Thanks for the advice.
My monthly cash flow looks like this (in a normal month):
Salary: $3,247
Bills: $844 (rent, electricity, internet, student loans)
Savings: $1.753
Left for spending: $626 (food, household, transport, entertainment, socializing).
Then there are not-normal months:
In May the salary is +100%, in which I keep the same budget and save the excess.
In December the salary is +25%, in which I keep the same budget and save the excess.
So on average the savings should grow $2k/month.
And then there are expenses that come up from time to time:
- Dentist appointment, which happens every other year maybe is $200.
- Wanted to help out a poor friend abroad with a small business loan ($500).
- Xmas gifts costing $200 instead of the budgeted $100.
- Renewing the laptop every 4-5 years ($600).
- New shoes $100 that overrides my set expenditure in a month.
Random stuff like that. And I am not overspending, I do look for versions of stuff that is cheap+quality taking into account durability, functionality and possible sell value. E.g. my shoes are $100 because I expect them to last at least 5 years and they are usable in 3 out of our 4 seasons. Better than buying 2 pairs of $40 shoes every year. Honestly speaking I don't know how much this totals up to on average each month, because many of these expenses don't even happen every year. I've started to take notes and so far come up with $60 every month in personal "depreciation" costs. I am including clothing, electronics and other long lasting stuff that I need that costs more than $50.
Like you say, discipline is key so I'm trying to figure out what can motivate me and stick to the plan, but also having a plan that actually works and is realistic. Maybe I should split my savings in two where 90% is untouchable long term savings and 10% is saving for those unexpected expenses? That way I would always have money for those and not needing to touch the long term savings. Again, the downside is the temptation of spending more than necessary from that "temporary" savings account. When you have $1,500 set aside for stuff like renewing the laptop its very easy to convince yourself that you need a $900 laptop instead of a $600 one and that you should renew it now instead of waiting 6 months. Maybe I still have a long way to go mentally here and not being as frugal as I thought I was and strive to be.