Let’s make it tangible

Photo by Claudio Schwarz on Unsplash‍

Last time we talked about giving your extra funds a job. However, that was pretty theoretical. Let’s make it a bit more tangible. 

Whether we’re talking about extra funds or just your available funds in general, one of the best ways to bring more financial calm & clarity to your life is to make a habit of using labels and/or buckets when it comes to your money.

For example, rather than leaving your annual vacations jumbled in with the rest of your regular spending, try labeling it as such. That can be as simple as adding a line item in your budget or including an annual goal of spending X amount of dollars on vacations in your planning.

Now when you go to plan your annual vacations, you remove the guilt that is attached to that spending. It’s no longer a question of whether you should or should not, but rather how much you’ve already spent for the year or plan to spend relative to what you’ve previously planned for.

You can even take it a step further by creating a separate vacation “bucket” account. Once you’ve decided on your annual vacation spending amount, transfer the funds – either in one chunk or perhaps monthly out of your checking account as you get paid – into that vacation bucket. You’re no longer worrying about where the funds are going to come from to pay for that line item. Rather, you can see it clear as day in its own bucket.

And before you ask, yes, go ahead and pay for that vacation on the credit card so you can get the points. Just make sure you pay it off right away using the vacation bucket funds.

This is just one example of the many parts of your financial life that will become easier when you label and bucket for them. Others that come to mind include things like your cash cushion, saving for college, and home renovations.

So if you haven’t already, consider going one step further than just giving your extra funds a job. Get in the habit of labeling and bucketing your best intentions. It’s an effective way to close the gap between what you hope to get from your money and those things actually happening.