What It’s Really Like to Put 50 Percent of My Income Into Sub-Savings Accounts

As you may remember from previous posts, after I learned that I wasn’t setting aside enough money for freelance taxes, I came up with a plan: every time a freelance payment hit my bank account, I would put 20 percent into a sub-savings account labeled “Taxes,” another 20 percent into a sub-savings account labeled “Debt,” and 10 percent into “Savings.”

I quickly amended “every time I get a payment” to “every Friday, I’ll make the transfers,” because batching your administrative work is one of the key components of David Allen’s Getting Things Done system. I don’t believe there is a way I can do this automatically; Capital One 360 allows autotransfers if you plan to transfer a fixed amount of money, but this system is set up to transfer variable amounts of money depending on how much I earn in any given week.

I’m clever enough with math to understand that this means chopping off 50 percent of my income as soon as it hits my checking account and stuffing it somewhere else, but I hadn’t quite realized what that would feel like in practice.

It feels like I don’t have any money.

Suddenly all of my bank accounts are small: my checking account and each of the sub-savings accounts I’ve set up. As of this Friday, I’ve added $297.31 each to my Taxes and Debt accounts and $149.13 to my Savings account. You can do your own math to estimate how much I’ve got left in Checking.

This month, I am expecting ~$4,500 total in freelance checks and might get another $500 depending on when payments come in. So, using this system, I could end the month with:

$900 in Taxes

$900 in Debt

$450 in Savings

$2, 250 in Checking

We already know that I have a $1,500 overhead cost, which leaves $750 for discretionary spending, some of which I’ve already spent. (My $189 grocery bill comes out of the monthly overhead cost, which includes a $350 grocery budget.) I also need to make sure and save some of that $750 for the beginning of next month, so I’ll be able to buy things until my big freelance checks start coming in around June 15.

Next week I have an eye appointment to get my eyes checked and get some new glasses (this isn’t a vanity thing; I seriously need my prescription updated). So that’ll come out of the $750 too.

I am very much hoping that I get that extra $500 in freelance payments before the month ends. Of course, with this system, I’ll only get to spend $250 of it. (I know that debt and taxes count as “spending.” But you also know what I mean here.)

But this is what you have to do, right? If you are trying to get your finances in order, this is pretty much exactly what you have to do.

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