Jun 7, 2010

Ways to Make & Save Money #14: Adjust As You Go

You can read the rest of the Ways to Make & Save Money series here.

For almost ten years now, I’ve had a budget or spending plan of some kind. It was stricter at first, meaning I was quite diligent about tracking our income and expenses. And then it became more of a guide to make sure we were staying on track with our goals – I stopped logging every expenditure, but I knew about how much we were spending and whether it was in line with our budget.

Last month, I mentioned that I've made one adjustment to how I manage our money that’s made a big difference, and Gina from Moneywise Moms said she really wanted to know what it was. Well, I’m a little embarrassed because it’s not really a big thing, but it did make it a lot easier for me to keep track of what should be going into savings.

Every month, we get a check from our flexible spending account to reimburse us for our daycare costs, as well as any medical expenses that have come up. And prior to this year, I used to direct that money where it was needed – so if I needed to pay a bill, it went into checking, and if there were no bills due, I deposited it into savings. In a way, I saw these checks as “extra” money to be snowflaked whenever possible.

But this year, I started depositing all reimbursement checks into our checking account. I decided that since they are reimbursement for expenses we’ve already paid for, it would balance out our budget by allowing me to keep savings in our savings account. I was a little worried at first that my new system would cause me to save less than I could. But that hasn’t happened. I have only needed to raid our savings account once this year, and that was for a medical expense incurred last year that wasn’t covered by our flexible spending account because we’d already exhausted it. I wish I’d made this change years ago, because I think it would have simplified my tracking a lot!

So that's this week's tip: Don't be afraid to make changes. If you don't like how it goes, you can always make another change, and you just may discover that change is a beautiful thing!


Gina @ MoneywiseMoms said...

Interesting. That's where I've always put our FSA money each month--it's still hard to keep track of! :)

Chief Family Officer said...

@Gina - It's not so much about keeping track of the FSA money, as it is about balancing my budget. When creating our budget, I deduct the amount that's automatically directed to our FSA, so if I deduct it again when we pay for services, it's technically a double deduction. Putting the reimbursement checks back in checking balances my budget better so I don't have to dip into savings. And that's what I've found this year, that I'm really not touching savings at all :)