Since the novel coronavirus hit in march, unemployment rates have been on the rise and many people have been concerned about the state of their wages. For those who are working, some people have had their salaries dropped, and I have many friends and family members who are worried that, if a second wave of the virus happens, they will lose their jobs, too.
I have never had a consistent income. Before and during college, I worked part-time jobs to make ends meet, and after school, I worked mostly freelance jobs, which meant there was never a consistent amount of money coming in. This never bothered me – I learned how to manage my money in a way that worked for me. So, when the virus hit, and my freelance jobs began to disappear, the way I budgeted my money actually stayed the same.
Many people take specific amounts out of their paychecks each week or month for savings or to give to charity. Because I have never had a consistent amount of money coming in, instead of taking out specific amounts of money, I split up my paycheck by percentages. This way, no matter how much I am earning, I always know how much money I have available for spending, how much should go into savings, the minimum amount I want to give to charity, etc.
This is not the ideal way for everyone to split up their incoming funds, but it works for me. And during such uncertain times, when paychecks seem to be less consistent for many people, I thought I would share how I split up my money as a possible option for others. You can use the percentages listed below, or just use my formula as a starting point to create a budget that works best for you!
My budget
Spend account – 60 percent (40 percent for essentials and 20 percent for recreational spendin)
The biggest chunk of my money goes into my spend account. The key here is that, hopefully, I won’t actually spend all of this money. This account also functions as a short-term savings account for bigger, unexpected expenditures. This is always the account I dip into first for any purchases, big or small, expected or unexpected.
Charitable giving – 10 percent
Ten percent of everything I earn is donated to charitable organizations of my choice. The organizations I donate to most frequently include Compassion International (I sponsor a child living in Ecuador), the Ulman Foundation, and United Church. I love also letting this account build up sometimes, so when I am asked for more sizable donations, I have the means to give. To be honest, though, I have a hard time saying “no” to people when they ask for support, so this account normally drops into a deficit, meaning I take some funds out of my spend account to donate, too.
Savings – 10 percent
Ten percent of everything I earn also immediately goes into savings. These are my long-term savings that I don’t touch unless it is an absolute emergency, or for very large purchases that I can’t cover from my spend account alone. As suggested by Dave Ramsay, I always try to have a minimum of $1,000 in this account in case of an emergency.
Adventure Fund – 10 percent
I am a saver, not a spender. I learned a long time ago that this meant I rarely spent on myself, which meant I ended up never doing anything that I really wanted to do with my life. So, I wrote myself a bucket list, and anytime I take a step towards achieving one of those goals, I take the money from my adventure fund. It’s a savings account for all of the life experiences I want to have. These include fun trips, like my road trip to Colorado, but also more practical purchases that are important to me, such as going to college and buying a home in the future.
Loan payments – 10 percent
Another 10 percent of my paycheck is designated to pay off debts, such as college loans. If there isn’t enough in this account to pay for loans, I take money out of my spend account, adventure fund, and savings (I also often take money from these accounts anyway to put extra money on my loan payments – the faster they are paid off, the better).
For me, having a budget has not been restrictive, but freeing! Knowing what I have to spend and feeling reassured that I have money set aside for paying off debts and saving for the future makes me feel more comfortable spending money on things that I want and need.
Comment below if you have tips to share on how you best budget your money, or if you have any questions about my budget formula!