The final budgeting secret is to SWEEP! Huh??
Let me explain. After you’ve finished paying all your regular monthly bills, and also transferred the money to your savings account to cover your occasional bills that you’re saving up for -- then take ALL THE REST of the money in your checking account (except what the bank demands you keep in the account to keep it open) and SWEEP it into your savings account.
Add one more sub-account in your lovely savings account and call it your Rainy Day Fund. This “swept” money goes in this fund. The money in this new fund accomplishes two important goals in keeping you on your budget:
- It removes the money from your checking account where it is EASY to spend, and tucks it away in your savings account where it is HARDER to spend. And. . .
- It gradually grows a fat cushion between you and a financial emergency.
Most financial experts recommend that you work toward having at least $1,000 in this Rainy Day Fund. But keep going. The ultimate goal would be to have about 6 months worth of household EXPENSES (not gross income) saved in there. That ends up being quite a few thousand dollars! This money is not to buy a new blender or TV or a new car. It is to pay the bill when the washing machine suddenly dies, or when your car engine blows up or you lose your job. Those small or large money emergencies that kill your budget!
Make the $1,000 your first goal, and then work toward having one month’s worth of expenses, then two months and so on. You will feel safer than you have ever felt before.
So, SWEEP your checking account --it’s the easiest way to keep your monthly budget healthy and safe.