One of the best parts of personal finance is the available options to personalize your money management. Over the past five years, I’ve made many changes to my style of saving, budgeting, and spending habits, but today I want to share with you how one of my latest tricks has helped me find an additional $200 in my budget put towards my investments.

Once a month, I sit down by myself and do a thorough review of my finances. This monthly money meeting has been the number one way to keep me on track with my financial goals and prepare for the month ahead to ensure I don’t go over budget if there are any events or changes to my calendar of expenses. 

In this money meeting, I look at my income and add any upcoming or unexpected earnings. From there, I review the previous month’s spending, discuss the next month of expected expenses with my partner, and list all the adjustments to make in my spreadsheets.

That’s right. I said spreadsheets as in plural. As in, I have more than one spreadsheet to manage my money. One worksheet is an overall look at our general monthly expenses and estimates, along with our income. Another spreadsheet is a monthly budget that puts our costs into percentages. The final and newest addition is a comprehensive spreadsheet from Jessica Moorhouse that helps me look at a big picture and full year. 

At my last monthly check-in, I noticed something different.

For some reason, it seemed like something was off with my percentages. I felt like I was missing something and that I should be saving a lot more money than I was. So, to be sure, I started to crunch the numbers. This hunch led me to analyze my spending using Elizabeth Warren’s 50-30-20 rule. 

What is a 50-30-20 budget?

Initially popularized in the book, All Your Worth: The Ultimate Lifetime Money Plan, this rule became a common budgeting tactic. The numbers mean that 50% of your income goes towards essentials (or needs), 30% of your income going towards non-essentials (or wants), and lastly, 20% of your income going towards savings (which would be any savings, short term or long term). 

I dove into these numbers and found that I was right on the mark for essentials, had some wiggle room with my non-essential spending, and to no surprise, I was under the 20% marker for my savings. Somehow, I should be able to save more money than I currently have automated into my accounts. 

But where was this mystery money hiding? I needed to find out.

Where did I find missing money in my budget?

Luckily, because I already have a few spreadsheets, I quickly searched to see what I had been missing for the past year of working with my budget since buying my first home. The culprit? My fear. A buffer in my checking account that I continuously left sitting there, untouched. 

My buffer is nothing new. I’ve always known that I kept an unusually high balance in my checking account, considering I was completely covered with my bills and had overdraft protection should anything mysterious arise. 

When I asked some of my readers what their balance was, the response was generally the same. Unless they were working their budget to the penny, almost everyone had an emergency buffer sitting stagnant in their checking account. Some people even kept over $6,000 in their accounts simply to avoid paying their banking fees each month. 

For me, my buffer was always around the $1,000 to $2,000 mark. A number that would allow me to spend without worrying about not having enough to cover bills, and feel like I was able to purchase something spur of the moment without second-guessing myself — which let’s be real — I never do. 

It quickly donned on me that I was leaving money there that could be a lot more useful for me elsewhere. So, I wanted to find a way to keep a more reasonable buffer available, but still allocate my money elsewhere to see if it would be a significant difference. 

How much of a difference does reallocating your buffer money make?

After doing some research to see how much of a buffer I could leave, if say my mortgage was accidentally withdrawn twice in one day, I found that I could remove an additional $200 from that ‘buffer’ amount and still feel comfortable with my checking account balance. 

Now the only question was, where should I put this extra money? Should I toss an additional $200 towards our home renovation fund? Should I put this extra money towards my daughter’s college fund? I was already saving a reasonable amount each month for these goals. 

But, the one area of my budget that could always do for an increase was prominent: my retirement fund.

Out of curiosity, I ran the numbers to see how much more money I would be able to save over the next 35 years if I could contribute an additional $200 each month in my RRSP. I plugged the numbers into Wealthsimple to get an estimate, and the results were exactly what I thought: over $200,000. 

If I left that money in my checking account or moved that money into high-interest savings account for over 35 years, it would only equal out to $84,000. 

That means that the $200 buffer I was leaving in my checking account for no reason other than extra comfort (because I already have an emergency fund) prevented me from earning a potential $116,000. 

That means that my 30-minute monthly money checks helped me knock nearly five years off my estimated retirement date if I want to retire early. 

In other words, budgeting and planning your financial goals might not seem like the most enjoyable way to spend your time, but if it means you can change the course of your future with an honest review of your cash flow, it’s always worth the investment. 

My husband and I have been doing partner check-ins for the past four years, and it has made a dramatic difference in how we manage our money as a team. It’s helped us pay for our wedding in full, navigate the financial cost of parenting, and buy our first home. 

Talking about money is important, sure. But, it’s even more important to do the same in your relationships. 

My new course, ‘Oh F*ck, Are We Ready to Talk About Money,’ helps to make an awkward conversation finally feel comfortable. 

The ‘Oh F*ck, Are We Ready to Talk About Money,’ course is a perfect fit for you if:

• You are in a serious relationship but have yet to share any financial details

• You talk about money, but the conversations usually end in an argument or don’t feel productive

• You want to start planning your financial future with your partner, but don’t know where to start

• And you are tired of awkwardly navigating multiple articles online to find ‘tips and tricks’ for talking to your partner. 

This course will help you buy back the time you’ve lost in past attempts to discuss money with your partner.

If you register for the course before August 9, 2020, the price is just $99 — or less than $50 per partner. Use the code EARLY30 for your discounted rate.