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My emergency fund has about £3500 in it, I also save up for irregular bills (inc Xmas, vacations and so on) so that they don’t come out of there, and I save 1% of my house value annually to pay for repairs and so on to that.

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Car upkeep (gas, insurance, maintenance, repairs, steering wheel cover, defensive driving class) – $150/month

Next car – $50/month (I pay cash for 10-year-old reliable cars and so far have kept them for ten years, but now that I’m on my third car, I do have some extra saved in case I buy a lemon and have to buy another car right away)

House maintenance (roof replacement, air conditioning replacement, paint, appliance replacement, etc.) – $133/month (I started at $100 and have increased it with inflation each year at raise time; before I got the house, I had a larger future house buying category)

Long term fun (travel, furniture, electronics, and any other purchase too pricy to pay for from my monthly budget) – ~$200/month I think

Medical (new category, now that I’m making myself get check-ups and whatnot: check-ups, medicine, future hospital bills; and I’ve just now decided to add vitamins to this category and changing the name of it to Health) – $100/month (this should be higher, especially as I get older, but it’s a good start for now)

Home renovation (another new category: new laundry room, screened-in porch, space for a dishwasher) – $100/month (oh, I wish this was higher; I may transfer some of my long-term fun money into this fund)

I’m also thinking of starting another category for lending to family members and subsidizing impoverished family members on once-in-a-lifetime family opportunities (so far: family trips). So far I have been doing this out of my monthly budget.

If I had a normal job, I’d also want a category for getting laid off, but I work for the state, so that is a highly unlikely risk for me. Although I’m starting to think it might be nice to have some money in case I ever wanted to quit without having another job lined up.

I recently had to increase my car maintenance savings to deal with reality (when a category goes negative for a whole year, that might be a sign that you’re doing something wrong!).

I keep track of this money in a spreadsheet. As you can see, you can let some categories go negative for a while so long as the total is positive. It’s like an electronic envelope system in that way.

Most of the actual money is in a high-interest internet savings account; some is in stocks. Oh, and my employer has one of those plans where you can set aside some money for medical expenses before taxes each month, but you have to spend it or lose it by the end of the year–some of my medical money goes there.

At the end of each month, I gleefully look at money I spent which could come out of all these categories and subtract them from the totals before adding the monthly amounts from my monthly paycheck. Then I subtract the sum of these category totals from my total savings (and stocks) to see how much extra I have with which to fantasize about super early retirement. (Right now, that figure is around zero. Oh well.)

I would say most of the expenses I’m saving for are not unexpected, it’s just that you don’t pay for them every month or you don’t know when you’ll be spending the money. Like I know I have to pay for car insurance every six months–if I save ahead of time, I’ll have enough to pay the whole amount up front, thus saving the installment plan fees. And I know that I will eventually have to replace my water heater, car, etc, I just don’t know when. It’s not a surprise that things (and people) break down, it’s just a surprise that they’re breaking down now.

My favorite example of when I used one of these funds was when I was driving for a long weekend trip four hours away and my car broke down one hour into the trip. Fortunately, it was in a city, and I had no trouble finding someone to fix it–after Labor Day! In the olden days I would have called a friend and begged them to drive for an hour to come pick me up, then begged another friend to drive me back there to pick up my car. And I would have had to scrap my trip. But since I had this fund, I just rented a car, took my trip anyway, drove it home afterwards to go to work, and drove it back to the repair place when the car was ready. I felt so rich!

It’s also nice to get a cash discount when buying insanely expensive things like a new central air conditioner and to never have to pay interest (except for my house).

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