- 10%-Long Term Savings: usually you won't touch this money. It's for emergencies are a very large purchase like a down payment or remodel. Of course, you never want to deplete your long term savings either, so make sure you still leave some for emergencies.
- 10%-Short Term Savings: first paying down any debt aside from a mortgage, then for vacations, Christmas presents, vacations, new appliances, etc.
- 10%-Fun Money: Anything you want to do during the month, eating out, going to a show, new clothes.
You take what is leftover from your 60% after fixed costs, utilities, car insurance, mortgage/rent and divide into three envelopes. Gas/transportation, Food/household supplies and Entertainment.
So far the key seems to be having that savings money deducted at the beginning of the month, so you get use to seeing only your 60%.
We're playing with this new system and will let you know how it goes. So far it's upped what we're saving by a lot. I'll keep you posted about any tips/tricks along the way. Has anyone tried a similar system?