You told yourself you’d only touch it in a real emergency. But then the car needed tires, a friend’s birthday trip came up, and somehow your savings account is lower than it was three months ago — and you’re not even sure where it went.
Here’s what’s actually happening: you’ve been saving into one bucket and spending from five different parts of your life.
In this episode, I’m walking you through the five savings buckets that every budget needs starting with why lumping everything into one account is exactly what’s keeping you stuck in that cycle of dipping, rebuilding, and dipping again. I also share what happened when a client came to me with $7,000 saved, $2,000 in credit card debt, and what we did in our very first call to shift how she saw her money.
If you have been focusing on building just one savings account but still find yourself dipping into it, this conversation will change how you look at saving money.
In this episode you’ll learn…
[02:00] Why one savings account creates pressure and messy habits
[03:01] Why focusing only on an emergency fund causes your plan to break
[05:20] What a side-eye fund is and how it changes your perspective
[07:45] Why you need more than one place to put your money
[09:30] The living fund and how it prepares you for home expenses
[12:10] The transportation fund and how it keeps you off the credit card for repairs
[15:05] The travel fund and how to plan for trips without the guilt
[17:40] The celebration fund and why it matters more than you think
[20:10] How separating your money stops the second-guessing and builds a real habit
Tune into Money Files to learn how to set up your savings to fit your life so you can stop dipping into your accounts and finally feel in control.
Are you ready to start asking for help with your finances? Apply to work with me, and let’s start working towards your financial goals.
If you loved this conversation about building a savings system that actually works, check out Episode 39: Shift the Way You Think About Saving to Build Better Financial Habits and Episode 183: The Dipper Identity: How to Break the Cycle of Dipping into Your Savings.
Transcript for “Five Savings Buckets Every Budget Needs — Starting With the One You’re Probably Skipping”
Intro: Hi, and welcome to Money Files. I’m Keina Newell from Wealth Over Now. I work every day with professional women and solopreneurs to help them get out of financial overwhelm and shame so they can experience more flexibility and ease with their finances. Are you ready to gain confidence and learn to manage your finances intentionally? Tune in and grab financial tips that will help you master the way you think about and manage your finances.
Keina: Hello, and welcome back to another episode of Money Files. So I’m really just excited to be talking about saving money. I talked about saving money last week. I’m going to talk about saving money this week. And I want to tell you about a recent conversation that I had with a client that just started with me. And she told me that she had, I want to say it was about $7,000 in savings. But the other thing she said in the same call that we were on is that she had about $2,000 in credit card debt. So my natural inclination is to think, well, why wouldn’t you take your savings to pay off your debt? And I knew why.
She didn’t want to dip into her savings because she had a goal that she wants the savings account to get to $21,000 because that would give her about, like it would set her up for a nice cushion where she’s like, if I lose my job, I just want that to be my solid emergency fund. And so I knew from talking to her that all of the money that she’s putting, that’s the only savings that she has. Everything goes in there. And she has thoughts about what happens if I have to dip into that account. She even told me like, I don’t like having to dip into the account because when I have to dip into the account, it goes lower. And when it goes lower, it creates different thoughts and feelings within me because it’s already not where I don’t want it to be.
And so I’m like, oh, well, I know what we’re going to be working on while we work together. And that’s to make sure that you actually have money for the things that you are saying that are important to you. And just in our first couple of conversations that we’ve had, I can see that she has tattoos. I can see that she likes to travel. I can hear that she likes to travel. She’s also focused on her health this year, but that’s not in her plan. She is someone who would confess to me that, Keina, I live off of a list of bills. And that’s why I’m here with you because I don’t want to live off a list of bills. So on our first call, we were just kind of talking about, what are some of the other things that we want to make sure are in her budget and that goes to travel, medical expenses, even celebrations with friends, because I could hear the values that she has as a person and how she likes to spend on herself and also how she likes to spend on other people.
And so this is important to note because if you’re just focused on creating an emergency fund, you might forget to include the things that you actually value 03:01 or the things that are just a part of your adulting experience. So what happens is that when you just have this one savings account and you are thinking about like, Kiena, I’m being responsible, I’m doing the thing where they told me to create a rainy day fund, and I want to make sure that I hit that goal because somebody out there somewhere said that you need three to six months of savings. So you’ve latched onto that, but you’re not making space for the other things that you actually like to spend money on. And that’s the breakdown because then when you have to touch your emergency fund or your rainy day fund, you have thoughts about it.
And so in this episode, I want to talk about what should we actually be saving for? How do I make sure that I can grow what I actually call a side-eye fund? I don’t really like emergency funds because some people don’t like to save for emergencies. I’m like, I like to call it the side-eye fund, one, because I oftentimes roll my eyes. But when I think about side-eye, it makes me think about like, I get choices. If I can side-eye you, that means I don’t have to listen to your foolishness. I ain’t going to listen to your craziness. And so when I think about a side-eye fund, it could be, I want to leave my job. It could be I’m in between jobs, but I have options. And thinking about having a side-eye fund, that’s one part of your life that we never know when we’re going to have to tap into that.
So it’s kind of, I understand why you want it to be a fund that is untouchable, a savings account that you’re not tapping into because you want it there for when you really need it. But I also want you to bring in other forms of saving money because you need to spend money at certain times of the year or during certain seasons that don’t look like your regular list of bills. That might be more of what somebody might call a short-term savings goal. And so we want to make sure that we’re leaving space for those things in our life and leaving space for the things that I call whack-a-mole expenses and they just kind of make you roll your eyes. Like, oh my goodness, I need a car tire, or here we go again. We need to make sure that we mulch the lawn.
And so there are things that you have to do that are not a bill every single month, but we need to make space for them. And by keeping our side-eye fund away from the things that are just basically short-term savings goals, we create separation and we create the opportunity to not have to make decisions in the moment about whether or not we can spend on something, but we just get to decide how do we want to spend. So by having and creating these savings buckets that are ultimately tied to a budget, then we are reducing what I call your decision fatigue. And we’re not having to make decisions every single time you get paid or every single time something comes up about whether or not you can afford it, is it in the plan? And so that is why I’ll always be a fan of a budget because budget is going to help you not bask in decision fatigue.
So let me get back on track to what I’m supposed to be talking about. Let’s talk about these five buckets and why we don’t just want to have one savings account or you can have one savings account because I know some savings accounts have different categories within them, but I want you to be thinking about what savings buckets do I need? And this is not an exhaustive list, but it’s where I want you to start. You can call this your starter kit for financial safety. If you start here, you’re going to be in a much better place and you’re going to be willing to adopt other savings buckets because you’re going to see how these savings buckets take care of you month after month and year after year.
So the first savings bucket I want you to have is what I’m going to call a living fund. And this is the cost of maintaining your household. So if you’re a renter, it might mean that this is the money that you’re going to put to the side for rent increases or if you know you’re someone like I generally will move when they increase my rent, there’s expenses at my rental property that my landlord doesn’t cover, that’s what would go in this fund. If you’re a homeowner, what’s going to go in this living fund is going to be setting aside money for the cost of home repairs. It could be setting aside money for refreshing your lawn during the summer when you have somebody come in and they might start your spring cleaning in March and they start to clean up the leaves. They make sure that they mow your lawn or they’re mulching your lawn or maybe if you don’t have someone mulching it, you go out and mulch it. So that could go into this fund.
The fees that you need to pay for a plumber, electrician to come to the house unexpectedly, maybe you need to get your HVAC service, that’s what this living fund is for. If you have to pay a deductible, like I had my dishwasher leak, so I live in a townhome, I had my dishwasher leak from my second floor to my garage, I had to pay $1,000 deductible. That came out of my living fund. I didn’t know when I was going to need that money, but I know that I live in a house and that my home insurance has a deductible and it’s $1,000. So just chipping away at that over time, you can have that money in this living fund to make sure that you can take care of your house or you can take care of moving from one apartment to the next. So that’s one savings bucket that we want to have.
The next savings bucket we want to have is our transportation fund. And this is like your cost of making sure that you’re able to move around. So if you’re somebody who has a car, you could put your oil changes in here. You could think about the cost of your deductible if you got in an accident, thinking about when you have to repair your tires. If you have a car that’s older, you might have to get work done throughout the year. And so that’s what would go in this transportation fund. You could also put your car registration here in this fund because it’s something that’s generally paid annually. Or if you live in a state like Virginia, you have vehicle property taxes, it could go in your transportation fund. But this fund is going to make sure that it keeps you mobile. If you live in a city and I have clients that do, they’re like, Keina, I don’t have a car, I like bike. When I’m not biking, I take Uber and I take Lyft, especially during the winter months. Like that’s what this transportation fund can be used for to offset the cost of you being able to take public transport when you’re not on your bike to also offset the cost of when you need to fix your bike because you have flats or you need to change the tire or you need to get your bike serviced. Like it can go into your transportation fund.
Notice how I’m talking through the things that although they may not happen every single month, if I think back to the last 12 years, or not 12 years, but 12 months of being a bike owner, what cost did I incur? If I think back to the last 12 months of having a car, what cost did I incur? And so that allows you to start thinking about what needs to go in my transportation fund. So you have a good starting point and you have a guesstimation that you can change at some later date. But like last year, if you spent about $1,200 on your car, well, then you’d put $100 a month into this transportation fund so that every time you’d have to take your car into the shop, you know that you have the money to be able to apply towards getting your car fixed. A lot of my clients come to me with auto maintenance being their thing that they’re like, Keina, if you could just help me figure out how not to have to put my auto maintenance on my credit card, I will love you forever. And those are the things that we do together.
So the third fund that you need is your travel fund. And so I want you to think about, you know, when do you travel? Do you have friends’ birthdays that are coming up that you need to travel for? Maybe you have weddings or baby showers that you’re traveling for. Maybe you like to go somewhere internationally or domestically twice a year or four times a year, your weekend trips, but that’s what goes in your travel fund. If you are a weekend trip girl, then you could put extra gas money in here. You could put hotel money in here. If you are, hey, I travel domestically, it could be your hotel money, your Airbnb money. How do I make sure I get to and from the airport? But like, that’s what goes in your travel fund. So if you think like I spent $6,000 the last 12 months traveling, then you need to be saving $500 a month into your travel fund. That’s how that math works out.
The fourth bucket that I want you to have is a celebration fund. And I think this is the one that people really look over, especially if you’re someone who you resonate with, like, I don’t really buy gifts for people. And I will tell you, I’m actually not a huge gift giver. Like I don’t feel obligated to give gifts. However, I do like to give people gifts when I see something that makes me think of them. So I’m very much a, ooh, I saw this, let me get it for you. And I know that about myself. So even just thinking about, in celebrations, how do I make sure I account for those moments when I actually want to give something to someone that I found something and made me think of them and then I’m able to respond. Also in the celebration fund, you can put your holiday money. So any holidays that you celebrate throughout the year, especially towards the end of the year, from November to the beginning of January, what needs to be accounted for, or maybe you host at your house, all of that should be one number that you can add up and then you can divide it by 12. That will go in your celebration fund.
And then lastly is your side eye fund or your safety fund. And this is really, that’s that untouchable fun that I talked about at the beginning of this podcast episode, that I want to have that money in case I lose my job, or there’s just really something out of my control that I couldn’t have planned for. That’s why you have that side eye fund. That’s why you have your safety fund. And it’s also why we don’t want the other savings buckets to be wrapped up into that, because they are discrete. We can plan for celebrations. We can plan for travel. We can plan for your transportation. And so we want to push ourselves to get to a point where we’re accounting for those things. And we’re not just telling ourselves, oh, I’ll take care of it whenever, because you’re not actually going to take care of it. You’re going to figure it out and they’re going to stack and compile. And then that’s where you create that negative relationship with being someone who I call a dipper. So you’re always dipping into your savings.
I have a podcast episode where I talk about that savings identity and you’re someone who is always dipping into your savings. So when my client, remember, she told me she had that $7,000 saved, that is actually her starting point. And so what we’re going to do and what we’re going to build out from that one bucket is we’re going to help her see where else do I want to put money in my life so I can create a better relationship with saving money. And so I can be in a space where I’m not thinking constantly about whether I can or cannot afford something, but I always want to make sure that I have the money to be prepared for the things that I want to be able to purchase. So that’s why we want to make sure that we start with these five saving buckets. Like I said, this is not an exhaustive list, but starting with these five buckets is how we get to a place where we can budget for the last time.
And this isn’t about restricting yourself, but it’s about really taking care of yourself and giving your money a job so that it actually matches your lifestyle. So I hope this episode was helpful. And if you’re listening to this and you’re like, Keina, I want to work one-to-one with you. I’ve been listening to you. I know you could help me. Then you can go to my show notes and you can apply to work with me there or go to wealthovernow.com. At the top, you’ll see that it says book a call. So thank you so much for tuning in and I will talk to you next week.
Outro: Thank you so much for listening to Money Files. If you’re ready to take the next step to reach your financial goals, head to www.wealthovernow.com/appointment and let’s get started.
