Handling your finances

[jkb11 26]

Hi fellow VJers!

I was wondering how do you orchestrate and structure your finances in your households? Where do you see room for improvement? I know everyone has different approaches and solutions, and I think it would be a great lesson to learn these different ways I'll start off with mine, and because we're currently experiencing some positive changes in our lives, we figured it would be a great time to rethink our approach. I'll skip pretax contributions/deductions to operate strictly on take-home pay.

Scenario:

- Both spouses working
- He is working full time, she is working part time
- His earnings account to around 90% of the household income

Setup:

- Main joint checking account, which we use on everyday basis and where our payroll deposits are being made
- Bill Pay joint checking account used only to pay recurring monthly bills
- Two tier emergency fund:
- Tier I - joint savings account, at the same bank as the main checking account, for convenient, instant withdrawals in case of any life-or-death emergency. Untouchable otherwise.
- Tier II - joint savings account, at an online bank with better rates but longer withdrawal periods, in case of bigger, but not necessarily same-day emergencies
- Family savings account where funds are collected either for some goal set in the future, or just "to have" in case we come up with ideas later down the road (vacation maybe? )
- Two Roth IRA accounts (one per spouse)

Contributions:

- All payroll income initially goes to the main joint checking account, all distributions from this account described below are made on a semi-monthly basis (His payroll runs twice a month). Most of the distributions/transfers are automated.
- Half of the amount required for all recurring bill payments are transferred to the Bill Pay account, twice a month. That covers all necessary bill payments.
- Tier I of emergency fund has initially higher contributions, but is capped at a relatively low level (around $1000 - $1500), with contributions decreasing over time. In case of fund usage, replenishment done ASAP
- Tier II of emergency fund has constant contributions at around 5 - 10%
- The family savings account funded at the similar level as the Tier II emergency fund account
- Roth IRA accounts are be funded with high contributions, pursuing the annual limits
- All other expenses charged to the main joint checking account.
- Any unused funds laying around in the main joint checking account go to savings/emergency/retirement accounts. This might be done once a month or so. If this happens often, we might consider increasing pretax contributions (like 401k).

Thoughts? Share your ideas and experiences!

Cheers