EGS Budget Spotlight: setting up a “savings scoreboard”

Now that we’ve successfully navigated our way to completion of Baby Step #3, we’ve started thinking about how we’ll handle any budget surpluses going forward.  We’ve budgeted in monthly contributions to our retirement funds (totaling 15% of our annual income), and so now we have the opportunity to begin planning for other items that wouldn’t fall into our recurring monthly budget.  In the near future, these will include:

• A home improvement fund for projects we’d like to see happen in the near term: new windows in some parts of the house, a deck in the backyard, new fencing, and perhaps even repainting the house (I think we’ll need to do some reading over at Young House Love)
• A vacation we are planning for February 2011 (our first major vacation since our honeymoon!)
• A new computer to replace our aging, but still lovely iBook G4 [affiliate link]

Our Savings Scoreboard

As we started to tweak the budget to accommodate these goals, we started to realize that they fit neatly at the end of the list of recurring monthly expenses.

So here’s what our process will be: when we sit down at the end of the month to analyze our budget (see our recent post for more about this process), we’ll decide how to portion out the surplus among our goals.  I started jokingly calling this our “savings scoreboard”, but I think it does a good job describing what’s going on here: giving a name to funds that won’t be used immediately.  This is important because without a direction for each dollar to go, we might be more inclined to spend the money on other less important items.

We expect that this will remain a part of our budget going forward, although it’s highly likely that the categories will continue to change as we forge ahead toward completion of Baby Steps #5-7.

Do you like this idea?  Have a better option?  Leave us a comment below and let us know; we’d love to hear it!