Tallying Up My New Savings Plan: June Edition

Previously, on Nicole’s Budget: After discovering that I needed to save a lot more for freelance taxes than I had been previously saving, I set up a series of sub-savings accounts. Every Friday, I tally up all of the freelance payments I’ve received that week and put 20 percent towards taxes, 20 percent towards debt, and 10 percent into regular savings.

Another month is over, so it’s time to take a look at how my sub-savings accounts are doing.

In June, I received $6,413.35 in freelance payments. This is a significant increase from the $3,385.05 I received in May. With the freelance life, sometimes paychecks just come when they come, and instead of averaging $4,899 each month — which would be more in line with my monthly freelance billings, give or take a few clients who always take a while to pay — I get something like this.

So what does that mean for my sub-savings accounts?

Taxes get 20 percent, or $1,282.22.

Debt also gets 20 percent, or $1,282.22.

Savings gets 10 percent, or $641.12.

And that leaves $3,207.79 in my checking account.

(The percentages are not perfect due to rounding.)

Everything in my checking account got spent this month; both my roughly $1,500/mo overhead and the extra money it cost to pay for my summer travel expenses. (Also two pairs of leggings, because I have recently discovered the joy of wearing leggings as pants.) When my rent check clears, my checking account will be essentially down to zero — although I should have another freelance payment in there by then, so I’m not worried.

And even if that freelance payment doesn’t come in, I have savings to cover the gap. This is the best part of the whole process. After two months of siphoning off 50 percent of my income into these sub-savings accounts, I now have $948.88 in savings. That feels, to quote Fun Home, like “seven million billion thousand.”

In fact, let’s take a look at those current account balances:

— Taxes: $512.77

— Debt: $940.58

— Savings: $948.88

Here are a few more things you should know to help those numbers make sense: first of all, I made a $1,383.81 estimated tax payment on June 15; second, I had to borrow against savings to make an $800 debt payment in May (since in May, 20 percent of my income was only $676.61) and so I used the debt account to pay it back.

I have, in fact, borrowed against savings a handful of times this month, and have always put it back when my next check arrived. It’s like having my very own zero-interest credit card, issued by the Bank of Me.

Seriously, I should have done this two years ago. What I ended up doing instead was putting extra expenses on an actual credit card, and then not fully paying it back because I was always nervous that I would run out of money again, so I wanted to keep as much as possible in my checking account.

But now I’m incentivized to put money back in savings because I know it’ll be there if I need it. It’s still mine. And someday I may need more than an extra $100 here or there to buy groceries while I wait for a freelance check, and it’ll be there for that too.

I love this system so much. You have no idea.

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