Comments on: Labelling Money http://blog.canadian-dream-free-at-45.com/2009/12/10/labelling-money/ Tue, 07 Feb 2012 18:14:07 +0000 hourly 1 http://wordpress.org/?v=3.1 By: JMK http://blog.canadian-dream-free-at-45.com/2009/12/10/labelling-money/comment-page-1/#comment-40329 JMK Fri, 19 Feb 2010 18:44:20 +0000 http://blog.canadian-dream-free-at-45.com/?p=1197#comment-40329 Super Fund is a great name for it. This is how we manage every cent not allocated to basic expenses like gas, groceries, mortgage, utilities, insurance, property taxes, etc. Our salaries and all these basic expenses are the same every week/month so we plan out every expense for the year in advance and everything else is considered unallocated excess. Every Friday on my spreadsheet I have a row labelled "Transfer to_____" and a blank amount. After adjusting all the planned amounts for the week with the actuals, I test amounts to determine the maximum I can skim off (without screwing up subsequent weeks) and decide whether the excess is going toward RRSPs or an extra mortgage payment. Because we generally live on 55% of our income there is a healthy excess most weeks. Whenever a large expense is anticipated, I simply don't do the transfer and let the excess pile up for the required number of weeks. I'll need new summer tires for my car in early April, so I'll skip the transfer for a couple of weeks in late March. When my husband was ready to replace his truck last year I stopped transfers for nearly 5 months while he looked around for the replacement. Super Fund is a great name for it. This is how we manage every cent not allocated to basic expenses like gas, groceries, mortgage, utilities, insurance, property taxes, etc. Our salaries and all these basic expenses are the same every week/month so we plan out every expense for the year in advance and everything else is considered unallocated excess. Every Friday on my spreadsheet I have a row labelled “Transfer to_____” and a blank amount. After adjusting all the planned amounts for the week with the actuals, I test amounts to determine the maximum I can skim off (without screwing up subsequent weeks) and decide whether the excess is going toward RRSPs or an extra mortgage payment. Because we generally live on 55% of our income there is a healthy excess most weeks. Whenever a large expense is anticipated, I simply don’t do the transfer and let the excess pile up for the required number of weeks. I’ll need new summer tires for my car in early April, so I’ll skip the transfer for a couple of weeks in late March. When my husband was ready to replace his truck last year I stopped transfers for nearly 5 months while he looked around for the replacement.

]]> By: CPS http://blog.canadian-dream-free-at-45.com/2009/12/10/labelling-money/comment-page-1/#comment-37190 CPS Fri, 11 Dec 2009 15:00:41 +0000 http://blog.canadian-dream-free-at-45.com/?p=1197#comment-37190 I now subscribe to the Super Fund idea. But I do think it is for people that have their financial houses in order. Those who are struggling with debt/spending would be well served by budgeting more closely until they can comfortably manage. It's just not a game I'm personally playing (and why I don't read the Simple Dollar anymore...too penny wise, time foolish for me) I now subscribe to the Super Fund idea. But I do think it is for people that have their financial houses in order.

Those who are struggling with debt/spending would be well served by budgeting more closely until they can comfortably manage. It’s just not a game I’m personally playing (and why I don’t read the Simple Dollar anymore…too penny wise, time foolish for me)

]]> By: Robert http://blog.canadian-dream-free-at-45.com/2009/12/10/labelling-money/comment-page-1/#comment-37149 Robert Thu, 10 Dec 2009 21:53:58 +0000 http://blog.canadian-dream-free-at-45.com/?p=1197#comment-37149 The term for having separate intentions for money in your head is "mental accounting". It causes people to make some funny decisions, like spending driving time and gas money to save a few pennies on groceries. The ultimate "super fund" is my Manulife One account. It holds my short-term debt, investment debt, emergency savings and longer-term savings. There are other banks that offer a similar setup. But it could also cut both ways, as you described. The term for having separate intentions for money in your head is “mental accounting”. It causes people to make some funny decisions, like spending driving time and gas money to save a few pennies on groceries.

The ultimate “super fund” is my Manulife One account. It holds my short-term debt, investment debt, emergency savings and longer-term savings. There are other banks that offer a similar setup. But it could also cut both ways, as you described.

]]> By: Andy http://blog.canadian-dream-free-at-45.com/2009/12/10/labelling-money/comment-page-1/#comment-37147 Andy Thu, 10 Dec 2009 21:24:13 +0000 http://blog.canadian-dream-free-at-45.com/?p=1197#comment-37147 Have to say I love reading your blog. Still catching up on your archived articles, but thought I'd throw my 2 cents in here. It is an interesting phenomenon, but I don't see it as complicating my life. I think the guilt of removing the funds from one group to another is healthy. It keeps me on track for my goals. If I really need to borrow money from one fund or another then I consciously need to recognize that my goals need to change or I need to replace the borrowed money. For example, I have a car fund to purchase a new car in a few years. If I was to borrow from that now I'd have to adjust that plan. I actually only see benefits from this labeling. So I'm not even sure what the issue would be. Although I do have a small "fudge factor" in my budget that I can draw from and not feel guilty about. Basically just a fund that has no specific purpose. Have to say I love reading your blog. Still catching up on your archived articles, but thought I’d throw my 2 cents in here.

It is an interesting phenomenon, but I don’t see it as complicating my life. I think the guilt of removing the funds from one group to another is healthy. It keeps me on track for my goals.

If I really need to borrow money from one fund or another then I consciously need to recognize that my goals need to change or I need to replace the borrowed money.

For example, I have a car fund to purchase a new car in a few years. If I was to borrow from that now I’d have to adjust that plan.

I actually only see benefits from this labeling. So I’m not even sure what the issue would be.

Although I do have a small “fudge factor” in my budget that I can draw from and not feel guilty about. Basically just a fund that has no specific purpose.

]]> By: Ben http://blog.canadian-dream-free-at-45.com/2009/12/10/labelling-money/comment-page-1/#comment-37129 Ben Thu, 10 Dec 2009 15:47:43 +0000 http://blog.canadian-dream-free-at-45.com/?p=1197#comment-37129 I've got a few labels on money I suppose. Chequing Account - this floats all the household bills. Savings Account #1: This is part of the e-fund, and siphons excess funds from chequing account. Equivalent to your SuperFund I suppose. Savings Account #2: This is the car savings account - takes money every month from SA#1. TFSA: another component of the e-fund. RRSP etc: retirement of course. So very simple really. The only real labeled account I have is the car savings account. This expense is one that a lot of people forget to save for, and it's a big one, so I find it helpful to keep it separate from my true emergency funds. In 3-5 years I know I will need to replace a car, and treating the entire pot of cash as an e-fund is blinding myself to the reality that the money doesn't really belong to me today - it's already been spent on the car in 3-5 years. I’ve got a few labels on money I suppose.
Chequing Account – this floats all the household bills.
Savings Account #1: This is part of the e-fund, and siphons excess funds from chequing account. Equivalent to your SuperFund I suppose.
Savings Account #2: This is the car savings account – takes money every month from SA#1.
TFSA: another component of the e-fund.
RRSP etc: retirement of course.

So very simple really. The only real labeled account I have is the car savings account. This expense is one that a lot of people forget to save for, and it’s a big one, so I find it helpful to keep it separate from my true emergency funds. In 3-5 years I know I will need to replace a car, and treating the entire pot of cash as an e-fund is blinding myself to the reality that the money doesn’t really belong to me today – it’s already been spent on the car in 3-5 years.

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