The Secret to Finding Your Magic Number

Ah, your magic number. The mysterious dollar amount that keeps your savings account from turning into an “I went over budget on my entertainment spending – again” account over and over and over again.

For the past few months, I’ve been constantly on edge because I feel as though I don’t have enough of a cushion in my savings account. And sure, I bet some people would look into my bank accounts and think I’m crazy, whereas others would look at me and shout “Ooh girl, you really should be uncomfortable”.

Balancing overspending is one thing, but “over-saving” or “under-saving” issues can be much harder to adjust.

If you’re anything like me, you want to find a magic number that allows you to breath without feeling like a giant horse (idk guys) is sitting on your chest.

You want to be able to head out on a spur of the moment road trip to the mountains with your BFFs, and then complain about how much you hate mosquitos and your ability to burn in 2.6 seconds flat on the way home. Man, I miss summer.

Anyways – back to my point.

How do you know when you’ve saved enough money?

I think emergency savings accounts are boring. I avoid calling my emergency account anything similar. Instead, it’s labelled “Money to protect your other money. Oh, and also your reckless behaviour”.

Yeah, you better believe that fits on my online banking, who is now thinking “why did we ever let our clients name their own accounts?”.

Everyone knows (okay, almost everyone), that it’s recommended you save 3-6 months of your salary into a special account in case you lose your job, lose a limb, or lose your marbles.

But as someone who has saved 3 months of her salary, I find it’s not enough. It’s not enough to allow me to feel comfortable dropping an extra $100 at the grocery store of my regular budgeted income, so how can it be enough to sustain me in case I can no longer work?

I mean yes, maybe once I hit the 4-month mark, the 5-month mark, or the 6-month mark I’ll start to feel a little bit more comfortable. But what about right now? What can I do right now to help myself feel comfortable right this second?

That’s easy. By using the magic number!

In a separate account from my “Money to protect your other money. Oh, and also your reckless behaviour”, I save a smaller amount each month in an account called “Comfy Couch”.

And to find the magic number to fill my account, I did this:

AVERAGE SPEND PER MONTH ÷ SIX MONTHS = Your magic number

What’s in my “Comfy Couch” account for the months I overspend, under-save, or just plain fail at money?

$583

And that silly small number was all it took to make me feel comfortable. Whenever I need to use some of that money, I simply take it out, and refill the amount the next time I have available funds to do so.

The best part about the magic number? It’s a small milestone you can hit before you have to dive into the world of “Hey, here is 6 months of my hard earned money just sitting in an account all sad and lonely”.


 

Also, this will be my last blog post of 2016! Yay! But also sad face. Feel free to sign up for my newsletter to get some sneak-peek previews into what’s coming in 2017 – and (even better) to see some of my other writings around the internet. Have a wonderful Christmas, and an even more wonderful New Years! xo.


Did you calculate your magic number? Let me know what you got in the comments!

Want to know what you would need for your own emergency fund?

 

24 Responses to “The Secret to Finding Your Magic Number

  • Your video is hilarious!

    I’m still working on my emergency fund (I don’t have crazy, fun and hilarious names for my accounts), which I am trying for $10,000. And so I was trying to figure out if I have a mental requirement for this “comfy couch” number that you have… And I think this sort of goes against the YNAB philosophy of giving every dollar a job (which is what I use to make our budgets). I guess maybe the “comfy couch” could be the job, but I think I want to have a “comfy couch” in every budget category so that I never have to worry about any unexpected expenses in any category coming in. Does that even make sense?

    • Aw, thanks Jena! I think there are no rules when it comes to budgeting. It’s whatever makes you feel confident and comfortable with your spending and saving habits. I totally know what you mean about categorizing the “comfy couch” amounts. I just had to splurge for new spark plugs and a battery for my truck (which was taken out of my emergency fund), but I wish I had another account that I could’ve taken it out of. I think maybe that would be an annual expenses deal though. For instance, I know I’ll be getting an oil change, tune up, etc. each year, so I should try to save however much I estimate that will cost.

      It’s totally your call – again, with whatever would make you most comfortable financially!

  • Anthony
    2 years ago

    Thanks for the post – so to understand, this is the average spend (not including rent) / 6 ?

    • I definitely included my rent. You would still have to pay rent in case of a job loss, so I think it’s good to include 🙂

  • I can’t say I keep a dedicated account for an emergency fund. I just make sure there’s plenty of savings to go around. Usually I have 1-2months in my chequing account and my high interest saves the rest for a while before I commit it to a permanent investment or purchase. Currently I have well probably close to 2 years saved, so it’s well over due for some investing. I work in Alberta so I was a bit worried the last 18 months about job loss but now it’s looking a bit brighter at work so I can start putting more of it to work.

    • Having a full savings account is fine too! For me personally though, I would risk spending that money because it is not allocated to something else. I need to set priorities and goals when it comes to money or I play things way too fast and loose haha.

      2 years?! You’re killing it! *Internet high five*

  • I love having names that matter to me on my accounts. The girlfriend has no idea what that Joy fund is for…

    • Hahaha that’s awesome! My husband would think I was insane if he saw my account names.

  • Interesting idea. In a similar way I’ve always left a small cushion (maybe $500) or so in my checking to handle the variability. But this means I’m not earning interest on that money. I’ll have to think about this some more.

    • Thanks! Yes, that’s just it. You just have to be careful as to not put it in an account which it isn’t accessible within 30 days. But if you have the money, you can certainly use your credit card until you can take it out of a separate account. Might as well get that passive income whenever possible.

  • I like this concept. My magic number is $283. I don’t have a separate account for this but maybe this is why I always try to leave a spare couple hundred in my checking account.! Nice post.
    Lake Girl @mylittlebluekayak.com

    • Definitely why! I used to leave all of my money in my checkings out of fear, but now I realize it was actually a mini savings account 😉

  • Sounds about right, Alyssa. I live within walking distance of a local brick and mortar bank. I keep most of our “emergency fund” with Ally, but I like to keep at least $1,000 in my “comfy couch” account, which is remarkably close to 1/6th of our monthly spending.

    Cheers!
    -PoF

  • Yeah we do very similar, just keep a nice round number in our online bank.

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