Three is wonderful number. I do three basic things with my money – save, spend, give. I automatically save about 50% of my money that comes in. Additionally, I spend about 40% of my money on good ole living. Furthermore, I donate 10% of my money.

If this seems impossible to you, stay with me because it seemed impossible to me several years ago. I want to give you hope to know that with some focus and a plan, you can get to a better place with your money.

With my birthday gifts to my niece & nephews, I like to teach them about money management. What better way to do this than by giving them money and telling them what to do with it. Typically, I give them three envelops – one for each category.

I choose an amount to give and put 50% into an envelop marked savings. I write a check out to their parents for college or other savings after they graduate high school. Next, I put 40% into an envelop marked spending. I give this in the form of cash and they can spend on whatever they’d like (as long as their parents approve). 😉

Most importantly, I put 10% into an envelop marked giving. This is also cash and they get to choose who or what to give it to. It can be a church, charity, or a person who is less fortunate than them. I am compiling a list of who or what they choose to give it to each year. I (and they) find this the most fun envelope! After all, it’s better to give than receive.

50% Savings

Once I paid off all my debts, I set up automation to max out all of the tax-advantaged accounts I had access to:

• Simple IRA through my employer
• Traditional IRA
• HSA

Additionally, I have now set up automation for other savings:

• M1 Finance, post-tax brokerage account
• Ally online savings accounts

The Value of Automation

It’s fun to watch these accounts grow and to be honest, I don’t even miss that money because it’s automatic. The pre-tax stuff (Simple IRA & HSA) comes right out of my paycheck and reduces my taxable income.

A Traditional IRA is tax-deductible at tax time. I’ve set up these contributions to be automatically taken out of my checking account each month and transferred into my IRA. Additionally, these funds are automatically invested in index funds.

For the M1 account, I used to put extra money left over in my budget into this account, but I recently decided to also automate this. Most of these investment services offer automation. You just have to link to another account (like your checking), pick your funds, and set up a schedule. It’s boss!

Lastly, for my Ally online savings accounts, they allow you to set up multiple accounts. Here are my current savings accounts:

• Emergency Fund
• Future Car
• Car Maintenance
• House Hack (future #goals)
• Vacation/Skiing

I’ve funded my emergency to cover 4-5 months of my expenses so I’m not currently putting any more money into it.  However, I’ve set up automation to fund all of these other savings accounts.

I have a small saving account with a brick and mortar bank for ease of access.

However, I have online accounts with Ally for my bigger savings goals since the interest is greater (1.9%). Additionally, it is about a 3-day delay in obtaining access to these funds via a transfer to my checking account. If you set up online savings account for greater interest rates that is great. Just make sure to plan ahead for that 3-day delay when you need to use the funds.

40% Spending

Okay, so here is what I live on. It’s pretty basic stuff like rent, utilities, food, insurance, entertainment. I’m a fan of putting things in the budget if something new comes up that I would like to purchase. However, with little things, I can judge because I know how much I have left after taxes and automated savings.

10% Giving

I give 10% automatically right off the top. As a woman of faith, I believe in tithing to my local church. My conviction to tithe came when I was still in debt. I thought of how easy it would be to start when I was out of debt but it was a true sacrifice when I need it so badly.

I’m so glad I started then.

Tithing has allowed me to develop discipline over my money. In order to be intense with my debt payoff, while giving 10% off the top, I had to really scrutinize what else I spent my money on. Furthermore, I came to understand that everything I own is God’s money and I get to be a steward of it.

With this shift in my mindset, I’ve come to learn that I want to be a good manager of the money He entrusts to me.

So 10% is what I tithe but occasionally I give above that and I’d like to up my giving game this coming year. Giving brings me joy.

Closing Thoughts

If you are not yet at this percent structure, no shame. Heck, I’m 46 and just really started this at the beginning of 2018. Additionally, it took me a while to get to this place.  Whatever age you are at and wherever you are at with your money, know that now is a good time to start striving towards this goal. Don’t be intimidated if you are far off from it, just start and look to get better.

Sure I can teach my niece & nephews this system because they are a clean slate.

Although, most of us in recovery have financial wreckages to clean up. It’s just good to know where we’d like to get. If we don’t know what we are aiming for, we could end up anywhere.

Theme pic by Peter Lewicki on Unsplash