Have dedicated bank accounts for specific expenses and saving goals to increase your money management satisfaction. Staying true to the Lazy Programmer principle, why spend time and effort mentally dividing your budget and deciding whether you can spend within a category or you’ve already reached your monthly limit. Create boxes for each expense category, set up an automatic monthly contribution to each of your boxes, and live a happy life splurging on whatever you’d like until you’re broke.
Within that category, that is. You still have money in another category, but you’re not allowed to use that for other purposes than is written on the box. Whether you like to buy clothes piece by piece as you go, or in a big bulk once a year, feel free to empty your Clothing box. You now still have money for your holidays in your Holiday box and for eating out in your Dining box. I love this strategy for allowing myself to be impulsive, but without the destructive results.
Not all boxes are of equal size. It’s realistic to cap your Holiday savings at €2.000, while your Clothing savings only need €500. Fill each box up until your predetermined cap and have your overflow contribute to either more payment towards your ‘Pay yourself first’ goals or use it as a one-time bonus on whatever you like. You’re doing a good job and are right on schedule anyways. Or do a combination of both options.
While setting up such a system, you want to start out by finding a bank that allows for two bank accounts (your main and daily shopping accounts) and several (free) bank/savings accounts.
Your main bank account is your workhorse and the foundation of all your automations, and also the one you’re least looking at eventually. All income of any sort should arrive at this account. From here, you contribute to your ‘Pay yourself first’ steps, pay monthly recurring costs such as housing, electrical, phone bills, etc., wire your monthly contribution to your daily shopping account and divide the rest under your boxes.
Your daily shopping account is the account you use to pay with daily. Its card is the one that will get the most usage. This account serves two main purposes. First, it protects you against theft and loss. There’s only a few hundred euros on this account, not thousands or more, so damage is limited. Second, it frees your mind to completely spend it on groceries and a new bike light, as you’ve covered your other expenses elsewhere. When needed, with the magic of fast internet and banking, you can transfer money from your dedicated box to your daily shopping account to pay for a specific expense in a physical location.
The dedicated accounts that make sense in your life have to be the result of your own analyses. I can give pointers and my preference as an inspiration, but we probably have different needs. Even you might change your needs and thus needed accounts over time. It’s a fluid process. If you own a car, I would add a Car account for depreciation, maintenance and repairs where you monthly add an estimate of the costs divided by the amount of months you guess you have left until that repair is necessary. If you own a house, add a House account for similar reasons. My dedicated accounts now include in no particular order: emergency funds, bridge funds, large purchases, holidays, clothing, sports, dining, education, business startup capital and pets.