services so long as you keep a minimum $ 1K balance. I find with payments geared to due dates there is sufficient overlap from one month to the next to maintain the cushion for free bank services. I sweep any left- over sums to a linked savings account which permits an instant 'fix' if something goes awry.

We recently increased cash held in the small house safe. There have been so many 'emergencies' and evacuations this winter where ATMs lose power or run out of money, it's important to have easy access to cash.

[kork13]

I do this in two ways... First, I keep a $1000 float in my checking account, which helps to even out variations in month-to-month spending. Second, I do include a sort of "buffer" in my monthly budget, but I really just call it "unallocated spending." For me, this is about 5% of gross. I assume that in some way, it will either be spent or saved, depending on how much I do or don't spend. If there's extra money in my checking account over a few consecutive months, I'll roll that excess into savings.

[JoeP]

One way to think about it is to have separate funding for maintenance. So you could create a bank account for this, put a thousand in there, and then deposit a hundred every pay period. It's really up to you how granular you want to get: maybe a vehicle maintenance fund, a house maintenance fund, etc.

Another way of thinking is to just lump everything into your EF, bearing in mind that you will probably have to deposit more per pay period to keep it at a high enough level.

[corn18]

Another way of thinking is to just lump everything into your EF, bearing in mind that you will probably have to deposit more per pay period to keep it at a high enough level.

I think I might go with this. I am going to put 2 months expenses into a savings account I never look at and leave it there for a disaster fund. I'll add to this until it gets to 8 months expenses. At the same time, I will put $5k into "e-fund" that I use for unexpected / unplanned expenses. I will tap that and refill it as required. If I can keep it steady at $5k, I will never access the disaster fund. I think I can manage to keep the efund full and increase the disaster fund.

Tom

[figuringmoneyout]

I did have a 10% cushion built into my budget when I was working a traditional job. Now that my income is lower, unstable, and fluctuating I don't do that. I hope to get there again though because it was nice to have both a savings cushion and a monthly budget cushion so that I felt really, really secure that anything that came up would be covered.

[Gailete]

Back when I was actually working out, I had to do a lot of business driving with mileage reimbursed. I got so I charged my gas (filling the tank every 4 days at times-EEK!). Each payday, I would write a check to Discover to cover the gas expenses for that week out of the mileage reimbursement and then the rest would go into a car only savings account. got several benefits. It boosted my discover reward points, I was paying any interest on the Discover card, and the car account grew so that each time I did have a car problem or need, I had the money in the car account and usually with money leftover. My attitude when the fix-it person called and said it would cost $500+ to fix the car, I was always okay with it since I knew I had the money. If I had been able to continue the job, that account would have also played a huge role in my next 'new' used car.

I miss having that account, but with not going out to work, erratic income, most mileage is just deducted as a business expense on our taxes but not reimbursed by hubby's customers, unless a larger that normal travel distance for him. So most of our money that we can tuck away into savings, just goes into different savings accounts depending on the source of the money. It works for me anyhow although it confuses hubby, and each year, even with no more extra money coming in, we aren't carrying credit card balances, bills are getting paid on time, etc. I'm less stressed by money. So while technically we don't have an emergency fund, if needed all of the different savings can be called upon if needed. But I do try to meet every day emergencies out of that weeks income or charge it and give myself a few extra weeks to gather it all up.