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Our Extra Money

As a zero-based budgeter, I am sometimes asked what we do with any windfalls that may pop up. A few years ago, I wouldn’t have been able to tell you, but now we have a plan.

Mr. BFS and I sometimes have a few hundred dollars at the end of the month that is just leftover – extra cash after all our savings goals and expenses are covered. Most of this extra usually comes from the sports officiating Mr. BFS does after work but now a little of it is from my blog and doing a survey online. 🙂

Anyway, for almost a year we just socked the extra away into the emergency fund, but hubby once complained that his extra work didn’t seem to be bringing him any extra money (“fun” money specifically). I don’t have as many hobbies as Mr. BFS, so I had never really thought about it like that. After talking about it, we came up with a system that has worked really well for us so far.

We put 50% in a high interest savings account and/or mortgage depending on how much is in the emergency account. If we don’t have at least $10,000 in the emergency fund, we put it all towards that since $10,000 is the bare minimum for us to feel secure. If that is taken care of, we split the 50% between the emergency fund and the mortgage as we see fit. Another 25% goes to our vacation account and the last 25% is split between our two individual fun money accounts.

This has been working well, but we will now be getting four “extra” paychecks each year – we are both paid biweekly on the same day since he got his new job. We agree (in fact, hubby brought it up) that $2500 just seems like a ridiculous amount to add to fun money accounts, so we will probably be putting those four paychecks a year into a second Roth IRA.

As I was writing this up, I noticed that Daniel even has noted in that he was thinking of putting some “extra” money either in savings or towards a want, specifically an iPhone. We also have been looking at some of the best real estate investments available to grow our money more.

I also came across 4 Ways to Maximize Your Stop Loss Pay at No Debt Plan and thought Kevin had some good ideas too:

1) Put it Where Your Budget Needs It
2) Pay Down Debt
3) Save It – emergency fund or Roth IRA
4) Buy a CD and think about your options


We still split up our monthly extra:

35% – Investment Cash
25% – Emergency Fund/Savings
20% – Vacation Account
10% – Hubby’s fun money
10% – My fun money

I’m not a certified financial planner, so what do you do if you are ever lucky enough to have some extra money left at the end of the month? Learn how to invest in stock market shares and other investments. Always remember to diversify your investments and using the best investing apps can make this easier. For example we’re loving the Acorns Investing app right now, This is considered to be a micro investing app but its also like an automatic savings app. Feel free to ask any questions about this subject.

18 thoughts on “Our Extra Money”

  1. Nicole

    Stick it in savings… chances are we’ll have extra bills to make up for it the next month. Big windfalls are dealt with on a case by case basis. Most recently they’ve been going to the mortgage.

  2. Echo

    I’m also a zero-based budgeter and with any extra money left over at the end of the month I would typically just put into savings (or buy a case of beer). I am pretty accurate with forecasting my income and expenses, so there aren’t usually any big surprises. The variance would be plus or minus $100 at the most, so it wouldn’t be worth it for me to setup a specific allocation to different accounts for the extra money.

  3. Finanzas Personales

    It seems your plan is really solid now and that all your needs are being satisfied under that system. I would have agreed with Mr. BFS. It’s very hard to keep up the hard work without receiving any fun benefits from it… OK, it’s great to have lower debts and all the emergency money that you need, but you have to balance that with living the moment. That, from my perspective at least, allows you to feel great about the future you’re building without feeling your life has ended and there’s no space for a good time today.

  4. krantcents

    Because everything is covered (retirement & mortgage plus), it sits in an interest bearing checking account. If it were sizable ($1,000s), I would invest it.

  5. Squirrelers

    I’m inclined to take extra money and just add it to the emergency fund. As that gets too big, I’d actually invest the rest (outside an interest-bearing checking account).

  6. IPA @ investmentpropertyasset.com

    If we have any extra money at the end of the month we put it in savings to boost our “rainy day fund”, which is practically non-existent. Once we get enough in savings, I’m thinking $5,000, I will start putting the money in our ING Savings account so it’s out of sight and we don’t spend it. I use the money we put into savings for bills like auto insurance that we pay twice a year. I need to start budgeting for those bills on a monthly basis so we can pay that without struggling for the month when we have to pay it.

  7. Michelle

    I am more like your hubby, I have to do or save for something fun with my “Extra money.”

    The extra money I have been getting from working OT has been split 50/50 between “saving for a house fund” and “travel/money for Vegas fund.” If I had it my way, I would save it all for Vegas (we are going in October for my sister’s 21st birthday) but hubby didnt like that idea, so we comprimised.

    As for the “Extra” paychecks we will getin April and September this year it will be split various ways. I will split mine between; House, Savings, and Vacation. Hubby will put most of his towards his student loans.

  8. It’s all going into savings right now, which is primarily earmarked for real estate investments as they come up. Got a sweet contract this week on a short sale property, now just waiting on approval from the bank. Might take several months!

  9. Jerry

    I agree that $10,000 is the insurance I need to feel secure. You never know life will throw at you and where it will lead to so you should be prepared in any case.

  10. Debbie M

    I’m always contributing to my various savings funds (health expenses, housing expenses, car expenses, next car fund, travel/electronics/furniture, charity), so there’s plenty there.

    So my windfalls go toward mortgage prepayment. Since the mortgage will be paid off in a little over a year even if I make minimum payments, this is sort of like a high-paying CD for me.

    When that’s paid off, I’ll start having the old principal-and-interest payments available for another use. That will go into my retirement fund. I’m planning to retire in four years, regardless of what happens to the market or my pension system or tax rates, etc., so extra money will help make sure that this is not a stupid plan.

    For me, not going to work is the best way for me to have fun–I feel that I can think up more fun things to do than my boss can, even if they all had to be free things (library books, walks in the neighborhood, etc.).

    I get paid once a month, so there are no “extra” payments for me. But sometimes I get a windfall (tax rebate, low-spending month, someone re-pays a loan, etc.).

  11. First Gen American

    It’s a nice problem to have and I think you are striking a good balance between saving for tomorrow and enjoying yourself a little today.

  12. Graham

    If I’m lucky enough to have money left over at the end of the month, unless I’m expecting an extra expense the next month (birthday, travel, etc…), I don’t hesitate and put it straight into savings. I’m sorry to report though, I haven’t been able to do this since about September though 🙁

  13. Henway

    I feel that life is not worth living if u dun have some fun, so if I have any money left after IRAs, emergency funds, and the necessities, I use the rest to indulge in hobbies and activities I enjoy.

  14. 101 Centavos

    Nice problem to have, a little extra money. Any extras that come our way we generally split into fun money and savings. Fun money lately has meant fabric and sewing stuff for the Mrs., and tools for me.

  15. sears

    You are ahead of the game already and with a spending plan and some goals, you’ll be on very solid ground with your finances.

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