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Creative Accounting

Updated on February 21, 2012

Build an Easy Slush Fund

Like a lot of people, I’ve been growing steadily poorer over the years, no matter how hard I work or thrifty I strive to be. The price of housing, food, utilities, insurance, education, and nearly everything else has risen exponentially over the past years, while my salary most definitely has not. As a result, my disposable income is near negligible once I’ve paid for all the necessities. It’s a little depressing when all the financial gurus keep shoving it down our throats that one should have at least six months of living expenses in savings. But, like most people I know, I’m a paycheck or two from the street and, barring falling backwards into some kind of monetary luck, I don’t see this changing anytime soon.

It gets discouraging working a minimum of 45 hours a week, buying generic brands, always eating at home, setting the thermostat at unsatisfactory levels, and doing precious little in lieu of entertainment in an effort to stay in the black before the next payday. A person needs a treat once in awhile to stay sane, whether it’s a new pair of shoes or dinner and a movie. One needs a slush fund for that kind of thing. And I’ve managed to maintain one over the years, no matter how tight the binds are around the checkbook.

I like to call it a form of creative accounting. You know how a lot of people set their watches ahead by 5 minutes in an effort to avoid being late? Well, this type of creative accounting is kind of like that. It involves a little fibbing to oneself and tricking your mind in order to achieve a more positive outcome. And here’s how it’s done:

Round up everything when you’re logging in your expenditures. If you spend $22.36 at the gas station, log it in your register as $25. If your grocery tab comes out to $86.13, mark it down as $90. Electric bill this month is $74? Go crazy and mark it down as $85. If you do this every time you spend anything, you’ll bank up a couple hundred bucks in a few months’ time, and it will be painless. Not only does this give you a cushion for an emergency or a little splurge at the bookstore, but you’ll be covered against any of those miscellaneous bank fees or in the unfortunate event you forget to mark down that $40 withdrawal from the ATM. Ever thought you were in the clear when swiping your debit card at the pharmacy for what you thought was the last $20 in your account? And didn’t consider the miscellaneous bank fees that month and ended up overdrafting your account by $4? And then paying about $40 in fees for your error? That can become one expensive tube of lipstick. But if you consistently inflate the amounts you spend on paper, you’ll never have an overdraft like this again. Of course you’ll need to check your balance frequently and factor in still uncashed checks or unprocessed withdrawals but, if you’re reasonably careful, you’ll find that you’ll usually have a minimum of $100 extra in your account each month.

I’m aware of all those programs where you can have automatic deductions from your paycheck or checking account to a savings or vacation fund account, but I’m too lazy to do the paperwork, and I feel that this creative accounting method is a bit more aggressive and, therefore, more rewarding.

And this is totally old school, but keeping a change jar is another effective means of saving some fun money. I never spend my change if I can help it. I spend cash as often as possible, and I always take all of my coins from purchases and chuck it into the change jar. It usually takes me about 6 months to build up $100. Not a huge amount by today’s standards, but it’s still like finding a minor windfall, since it’s money I haven’t missed. The coin machines in the supermarkets where you take it to cash it in take out about 10 percent, but it’s still nice to pocket a few $20 bills and do something frivolous with it.

Poverty can be a strong motivator to save money for an emergency or a nice seafood meal for two that someone else cooks and cleans up. This little accounting trick has paid for designer perfumes, my kids’ wardrobe adjustments, car repairs, and even plane fare. Give it a try, and you’ll have a trip to the amusement park by this summer.

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