When money comes in, this is what I do with it:
The first 10% is allocated to church/charity and then another 10% goes to the money market savings account.
The rest of the money stays in my checking account for the duration of the month. Because I’m not much of a spender, I don’t worry about my spending. I don’t live a luxurious lifestyle, but I don’t feel deprived either. I could probably maximize my savings a bit more if I really wanted to, but for now I consider myself lucky that I’m naturally inclined to save more than spend.
I keep my receipts and record all the income and expenses for the month. On the first day of every month, I run the numbers for the prior month. This is when I spread out the remainder of the money from that month.
I take all income (minus the 20% that’s already been allocated) and subtract expenses. The balance gets divided like this:
40% to the money market (general savings)
25% to my Roth IRA (until I reach my contribution limit)
20% to my future Vanguard account (minimum of $3,000 to open an account)
10% to my stock portfolio at Zecco
5% to my emergency fund at ING
It can get a little messy and it varies from month to month depending on my spending, but it seems to work for me.
Basically, my personal money philosophy looks like this:
Pay God first. Then pay yourself. Feel free to spend, but never more than you make.
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