What is a “Life Account”?
In the past, I have discuss the importance of business account? I have provided a ways to save money, including 52 envelopes and change saving techniques. However, do you have a life account? And what is a life account? All free lancer, and non-free lancer, should have a life account. It is an account to pay for … well events that life throws at you.
So what are some life events? The washing machine decides to stop working. Your dish washer will not come on. A toilet needs some major attention from your local plumber. Life Events!!!
Your significant other is having a really bad day. You might need to take them to their favorite restaurant or water hole. One of your children has an all star performance in a athletic event… maybe they was struggling to hit a baseball, and after a few hours of instruction, they had a big hit. Ice cream shoppe could be on your agenda to celebrate. Maybe one of your children did not make a particular team, you might want to offer some encouragement at their favorite fast food joint. Life Events!!!
Paying for Life Events
You should have three accounts. One should be for business. All projects payments should be send directly into your business account. You need a saving account for your business account. You need a personal account. You should have a saving account for your personal account. Lastly you need a life account. No saving account is needed for your life account. Your life account should not be easily accessible. Go to your local credit union or small banks. Look for a financial institution, which is not close to your home or work. No debit or credit card is needed for your life events’ accounts. You need to write down (you know I love to document everything) what is a life event.
Since life events happen to everyone. Take 5% or 10% of your saving and move to your life account on a monthly basis. Use your change saving techniques for your life events accounts. Use the 52 envelops techniques to grow your account. It really does not matter, how you fund the account? Just fund it because life events are right around the corner.
Moving money for Life Events
Once the event qualifies as a life event, they move money from your life event account to your personal account and pay for the life event. The feeling of dealing with getting a new appliance or car repair bill without having to cause stress or strain on the personal account is an awesome feeling.
While you do not want easy access to your life event account, you will need to be able to make deposit and withdrawals in a timely manner. Currently I am using a local credit union. It is about 20 miles from my house and office. As funds are collected in my personal account, I write a check to my life events account. Using the credit union application (app), I deposit funds on a monthly basis. If I need to make any withdrawals, then I write a check to myself and place it in my personal account.
Image courtesy of Travis Essinger.
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