this wasn't in the plan |but life is still pretty good

I recently started using You Need a Budget to track spending. I love it. YNAB runs on four rules, the first being stop living paycheck to paycheck. To help you do this, they encourage you to build up a buffer - an amount equal to one month's worth of expenses so that you are living not off of your most recent paycheck,  but off of the previous month's income.

This is different than, say, having an emergency fund. This is money that doesn't have a "job" (other than to be your buffer), so it's not money that's assigned to a savings account, it's just money that's always hanging out in whatever account you use to pay bills and withdraw spending money.

We've been lucky enough to never have to live paycheck to paycheck, but I tend to pretend that we do. When my husband gets paid, I transfer the money to our ING checking account and then pay all the bills that need to be paid within the next two weeks and divvy out the rest to savings. This works well, unless I don't transfer the paycheck quick enough - in which case I have to temporarily pull money out of one of the ING savings accounts to cover until the transfer happens.  If I followed more of a buffer mentality, I'd never have to worry about late transfers, I'd have enough money in the checking account to cover the month's expenses. It would then replenish itself during the month with the current month's income that I would then use for the next month.

YNAB in no way compensated me for this post, I just really like their product.

photo by photos8.com via flickr