Life is unpredictable, and financial hardships can never come at a good time.

Welcome to the budget mom youtube channel i’m kamiko love from and today we are talking all about something i truly believe we are all searching for when it comes to our finances and that is peace of mind so what what’s another term for that financial stability financial stability is actually one of the key components that i talk about in my brand

New book my money my way all about financial fulfillment there are three things that make up financial fulfillment stability confidence and clarity and today i thought we would talk about the stability aspect of it because i truly do believe you know everyone says well i’m you know wanting to pay off debt i’m wanting to save money i’m wanting to start investing but

We do all of these things i think with this underlying reason in our gut of searching for the calm right the financial stability what is financial stability financial stability is being able to deal with and handle the shocks to our finances or budget or the imbalances that we might find sometimes in life basically it’s the ability to handle whatever life throws

At us and knowing internally inside that we have a plan and a budget that is set up to work for us right i always say my budget has my back and what i mean by that is i know i have the financial stability in my life where i have financial options to pay for all maybe these different things that are happening now i really think that you know the misconception is

That we should have an emergency fund in our life when you hear about paying for these unexpected expenses that are thrown at us that kind of derails our budgets or sets us behind or makes us take two steps backwards is having an emergency fund but i don’t think that is enough because what happens when a planned or expected expense pops up in our life or even an

Unplanned or unexpected expense pops up in our life that’s outside the realm of an emergency right we’re told the number one rule with emergency funds is that we’re not supposed to use them unless it’s a true emergency there are a lot of things that come up in life that aren’t true emergencies so today i thought i would talk about some of the realistic ways that i

Have set up financial options and found stability in my own life these things have truly transformed my inner calm when it comes to my finances so today we’re going to be talking about my checking account cushion we’re going to be talking about my miscellaneous envelope we’re going to be talking about sinking funds and yes we will be talking about emergency fund

Because that is still really important especially if you’re on a debt payoff journey the last thing that we want is for a true emergency to happen and kind of set us back on our course of wanting to hit our financial goals so i thought it would be fun to not only tell you about these things these options that i’ve set up in my life but to really show you visually

What this looks like how i use them how i track it what resources and tools i use with those financial options to give you a very clear picture of how all these things kind of work together to kind of put this bubble of financial stability around me my life and my dreams and my goals i think it’s very important because i think once we find that financial stability

And that peace of mind with our finances is when we can really start tackling other components of a really important financial transformation we’re talking about our emotions our anxiety around finances our stress our shame our guilt peace of mind and financial stability completely is one of the biggest components of a financial transformation so let’s look at

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The options i’ve set up in my life so the first option financial option that i give myself is my miscellaneous envelope now this is the envelope it’s just a cash envelope it’s actually a budget line in my variable spending and remember i use the cash envelope method so i give myself fifty dollars in my budget every single time i’m paid which is currently once

A month on the first to take care of unplanned or unexpected expenses between my pay periods these are the type of expenses like in the month of january i spent my full fifty dollars and if we go to my expense trackers i can actually show you oh so part of it was for running shoes this is an unplanned expense that was not in my budget right but it’s not a true

Emergency i don’t want to use my emergency fund for running shoes right and so i bet i used 50 of my miscellaneous cash for my cash envelope and part of my checking account cushion which is another option i’ll be showing you here shortly so i think the miscellaneous envelope or having that budget category in your budget is really important because things that

Pop up in our lives like your kid forgetting to tell you he has a birthday party to go to tomorrow a friend that’s in town that you want to have dinner with these things that weren’t planned in your budget but they’re happening that live outside of the realm of a true emergency fund and i have i spend it in cash i have a cash envelope that looks like this and i

Do that every single time i’m paid the next thing that i want to talk about very quickly is my checking account cushion now my checking account cushion is something that i don’t track anywhere else except for in my starting balance on my checking in my expense trackers now what is my checking account cushion if we go back to my budget you can see that i use this

Paycheck budget tracker inside the budget by paycheck workbook but this is a zero based budget meaning that every single dollar of my income or money coming in for that month which i call inflow has a plan it’s going somewhere in my budget so income minus expenses equals zero and for a really long time i thought that meant that my checking account would be going

Down to zero every single time because right if you’re spending all your money then you should have no money left that’s not what it means what it means is that every dollar has a plan so part of my plan in my budget you can see this here is a cushion now when i first started this i started with doing a couple dollars every month ten dollars every month and i

Just let it sit in my checking account and i did this because i was getting so scared to bring my checking account down to zero like what if a bill was higher than i expected and it was on auto pay i was afraid of getting overdraft fees because there was no money in the account as an all cash spender using cash envelopes what did i do if i needed to make an online

Purchase so this checking account cushion gives me the stability of doing online purchases of not having to worry about overdraft fees i’m not worrying about okay what if one of my bills is higher than normal do you see how it takes away that stress and anxiety for those things plus it’s just nice to have in case you it’s like a little it’s like a little emergency

Fund but but i guess we shouldn’t call an emergency fund it’s it’s like a little fund you have set for yourself to take care of unplanned or unexpected expenses in between your pay periods and the way that you can see this in my finances every single time i start a new tracking period because i track from the first to the last day of the month every single time

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This starting balance for my checking account is my checking account cushion so in january on january 1st i can tell you right now that my checking account cushion was at 1245. that’s its dedicated plan that’s its plan in my budget is it being spent on something no it’s just a plan to have it there in case i need it now it took me a long time to grow it up to

A thousand dollars that’s where i feel the most comfortable is having it around a thousand dollars every month but that’s my checking account cushion the next thing that i want to talk about very quickly and another option i have created in my life is something called sinking funds it’s kind of funny you know we say our lives are so unpredictable but they’re a lot

More predictable than we might think every year we know we’re going to have birthdays come up every single year we know that we’re going to have for instance back to school shopping every year we know valentine’s coming christmas is coming sports for my kiddos come in i know it so why am i preparing for these types of things beforehand so i have a plan for them

In my budget so with sinking funds and the great thing too is like there have been times in my life where i’ve had a really big expense come up and i’ve been able to re-evaluate the trade-offs i was making with my money for instance i thought to myself you know what this big expense came up and i don’t have enough in my checking account cushion to pay for it so

You know what i’m okay with the trade-off of decreasing my valentine’s savings by half do you see how having options in your life gives you the ability to make more trade-offs it gives you more more choices when it comes to the trade-offs you are making i’m not forced to choose between using debt and spending another way or using my emergency fund or going into

Debt now i have these other options i can include in my trade-off decisions so with my sinking funds some of them i save for in cash some of them i save on in separate savings accounts at my bank my credit union so for cash i have valentine’s day my uh 500 house maintenance i always keep in 500 in cash here at the house my discord clothing costco my fiance’s

Birthday back to school my son’s birthday my son’s sports and christmas those are the things that i save for in cash because i’m either spending them throughout the year or i plan to spend them within relatively soon within a year the things that i save for in individual savings accounts each one of these is a different savings accounts now if you’re wondering

What app this is this is not an app this is a screenshot of my online banking i bank with the credit union that allows me to have as many savings or checking accounts as i want no fees and no minimums these are all the savings accounts i have established for myself and these ones that i decide to save for in my credit union are for bigger goals like disneyland or

Vacations or my car maintenance fund or my property tactics or my landscaping savings or my pet fund or my wedding or my chicken goals these are things that i’m not planning to to really spend they’re just growing and they’re implemented in my financial plan with my budget and my financial goals all right so that’s sinking fund now the last thing so we talked

About the checking account cushion we talked about sinking funds we talked about the miscellaneous envelope let’s talk about the last thing your emergency fund now i get asked a lot mikko do you have an emergency fund i do my emergency fund is around nine or ten thousand dollars that’s where i feel comfortable because i have a lot of other resources that i could

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Use outside of just my emergency fund but for me that’s where i feel comfortable now how i handle this is your emergency fund should be something that you have immediate access to i think it’s totally fine sitting inside of your normal savings account at your banking institution whether that’s a bank or a credit union however though if you have a larger emergency

Fund like right you have six months worth of savings in there for your emergency fund i decided to make my money work a little harder for me right because in a traditional savings account you have you’re not getting paid very much the interest is not very big i decided to leave about four thousand dollars in immediate access cash in a savings account at my credit

Union fought about thousand dollars of that is sitting in an uh a high-yield online savings account with ally now i love ally they are an online high-yield savings account option for you i like it personally because of the bucket feature i’m not using the bucket feature because i only have my emergency fund in here but if i did want to move some of these higher

Type of savings that i have going on in my separate savings account ally allows you to separate all of your savings into what’s called buckets but you earn interest on the total amount that you have saved the overall total so that’s a pretty good deal and so anyways i recommend and i use ally for my online high-yield savings accounts there are many to choose from

Don’t think too deeply on it make sure they have a good interest rate no check your fees check your minimums and that type of thing but i i enjoy using ally so emergency fund also established in my life for true emergencies it’s another financial option for stability that i have given myself so those are just some of the ways i have set up financial options and

Found financial stability in my life of course there might be something that you do that’s a little maybe more personal to your situation for example i don’t use credit cards at all but i do know that for some people using credit cards responsibly does give them some type of financial stability in their lives i know a lot of people some some people will actually

Have a credit card limit for their financial emergencies knowing that they have the cash to pay it off every single month you just have to make sure you can use that credit card responsibly maybe it’s having a different sinking fund that i don’t have in my life remember stability and options is what gives you inner peace and calm not me not your friends not your

Parents not what everyone else is telling you because if you have truly defined financial success for yourself which my book my money my way walks you through that process of defining success for yourself then it won’t matter financial stability is what you define it as and finding that in your own life and the options that you set up because when i look back on

My life and the kind of chaos and anxiety and stress and really all the emotions i was feeling around you know financing a dollar oh nine ice cream cone for my child i look back and that’s because i only gave myself two options when it came to my finances i could use my emergency fund or i had to rely on debt i cornered myself back into a corner where i i gave

Myself only those two options without realizing that i could produce more options in my life so if you found this video helpful please like it and don’t forget to subscribe if you like it please subscribe oh geez okay

Transcribed from video
CREATING FINANCIAL STABILITY – Budget Tips | Savings Goals By The Budget Mom