Now that I’ve maxed out my emergency fund, I need to adjust my budget to absorb the cash that was being chucked into that account every month. In May’s budget, I scheduled $400 to go into our emergency fund. Now that it’s full, I need to reallocate that cash. Instead of just funnelling all of it into our travel fund like I was planning, I decided to get a little creative with where it went.
I made this decision because our budget has been feeling a bit pinched lately. Our budget for things like transportation, groceries and entertainment has been basically unchanged since 2011, and lately it seems like we always run out of month before we run out of money. I think it might be time to give these budget categories a little leeway, at least for the summer, when we’ve got barbecues, camping trips and other family gatherings to attend.
So here’s what I did with that extra $400 per month:
Travel Fund Contribution Increase
That’s not to say I didn’t increase our travel fund savings at all, I increased it from $275 per month to $500 per month. By my calculation we should hit our planned goal of $7,000 in this fund by the end of October, as long as I put my extra paycheques into this account as well, and as long as no terrible disasters strike.
Dialing Back My Gazelle Intensity
It was definitely tempting to funnel all $400 into this account, and hit our goal by the end of September, but in the end I decided this was unnecessary. If I had put all $400 into our travel fund every month we would’ve stayed on a very tight budget this summer, had less fun, and for what? To achieve our savings goal 4 months early instead of 2 months early? Who cares? I originally wanted to complete this goal by the end of the year, I’m not going to get a prize for completing it 4 months early.
This is a tough lesson I’ve been slowly learning this year. Gazelle intensity doesn’t work nearly as well for saving as it does for debt repayment. With debt repayment, you are working towards zero. When you hit zero, you’re done. You win.
Saving, on the other hand, is endless. There is always going to be another goal to hit. I saved for my emergency fund goal, completed it, now I’m moving on to travel fund. When I complete that, then what? Will I start saving for a car? A house? More school? The possibilities are endless, so continuing on with this crazy intensity will eventually make me burn out.
Instead, I’m going to set goals each year, and as long as I reach those goals by the end of the year, I’m not going to worry about how quickly they are accomplished. This means that I’m increasing our travel fund contribution to $500 per month, and the rest of that money is going back into our monthly budget. Here’s how we’ll be spending it:
Increased House Budget
I increased our “house fund” from $35 per month to $135 per month. This is to cover things like replacing worn out camping gear, buying propane for our barbecue (or maybe a new one, ours is disintegrating), and buying a fan for our bedroom (it’s already stifling in there at night and it’s only May). This could also cover random day trips to Provincial parks, or whatever else I deem necessary this summer.
Increased Transportation Budget
I also added $75 to our transportation budget. Right now we spend around $200 per month on gas for our car, but we don’t put anything away for regular maintenance. Now that my emergency fund is fully funded, I’d really rather not access it for routine things like oil changes, and this is where the car maintenance fund comes in. That $75 per month will hopefully create a bit of a slush fund to be applied against future car repairs. I’m also considering getting our car professionally cleaned, since it’s gotten pretty dingy over the past three years and needs a better cleaning that I can accomplish at home.
When you have extra room in your budget, where do you put the money? I want to know!