Relationships

Ask Paco (Because Finance Can Be Fun)

Ask Paco (Because Finance Can Be Fun)

Once a month, finance expert Paco de Leon will be tackling our pressing questions about all things money (with a good dose of wit and wisdom). Here are today’s three topics…

Q. I am bad at saving money. I’ve made a budget and do my best to stick to it, but life is expensive and too often it feels like all the money disappears as soon as it hits my bank account. Do you have any real-life tricks for saving? — Isabel

A. The human brain is a funny thing. Even I — who tell people about finance for a living — have struggled with setting money aside. You know how people say that work will take up as much time as you allow it? Well, bullsh*t spending will take up as much money as you allow it. Here are some things you can do:

1. Protect yourself from yourself.
If you don’t see it, you won’t spend it. So, if you work at a job with an HR department, ask if you can set up a direct deposit where some percentage of your paycheck goes directly into savings. You can also set up an automatic transfer that happens on your payday. For freelancers, designate a regular day where you sit down, look at all your receivables and expenses, and set money aside.

2. Stop buying stuff you don’t need.
To help cut back on spending, unsubscribe from any email lists you get from stores and brands, and delete any shopping apps, if you have them. I actually gave up social media — I haven’t been on Instagram in a year. I know it’s a huge thing to ask, but I do think social media has a lot to do with driving consumption, so at least try to limit it. Capitalism wants to make you buy stuff, with all the emails and ads and constant pinging that makes you feel unsteady. Take deep breaths. Remember: You are enough already.

3. Embrace breakfast.
If you have to take a meeting out, make it a breakfast or a coffee, which will be cheaper than meeting for lunch, dinner or drinks.

4. Give yourself an allowance.
Have one bank account that’s for your expenses — rent or mortgage, groceries, student loans, car payments, insurance, etc. Then set up another account for everything else — all the pizza and all the shoes. This is your allowance. This is THE ONLY PLACE you’re allowed to draw money from for all the extra stuff. Otherwise, it’s so easy to look at your one account that has everything in it and be like, ‘I should go to Disneyland!’ Limit yourself. Humans can’t be trusted.

5. Make it a game.
I like to make up challenges for myself, so I can feel good when I overcome them. For a whole year, I bought only used things. (Yes, that’s extreme, but I’m kind of an extreme person.) I’ll invite people over, and we’ll cook and spend hours talking or playing music, which doesn’t cost a lot. Or I’ll go for long walks in the park, which is free. Make a game for yourself where you don’t buy takeout coffee for one week or where you try to save up a certain amount. Once you’ve hit your first milestone, it’s kind of like a ball going through a hoop, where you want to make it happen again and again. Remember, you have to take action to see change.

Q. I’m getting married next month. My partner earns more than I do, while I am still paying off $60,000 in student loan debt. What are some ways other couples combine finances, divide expenses, etc? I have some friends who contribute on a percentage basis, and others who combine everything into joint accounts. What are my options? — Katie

A. Personally, I’m in favor of having a joint account for household expenses, bills, things like wedding and baby gifts which come from both of you, and joint goals, like saving for trips or to bring a baby into the world. In a situation where both partners have an income, contributing to your joint account on a percentage basis can be great.

Each person can still keep a separate allowance account, which allows for some autonomy. This way, you don’t have to have a conversation every time you want to do something. If one person wants to hoard their allowance to buy a vintage guitar — which is what I would do — it’s okay, as opposed to one day taking that money from a joint account and having it not be met with delight.

Some couples find it works to combine everything into joint accounts. However, if you combine everything, the person who makes more money needs to have the mental fortitude not to feel resentful. This works just fine for some people, but I’ve also seen situations where the person who makes less has a spending problem, and it can get tricky.

I’ve also met lots of couples that have been married for years, and keeping everything separate works best for them.

In some ways, this is actually a relationship question. The important thing is to get on a level of communication and trust where you feel secure enough sharing with each other. The situation that works best for you is the one that both of you are comfortable with. I recommend that all couples have regular conversations about finance. Put it on the calendar. Money can be triggering for people. When you’ve had a crappy day and you don’t feel like dealing with something and then your partner comes at you like, ‘Finance finance whatever,’ that’s a recipe for disaster. But with regularly scheduled space reserved for those talks, it can make it easier to have these conversations and less likely to have conflict in the future.

Q. How big should an emergency savings fund be? I’ve heard people say everything from two months to nine months. Also, in an ideal world, how much of my income should I be saving? — Monica

A. So, here’s a truth: All of this finance stuff is something that some people just made up one day. The textbook answer is that an emergency fund should have three to six months of your fixed expenses. I went to a class once that said entrepreneurs should have 12 months saved up. I was like, ‘Has the person who wrote this ever met an entrepreneur?’

These prescriptive answers work for large swaths of society, but might not work for everyone. I’d say the real answer is you need to save whatever amount allows you to sleep at night. If you don’t have more than one month saved, chances are you’re probably waking up and worrying about money.

Wisdom says that 10% to 20% of your income should be put into savings. But that is assuming you want to have the kind of life the people who prescribed that had, which is to work for a long time and then retire. There are people in Internet chat forums that save like 80% of their income so they can retire by age 30. You have to do what works for you.

At a minimum, though, you should aim to save 10% each month. If you can’t afford to put that money aside, examine your life. It’s like what Jay-Z says: ‘Men lie, women lie, numbers don’t.’ Where are you living? How much more time will you let yourself stay at this job? You have to save, even though you don’t feel like it. Nobody ever feels like saving. Professional athletes don’t always feel like training. But you have to say, ‘Feelings, sit down. I’m trying to do things with my life.’


Paco de Leon is a musician who happens to be killer at finance. Her experience includes business consulting, business management, financial planning, wealth management and even some time at a giant bank. Her experiences led her to found The Hell Yeah Group, a financial firm focused on inspiring creatives to be engaged with their finances and giving them the tools and support to stop freaking out about it.

Thank you so much, Paco! Do you have a money question? Let us know in the comments below…

P.S. A trick for saving money, and do you talk about money with friends?

(Photo courtesy of Paco; illustrated background by Alessandra Olanow.)

  1. Alex says...

    I can’t wait to see more of this series!

    My husband and I subscribe to the “what’s mine is yours” philosophy. We combine all money into a single account and everything gets paid from that account. I know different arrangements work for different couples, but I cannot imagine doing it any other way. Part of the reason why this works is that we are on the same page about the things we want to accomplish in life, and are each committed to also supporting the individual goals of the other.

    One aspect of partnership/finances I would be very interested in seeing explored through this series or on the blog is the household power that comes with the higher income. In our case, I make significantly more money than my husband, and I often worry that I am being given (or taking?) more decision-making power when it comes to major expenses, especially where our views on certain individual expenses differ. We strive for equality in all ways, but I know he feels that my voice is sometimes more powerful than his because of our income difference. Realistically, money is a very small contribution to what makes up our wonderful life, and I consider my husband as an equal contributor across the spectrum of relationship needs. I would love to know how other couples deal with this, and how to recognize situations where I unfairly (albeit unknowingly) have the “final say”.

  2. Gretchen Alice says...

    My question is…what exactly *is* a Roth IRA and why do people keep talking about it??

    • Annette says...

      Basically, a Roth IRA is an Individual Retirement Account where the money you put in is after taxes so when you take the money out, it is tax free (you have already paid taxes on the income which is how you got the money). Versus a traditional IRA where you get to take the contribution amount off your taxes and will have to pay taxes on it when you take payments out at retirement.

  3. Tiffany says...

    I’d love to hear more about student debt! I feel pretty stifled by income based repayment and planning everything around sticking with nonprofits so I can eventually get loan forgiveness on my $56,000 in Federal loans. I’m 32. I’ve got 5 years to go. And an extra $20,000 in private loans that I’m also working on. Is this the right approach?

  4. Emily Hammock Mosby says...

    I totally agree with the sentiment that finances can be triggering, and couples need to agree on how – and when! – to discuss them. I can’t recommend enough the concept of “family meetings.” Right now, they are just my husband and me, twice a week, to discuss logistics, parenting, scheduling, and yes, finances. We try corral the chatter on these subjects, and just discuss during our meetings – that way we can actually TALK about other things when we sit down at night and spend time together. We set a time limit too, so we (I) don’t spiral into discussing ALL THE THINGS we could do about money/house projects/ etc. When our son is older, we plan to include him too!

    • Yes, Emily! I hear you on family meetings.

      My boyfriend and I recently started doing monthly meetings as a way to check-in on the “administrative” aspects of our relationship and to ensure we’re still on the same page. As part of the agenda for these meetings, we discuss money. We’ve learned to be very honest with one another and support each other in our individual goals as well as the goals we hope to accomplish down the line should we decided to make it official. I truly hope that if we do get married and start a family we can share this practice with our children.

  5. Alexandra H. says...

    “Finance finance whatever” – exactly!!!

    Love this column, Paco – you have such an authentic voice and your column is packed with great tips. I firmly believe the more we talk about finances the more we can lift everyone up; no need to hoard great savings and financial tips. Yea!

  6. Emily M. says...

    Yes yes yes! This is hitting the mark. Thank you Cup of Jo and Paco. More please!

  7. Heather D says...

    How on earth do I get my non-compliant husband to work with me on financial matters? We took the magical Dave Ramsey course together several years ago, but he would never be on board. He spends a ton of money every week on snacks, sodas in giant cups, drive-thru fare, tiny (albeit cheap) electronic gadgets on amazon that are lost and never to be used again…. You see the trend here. Sure, $2-5 here and there isn’t much, but over the period of a week he might spend $75 on junk! How do I get him on board?

    • Allison says...

      Generally having a clear goal for the money as well as awareness of where it is currently being spent helps change spending patterns. Saving vaguely “for retirement” is often not very compelling for those who have a less frugal approach and making smaller and more appealing goals (e.g. make it a challenge to save x$ in a month or 3 months and have a planned reward to go with meeting the goal. ) Good luck!

    • Annette says...

      Your husband sounds very similar to mine. We keep our bank accounts seperate and split the bills (each paying about the same amount). I told him, you spend your money on what you like but you better pay your portion of the bills. I am a bookkeeper and it drives me nuts how careless he can be with money but I had to let it go. Maybe suggest you each put in a percentage of your disposable income to a savings account to save for something meaningful to both of you; ie vacation, pay off debt, home, etc.

  8. I am so excited for this new column! I bought my first house this spring and am reworking some of my finances, so I am very much looking forward to reading more of Paco’s advice in the months to come.

  9. MB says...

    This is excellent – thank you for anticipating what your readers might enjoy before we even know we want it ourselves! It’s one of my goals to become savvier with finances and this is a great resource

  10. Great new column! My husband and I are pretty serious savers (there’s always room for improvement! 😉) but we are very serious planners! We want to retire many years before the norm of 65ish. Planning is an absolute necessity.

  11. Rahnster says...

    I was able to stop overspending by only using cash for “fun” stuff, food, entertainment, etc. When I was swiping my credit card, it was easy to overdo it because I wasn’t keeping track and it always added up to more than I expected. So, now, I use my credit card for gas and bills (I have auto pay set for most of my bills and they charge to my credit card instead of my bank account), but I use cash for everything. I take $100 out of the ATM and when it runs out, I have to hit the ATM again. Having paper money in my hand makes me think twice before spending it and getting to the ATM isn’t super convenient so it tends to stifle spending for a few days. Bonus, all our change goes into a jar and we dedicate our change jar to something special, like a trip.

  12. Jen says...

    “Limit yourself. Humans can’t be trusted.”

    hahaha so true!!!!

  13. Lee says...

    I love this new column! Thanks Paco for sharing your practical wisdom with COJ readers!

  14. CC says...

    I’m super excited about this series and Paco! My husband and I are both self-employed and it’s been tough finding financial advice that actually applies to our lifestyle.

  15. Kelly says...

    LOVE this series, and I will definitely be reading along. Paco gives such practical advice in a writing style that is truly interesting and inspiring!

  16. Jana says...

    Thank you, Paco! I have already forwarded this to a number of friends.

  17. T says...

    One little tip about “buying stuff”. We do it because it gives us a ping of pleasure. It gives us a neurochemical rush to choose something unnecessary, a treat, and acquire it. I think that the vast majority of your investments and savings should be automated. But if you’re trying to cut down on buying stuff but miss that hit of fun from spending money, set aside some money every month to buy an investment – whether it be a stock mutual fund, bond fund, real estate fund, etc. You actually get the same kind of rush from shopping but this shopping makes you richer in the long run.

    • Stacey says...

      Great idea! I’m going to try that.

  18. ceridwen says...

    Great advice! My husband and I started on a budget program, it’s an Australian one, and it helped us so, so much! It was like weight watchers for money at first but we got there and it has worked. No more massive stress when rent time came around and all the bills now don’t rain down at one. I mean, they might, but we have the money aside so not a problem. But I like the idea of us having separate allowance accounts. We have our personal shopping money that comes in every three months (but that’s a long time between drinks! For me anyway). I think it is good to budget in for stuff to give you a bit of room to do your own thing without negotiation. The budget did make us talk about what we really want and what is important to us as a family and indivially. We are one income family, I work full time and my husband is a stay at home dad. We want to be able to do that. So the budget, although it dies the all for a lot of spontinaety, enables us to do that.

    • Preeti Varma says...

      I’d love to know which Australian app you used! Thank you!

    • Julie says...

      I also would love to know this!

  19. Jenny Leigh says...

    I once bought a book called “smart women finish rich” but when I started reading it in Europe, where I live, I realized not much applied to how we live and the tax and financial rules that exist here. Does anyone have tips for books on personal finance that are for a European audience, preferable women?
    Many thanks!

  20. Jessica says...

    ‘Feelings, sit down. I’m trying to do things with my life.’

    PREACH!! I can probably also apply this to so many areas of my life. Thanks for the new mantra, Paco!

    • Heather D says...

      Right?! I want this printed on my walls, on tea towels, on a t-shirt!

  21. What a great column!! I did not expect a post on finances to make me laugh out loud, but the comment about looking at your account that has everything in it and thinking, “I should go to Disneyland!” totally gave me the giggles. Love the idea that finances can be fun. I completely agree. I tend to avoid numbers and saving by nature, but when I actually decide to sit down and get serious about finances it is pretty fun. Thanks for being willing to tackle this tough subject with wisdom and delight.

  22. Sarah says...

    Love this!

  23. Lizzy says...

    Just wanted to say I love this post! So funny and helpful! I want to be friends with Paco immediately!

  24. Karin says...

    My question is what is best if you inherit money?
    1) pay off student debt? Still have $135,000 from my veterinary degree that I will be paying until I retire at this rate.
    2) use it to do an extention on our house? Our children share a room ( one boy and one younger girl) but in a few years they will need seperate rooms. We could move out of the bay area to afford a 3 bedroom or maybe we could do an addition since we got the house at a deal in 2008 and we would like to stay here for the good jobs. In the end our house would gain value.
    3)invest the money ( I have an acorn account which is all we have for now)
    4) put it into the kids collage accounts to save them the burden of collage debt.

    We have no standing credit card debt since we pay it off monthly.

    Not sure what is the wise choice.

    • Great question. Following to see answer!

    • Jess says...

      Also following to see the answer! One thing I have heard over and over is to make no rash decisions about it. Literally sit on it for an amount of time, 6 months to a year, before deciding.

    • Jennie says...

      Hi Karin. I do not know your complete financial picture, but I would start by looking at the tax implications / ROI. I am guessing that your student debt is tax-deductible, so less of a value in paying that off now. Furthermore, you should see if there is a way you can avoid paying taxes on that inheritance (e.g. set it up as a trust but still drawn income from it). Ok, now – look at the ROI on the house you bought (congrats – it sounds like you got a great deal). If the price per square foot you paid in 2008 increased in value (I am sure it did) you may increase the value of the home enough by adding the addition where it in a sense pays for itself. So basically you spend x to add on the addition but can sell it for y which is more than what you paid for the addition plus your outstanding load on it (hopefully significantly more).

      I would advise against a lump sum investment as you will lose the advantage of cost dollar averaging.

      Good luck!

  25. Laura says...

    Hi, CoJ! I loved this article (especially the tone) and wanted to ask a question that I don’t think I’ve ever seen addressed. I’m happily married. But. I worry. I worry that maybe things won’t work (we have young kids, and those rough patches are brutal but not constant). I worry that one of us will die with no warning. I wonder if there are basic financial safety measures every married person should take, should these kind of hard things happen. Any chance you guys want to weigh in? I’m excited about the series!

    • Rosa says...

      Life insurance on each partner to at least cover mortgage and 1 year salary of that partner. If they die, money should not add to the horrible grief…what a tough but real subject…Would love to hear Paco’s take on this

    • Fiona says...

      I read this article that said that you need to fully understand your finances. Make sure that neither you nor your partner know “more” about retirement processes, benefits, accounts, mortgage processes etc. than the other (Same goes for technology, its easy to “divide and conquer” but where does that leave you if something happens?). As a starting point make sure you know how everything works, and thats something that can happen quickly, as a short term goal. Second, I would say look in detail into life insurance (through your employment or otherwise) and make sure its sufficient – you can buy more for very little. My husband’s is generous but we had to top mine up in order to protect him appropriately if anything ever happened to me.

    • Amber says...

      Recently also learned that you should make your spouse an executor or power of attorney (clearly I didn’t learn that much about it), because if something happens to one of you, just being married doesn’t automatically ensure everything goes where it should.

  26. Clare says...

    This is great! Thanks Paco!

  27. Anna says...

    This is so great! I love her! Her voice is just so down to earth and reassuring.

  28. Rachel says...

    WOWOWOWOW! Paco is awesome! Can’t wait for more of these!

  29. Lindsey says...

    “Humans can’t be trusted.” Bahahahahhahahahahahahaha.

    But also, yes. Nodding head.

    • Maggie says...

      I feel like this should be the name of her financial cobsulting firm!

  30. Irina says...

    Where I have trouble is drawing that line between essential and non-essential expenses. My husband and I live on one salary (mine) and have high medical bills even though we have good health insurance; we are also paying off a lot of credit card debt. After we’re done paying the mortgage and the bills, there is very little left each month.

    After mortgage and bills, our biggest spending item is food. We rarely buy anything fancy and we only eat out a handful of times a year. I cook from scratch and often our next meal is determined by what’s on sale. However, we try to eat healthy, i.e. mostly unprocessed, real food like vegetables, fruit, grains, beans, meat, fish, cheese, yogurt, nuts, etc., and I try to stick to organic for the items on the Dirty Dozen list (highest in pesticides when conventionally grown), as well as for other foods when possible (e.g. milk). So, it adds up…

    Sometimes I think we should just eat rice & beans (plus eggs from our chickens and the produce from our garden) to free up some money. Our housemate, who does not make much money, basically subsists on cereal, homemade crepes, and coffee, so his grocery list is just 5 items long, and all of them are cheap.

    But then I think about how this kind of constant self-deprivation would make us grumpy and hangry, and how it is not healthy for our bodies and brains in the long run. And, at some point, we will probably get sick of it, go buy all the things we’ve been missing and then some, and overspend.

    I keep going back and forth on this. Is a healthy, high-quality diet an essential thing? Or is it a luxury item? I know everyone needs to decide this for themselves, but I just can’t make up my mind.

    • Blandine says...

      Sometimes you are doing absolutely everything to keep your spending down which sounds like it is the case for you. So maybe you can look at the other side of the equation, increase your income in some way?

    • Erin says...

      One experiment I did for a while was to always look at my grocery receipt and make a mental note of what was the most expensive item. Sometimes it was a surprise. It sounds like you’re already pretty cost-conscious about what you’re buying, so maybe this wouldn’t make much difference for you, but it helped me think about whether the expensive stuff was necessary or a luxury, or whether I could find cheaper substitutes for some pricey items. On a related note, one of my very cost-conscious college roommates allowed herself one “splurge” on every trip to the grocery store … not expensive, but a little thing that would feel like a treat so she didn’t end up getting that “AAAAH I CAN’T EVER HAVE ANYTHING I WANT” feeling.

    • Christina says...

      One million times YES, a high-quality diet is the MOST essential thing. It will help reduce your risk of costly diet-related illness down the road, improve your mental health, increase energy, reduce inflammation in the body and many other things that you can’t even put a price tag on. I eat a vegan, 99% organic diet and it is very affordable, healthy and sustainable.

    • sasha l says...

      Swap some meat, chicken and fish for lentils and beans, get organic. You’ll save a ton of money and it’s healthier too. Not deprivation at all, they are yummy!

  31. Katrin says...

    We have several accounts: one for savings, one for traveling, one for the house (including mortage, taxes, insurance, renovations), one for groceries, one for christmas presents for the whole big family, one for the cars (taxes, insurances, saving up for new cars, repairs) and what is left in our shared account is for clothing, going out and everything else- but since the most of our income is gone by the first of each month to the other accounts, you feel relatively poor and spend way less. But it piles up in the accounts which is really cool.

  32. My question is about FOOD! We are on a tight budget so that one of us can stay home with our 15 month daughter. We are pretty good about not spending much on stuff we don’t need but holy moly, it seems that all our money goes to food! It is important to us that we buy mostly organic produce (we have a CSA this year) and grass fed/pastured meats, eggs and dairy. I feel like of all the areas to cut corners on, nutrition is not one. We also are excellent at not wasting anything. But still, we spend so much – way more than other people we know! Any tips on how to purchase high quality food without spending a fortune? I’ve struggled with this for years!

    • Amelia Ryan says...

      If it’s available in your area, Imperfect Produce offers organic (and conventional) produce at really good prices because it’s been “rejected” from grocery stores for aesthetic reasons or surplus. We’ve been doing it for almost a year now and it’s great. It’s worth checking out!

    • Tori says...

      I can really relate. My mom likes to say we’re saving $ on medical bills by spending on groceries…who knows ;) Though my approach is constantly in the works my current method: flexibility. For me (very pregnant with a 3 year old) I only buy grass fed milk and organic eggs but almost everything else is in flux based on pricing, sales, and our other spending. We certainly have our go tos and I do try to get organic as much as possible but I’ve been trying to feel less guilty if it really is out of our price range i.e. if I really want nectarines but the organic ones would push our budget too far, I get conventional. Also, I try to cook interesting and varied meals but sometimes the recipe I bought groceries for just doesn’t end up sounding good/get eaten/use up all the specialty ingredients so I’m trying to cook simply and have certain meals in regular rotation that are cheap and get eaten. On that note we try to eat a simple meal for breakfast (cereal or toast or yogurt) and lunch (salads or sandwiches) and change it up at dinner. I’d love to hear more peoples’ approach!!! Always need tips and ideas for this…

    • Teegan says...

      Some farms/CSAs will give you free or discounted produce if you volunteer. I “worked off” a CSA share when I was pregnant with my first son, and that got me hooked on working on farms every summer to pay for all our organic veggies. (My husband teaches while I’m usually a SAHM, so summers were when I had more time to work.) Also, if you work for them, you can often get ugly/limp “seconds” in bulk—great for pickling, blanching & freezing, dehydrating, etc, to get you through winter. The stand where I worked even let me keep my boys with me when I was in a childcare pinch.
      As far as meats, have you tried a buying whole or half animals straight from small farmers? Then you can either split the meat (and the savings!) with friends, or store it in a chest freezer if you have the space).

    • Meg says...

      Hungry Harvest (https://www.hungryharvest.net/) is another service that does CSA-like deliveries of “imperfect” produce for much cheaper than most CSAs. It’s not available everywhere, but maybe they’re in your area!

    • sasha l says...

      Less meat more lentils and beans. You will not believe how much you save.

  33. christine says...

    I would love to hear Paco’s advice for entrepreneurs / small business owners – we have to pay quarterly tax estimates, mortgage, expenses, but our income is variable and earned intermittently (sometimes you have a “big” month, sometimes not!). Any tricks/advice for budgeting and/or saving? Thanks!

  34. I wholeheartedly agree with the idea that you save money you can’t see. My retirement contribution comes out of my paycheck before it gets deposited. I probably would never have put what I have so far into that account if I had to contentiously make the choice to do so (I’m 31, for reference). I got married last year, and my partner makes about 10K more than I do. We both deposit our paychecks into a joint checking account (which we started doing because we were offered a lower car loan rate to do so), and then transfer a bit of money each month to our respective individual accounts as we’re both more comfortable having our money spread out a bit, plus it allows for more secretive present buying. I love this new column, and welcome Paco!

  35. Love, love, love everything about this!!

  36. So happy about this new column!! I’ve been reading Paco’s words on The Hell Yeah Group for a while, and there are tons of funny, informative articles over there for anyone interested while we wait for the next one.

    Welcome to CoJ, Paco!

  37. K says...

    Okay, I love her!!

  38. The only finance article I’ve ever felt like I could actually relate to, and the only one I’ve also enjoyed reading. *relief*

    • Shannon says...

      I second that. Paco for the win!

  39. Sarah says...

    Oh yikes, I’m not a fan of the “percentage of income” allowance when couples combine finances. Especially after having kids, one partner often emerges as the primary breadwinner, while the other is more involved in care-taking. Those divisions of labor can be a good thing, and we shouldn’t penalize the care-taking spouse with less fun money.

    Great column though! Love the info and subsequent discussion!

    • Kate says...

      Agree, Sarah! My partner makes more than I do and we each have an allowance but it’s a set amount, not a percentage. But finances are particular to each couple so I’m sure the percentage aspect works great for many couples, too.

  40. Andrea says...

    Someone asked about savings and retirement and whether retirement savings should count toward that 20% savings goal. Ramit Sethi gives these broad categories for your money:

    10% retirement
    10% savings
    60% fixed costs
    20% spending

    • Paige says...

      Thank you, I was wondering about this!!

    • Jessica says...

      Thank you for this!

  41. Elena says...

    I knew this would be a GREAT column as soon as I read the list of items you include as possible everyday/routine expenses and saw that you put student loans on there! It feels so good to be spoken to directly – it can be so discouraging to search for financial advice online only to feel abnormal or out of the loop because they’re speaking to what your expenses or needs “should” be, rather than meeting you where you’re at. Another star for CoJ! Thank you Paco!

  42. “Feelings, sit down. I’m trying to do things with my life.” My favorite thing I’ve read in a while- and the funnest finance article I’ve read ever.

    Putting a percentage of money straight into retirement is also a great way to save it because you can’t touch it. You can, however, draw 10k penalty free from an iRA for a first-time home purchase, which has been very helpful for us.

  43. Abigail says...

    How do I start a college savings account for my baby?

    • Sarah says...

      Open a 529 account. If your state offers a tax refund for using you state’s plan, do it in your state. Otherwise, use the Utah 529 plan (it has the lowest-fee funds).

      Seriously, it’s really easy. I waited way too long thinking it would be a pain. But, it only took like 30 minutes. Good luck and congrats on the baby!

    • Louisa says...

      I agree with Sarah and I want to add: If you’re 40+, so that your baby will enter college after you turn 58 (the age you can withdraw funds from a retirement account), it might make more sense to save your money in a retirement fund. If you use a Roth IRA, it gets the same tax advantages as a 529 but (of course) you don’t have to spend it on college if your baby doesn’t go to college/gets a scholarship/wins the lottery.

    • Karen says...

      Also, use upromise.com! If you online shop a bit (guilty!), you will get a percentage of the amount you spend into a linked 529 college savings account.

  44. Jaspreet says...

    THIS IS SO GOOD!!! I love the information and I am excited to read more on this topic. Hell Yeah!

  45. Karen says...

    Love this advice! My partner and I have a joint account and individual “allowance” accounts. We think about our joint account like it’s the government, and we’re paying taxes:

    We each pay a percentage of our income to our joint account to benefit the greater good of our family (joint goals and needs). When we started this approach, “taxes” only paid for rent, bills, and groceries. Over the years, as our lives have become more enmeshed, we’ve renegotiated and added categories, which means that our “tax percentages” have gone up. This means I don’t have to pay for tire blowouts out of my shoe budget—there’s a safety net in the joint account for that. We meet once a month to discuss (and use/love YNAB).

    This has allowed us to ease into merged finances while maintaining independence. As a bonus, the government metaphor has helped us consider decisions about money in the context of our joint priorities, a perspective that helps us see the long term view as well as the now.

    • Becky says...

      That is a fantastic analogy!

  46. Elizabeth says...

    I feel so motivated to save! Awesome!

  47. Jessica says...

    Regarding ‘you should aim to save 10% a month’:
    Does this include money put towards retirement or is that an additional % on top of 10% personal savings?

    I always get a little unsure about how much to save and where that money gets saved! If I’m putting 12-15% toward retirement each month, am I expected to also put 10% into a personal savings account?

    • Roxanne says...

      I have this exact same questions!

    • Lauren says...

      Short answer: YES, you should have a retirement account (that 12-15%) and then savings in addition to that. Savings is for down-payments on homes, big expenditures that might arise ten years down the line that we don’t foresee, lost jobs, expected and unexpected moves, financial help for family. You can touch that before you retire. Retirement money is for when you no longer have a regular income from being employed full-time—and that can end up being a lot of money that you need! If, when you’re 65 (or however old you are when you retire), you have savings leftover, fantastic. But thinking of them as separate things can help you keep your own boundaries and ensure that you have the financial footing you need at all stages of life.

    • Jess says...

      Are these percentages out of your actual paycheck? Or your gross income? I know my 401k comes out of my pre tax income, so if I save an additional 10% out of my literal paycheck is that hitting the goal or should I be pushing for more?

  48. Lucy says...

    So excited to see more money discussion on Cup of Jo. I read Your Money Or Your Life earlier this year, and I cannot recommend it highly enough. It changed the way I think about money/happiness by forcing me to look at each expenditure in terms of hours/minutes of your life spent working. Totally reframes those lunch hour trips to Zara and all my other meaningless purchases.

    • M says...

      I love YMOYL – it truly changed my vision of how to live and what to spend. Also, Mr. Money Mustache is pretty far out but surprisingly doable. I have been cutting back to try to save more and his blog and forums have taught me so much.

  49. HH says...

    Ditto to the renting vs. buying question (and in the midwest). What is the least % you should have to put down on a down payment? If you don’t have 3 months of emergency funds, should you not even be looking?

    I want to live in a place whose aesthetics I love (or love the potential of). But my parents tell me I should look for a place that’s practical, that buying a house should not be an emotional decision. Is that true?

    • Alicia McGrail says...

      Yes to the rent vs. buy convo!

    • Irina says...

      My husband and I didn’t have 3 months of emergency funds saved when we bought our house last year. We didn’t have a down payment saved either. We bought in a rural area, so we got a USDA Rural Development loan where we only had to put 3% down, and that 3% came via a down payment assistance loan from the state.

      We saved just enough towards closing costs, and we were only able to do that because we got our last month’s rent back from our landlord and then camped out and house-sat for over two months until we were able to move into our new home. In the end the seller ended up covering all or most of the closing costs so we got really lucky and were able to put our savings towards buying some things for the new house.

      It is definitely risky to buy a home without having an emergency savings fund, but we decided to take the chance. I am the only income earner in our family currently but I’ve had my job for over 5 years and feel pretty secure. If something happens, I figure I can fall back on unemployment compensation or disability insurance.

      We were 35 and 40 when we bought our home and felt more than ready; also, home prices in our area have been growing and the market here is small so it’s not easy to find a home that fits both your budget and your needs/preferences. When we found one, we felt that we had to jump on it. It was almost a “now or never” type of situation.

  50. McKenzie Cunningham says...

    Any tips for categorizing savings? All the money I don’t spend in my spending budget (some of it for trips, clothes, etc.) just gets shoved into the same savings account. I’d like to keep track of how my savings for that big trip are going, or how much I’ve saved this year from not shopping a lot.

    • McKenzie, you might either like to set up multiple bank accounts using something like Capital One 360 where you can see clearly how much is in each account and for what, OR check out the Cup of Jo post on YNAB (You Need a Budget)! I personally prefer YNAB because I can see the amount after I might have made a purchase or a transfer or paid off a credit card but it’s not showing up on my bank account yet.

    • d says...

      Or you can set up an Excel spreadsheet to take your total and divide it by percentages into each category. I was looking for a solution like this since I don’t bank with Chase.

    • Kelsey says...

      Simple Banking saved my life – seriously!
      You can put your money into separate “folders.” It has changed my entire relationship with/understanding of money and budgeting. I recommend it to everyone!

    • Emma says...

      I just started a small business this year and opened a Simple account. I was a little skeptical as it’s an online-only bank, but they allow you to set up “goals” which separate your account into “safe to spend” and “goals”–the goals can be whatever amount and on whatever timeline. I’m using this feature to help me put aside $ for taxes since I am self-employed. I also set up a “goal” for a new vehicle since mine is over 20 years old. I showed my partner and he was really into the idea that it tucks money away automatically. Basically if you say you want to save $4,000 between now and Dec 31, it divides the dollar amount by the number of days and puts that much money aside every day.

    • Jessica says...

      I second Simple Banking!! It seriously changed the way I was able to save money by being able to funnel money behind my ‘available spending’ and into different folders (New bed, bills, travel, etc).

      I took my major spending categories and broke down what I spend each year, divided by 26 paychecks and each paycheck I break them up into the folders. Now that Simple can automatically pull charges from certain folders, I never have to worry if I have enough saved for bills, etc because it’s all just sitting there waiting to be spent.

      I don’t know why more banks haven’t adopted Simple’s UI because it’s seriously been life-changing for me! Highly recommend!!

  51. Such great advice. I enjoyed reading this.

  52. Maggie says...

    Great column!

  53. CC says...

    This post is SO FANTASTIC! I can’t wait to read more of Paco’s wisdom!

  54. Brooke says...

    This series is great and Paco’s advice are so real. Thank you!

  55. Kelsey says...

    Love this new series! Would love to hear Paco discuss renting vs buying a home. (Bonus if it’s general and not exclusive to NYC living!)

    Your friend in the midwest,

    Kelsey

    • Heather says...

      Seconded!

  56. Alycia says...

    Mado, if something is free on the internet, you are the product. The site wouldn’t be free if people weren’t clicking on those links and shopping!

  57. Ro says...

    I have a question.

    I have a savings account, but most of the money it’s just…there.
    Should I be looking into investing that money or something?
    Is there a way to do that without jeopardizing my savings?

    • NR says...

      Yes! The answer depends on how much you have on hand and where you are in terms of your big life goals. Are you on track for retirement? Do you have credit card or other consumer debt? Do you have an emergency fund? Do you want to buy a home? Do you want to invest in the market? In the meantime, though, check how much the interest rate is on your savings. It’s typically pretty anemic. There are online savings accounts that offer better rates (not fast-bucks rates, but much better than your typical personal savings account). This post has all the current rates:
      https://www.bankrate.com/banking/savings/rates/