How I’m Budgeting in the New School Year

A new school year just started, and with that, we are receiving school paychecks again.  I get so excited each September to create a new document with all my financial goals, and set the amount I will transfer from each paycheck into all my different accounts.

Click through to read about how I allocate my paychecks. | budgeting | pay yourself first | monthly budget

Allocation Station

My husband and I give each dollar a purpose in our paychecks.  We figure out how much we can allocate toward each of our financial goals, and make all of our transfers on payday.  We create the illusion of scarcity, to make sure that all of our goals are taken care of before we spend any money.

Right now, we are saving for a number of different goals.  We would like to take a trip to Europe next summer, and are putting money away in our vacation fund.  We are getting ready to build our house, and are saving for a down payment and closing costs.  We are saving for retirement, and are trying to build up our emergency funds.

We have different savings and investment accounts for each of these goals, and transfer money from each paycheck into the different accounts.

My husband transfers money from his paychecks to meet our different goals, and with the exception of the car (I’m paying for that, while he contributes more to other goals), we have a very similar breakdown of where our money goes each month.  For this post, I’m only sharing the percentages of my monthly take home pay.

My Monthly Goals

I received a little bit of a bump in salary from a small yearly raise, and from no longer having to contribute 3% of my salary to the retirement system.  I am researching my 403b options, and I’m hoping to open an account soon, so this all could change when I do that.  In the meantime, this is how I am allocating my money:

Joint Checking ~ 29% of my monthly net income

We use our joint checking account to pay for rent, utilities, Netflix, internet, and groceries.  With the exception of rent, we pay for all of those other bills/expenses with our joint credit card and then pay it off each month from our checking account.

House Fund ~ 23% of my monthly net income

Our new goal is to have $80,000 saved for a down payment and closing costs on our house, so we are aggressively saving for this each month.

Emergency Fund ~ 4% of my monthly net income

We put our emergency fund on hold for a few months while we tried to ramp up our house saving.  Now that we have each received small raises, we are trying to continue building this.  Right now, we have about four months of expenses saved, but I would like to get it up to six months.

Roth IRA ~ 13% of my monthly net income

I transfer money each month into my Roth IRA to try to contribute the max amount each year.

Car ~ 12% of my monthly net income

I am currently paying extra on my car each month to try to get it paid off by the end of the year.  Right now, I have less than $7,000 to pay off.

Vacation ~ 6% of my monthly net income

We love to travel, and are saving for a trip to Europe next summer.

Personal Escrow ~ 8% of my monthly net income

I have a dedicated savings account where I keep money for car insurance, car maintenance, EZ Pass, and my cell phone.  I’ll use my credit card to pay for each of these things and then pay the card off with money from this savings account.

Gifts ~1% of my monthly net income

I have a separate account for saving for Christmas.  We don’t go crazy around the holidays, but we do enjoy giving gifts to our family members.  If we have the money set aside for Christmas, it’s a lot less stressful at that time of year.

Kick Around Cash ~ 4% of my monthly net income

I leave a small amount from each paycheck to spend on whatever I like.  If I want to register for a race, I’ll use this money.  If I want to buy new clothes, I’ll use this money.  If I’m getting a beer with a friend, I’ll use this money.

How Do I Compare to the 50/30/20 Budget?

A lot of personal finance bloggers discuss using 50/30/20 rule (or budget) as a guideline for monthly spending and saving.  According to this rule, no more than 50% of your monthly take-home pay should be spent on needs, 30% on wants, and 20% on savings.

I’m not going to get too crazy analyzing each purchase/bill to determine if it’s a need or a want, but I will note what I’m including in each section below.

So how do I compare?

Needs ~45% of my monthly net income

For the purposes of this post, I am counting everything we pay for from our joint checking account, my personal escrow account, and my car payment as needs.  These expenses include rent, groceries, car payment, gas, utilities, car insurance, car maintenance, internet, Netflix (yeah, I know, not a need), EZ Pass, life insurance, and my cell phone.

Wants ~11% of my monthly net income

Wants include savings for vacation, gifts, and the kick around cash I spend.

Savings ~44% of my monthly net income

The savings section was a little trickier to figure out.  I decided to include our savings for the down payment on our house, even though mortgage payments will eventually become a “need”.  I’m also including savings for our emergency fund, contributions to my Roth IRA, and extra car payments I’m making, in this section.

Closing Thoughts

Our financial goals are always changing, so I consider this each month when I make my transfers.  Right now, I am pleased to be able to keep the same level of contribution to our house fund, while at the same time continuing to contribute to our emergency fund.  When I sign up for the 403b, these amounts might have to change again.

How are you doing with your financial goals?

Click through to read about how I allocate my paychecks. | budgeting | pay yourself first | monthly budget

Illusion of Scarcity Worksheet (PDF)

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Download this free worksheet and start paying yourself first.


  • Budget for financial obligations and recurring expenses
  • Prioritize your financial goals
  • Make all your transfers on payday
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2 Comments

  • It’s really cool to see how you break everything out. Kudos to you on the high down payment plan for your house too – you’ll be in much better shape than most other homeowners and will have the cushion in your equity to handle any swings in home values!

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