My curiosity goes more towards non-immediate expenses such as vehicle maintenance, vacation funds, gifts, and longer-term expenses of that nature. I am guaranteed to spend about $3k a month on recurring living expenses. I currently have $10k in checking which includes accumulated budget lines for airline tickets, vehicle maintenance, Christmas, various annual registrations and fees, and clothes. I put a predetermined amount in checking each month to grow these categories. I'm trying to determine if these items should stay in cash continuing to accumulate or if I would be better off putting them in my investment account until I need them.
My personal way of dealing with these things is to not really worry about them, and just cash-flow the expenses monthly.
Here's specifically what I do:
- I keep a buffer of $1,000 in my checking account.
- I keep an emergency fund in a "high yield" (laughable these days) savings account.
- I pay most of my expenses on my credit cards, with the exception of utilities, home property tax, and vehicle property tax/tag.
- On payday, I pay my credit cards down to zero, pay utilities or taxes as they come up.
- I subtract $1k from my checking balance, and move what's left over to my current savings goal (which is either EF, Roth, or Taxable investment account).
- Repeat every 2 weeks on payday.
My income is large enough and savings rate high enough that I can cover larger expenses easily with cash flow (including vacations, especially as those expenses can sometimes be prepaid). I've never had to, but could dip into my EF if I had something like an expensive car repair pop up. This means that my savings rate isn't consistent month-to-month, but the annual total is always good (months can vary from 25% to 75%, but average out to 60% or so), and I am able to meet the savings goals I set each year.
I only move to investments what I'm sure I will not need in the short term. I don't want to be selling investments until I need to live off of them.