Do You Have “Unexpected Accounts”?
This is a guest post from Jay S. over at jinij.com the personal finance for dummies blog.
Do you have an “unexpected account”? Being on a budget is a constant thing, all your money has to be accounted for at all times. You have to plan for every little thing the best we can and sometimes unexpected things happen. Friends wanting to go out, family needing help, car keep giving problems and a million other things. There’s no way we can cover every angle, but you should still watch what you spend when these things happen and not just spend what you have to, in order to make the problem go away.
Most of us have a savings account and a checking account, we spend from our checking account and use the saving as a backup for the checking. Now imagine if you had an account for almost everything you had to do and everything you want to do. Money specifically put to the side for all the little and big things in life, this is how most personal financial manager have there lives setup and how I have learned to keep my finances.
They are called many things, but I call them unexpected accounts because they are there for unexpected financial situations. These are simply accounts that you setup to pay for things that pop up on you. If your bank has the ability to setup sub-accounts within your checking account you can make a few and name them according to what they are for. For instance you can make a car repair sub-account and have your checking automatically transfer $10 or $20 from each paycheck to this account. In time it will add up and if your car breaks down you will have money ready and waiting for it.
You can setup as many unexpected accounts as you can afford. Try to experiment to see how much you can put aside without feeling the crunch for your bills. Your money will still be in your checking account so it really does not matter how many accounts you have. You can also take from one account to help another if it is not enough to cover that expense. Now you can be ready for almost anything that pop up financially without worrying about it too much.