Freedom account?

Avatar for aerandel
iVillage Member
Registered: 03-25-2003
Freedom account?
1
Wed, 01-04-2006 - 7:09am
Did I miss something...I swear I posted this last night, lol, where it went I have no idea. Anyway though, I have noticed a few people mention a "freedom account" and I was just wondering what it was. A retirement account, investments, what? Thanks!

                          

             

iVillage Member
Registered: 08-08-2003
In reply to: aerandel
Wed, 01-04-2006 - 11:57am

It's from Mary Hunt. A freedom account is a separate savings account that you establish after you have your emergency fund set up. You estimate your above-and-beyond expenses for a year, including car insurance, health care costs, car repairs, those big things that come up. Then you divide by 12 and put that much each month into the freedom account. That way, you don't have to use your emergency fund for things that you know are coming. My freedom account categories are:

Home repair
Car Repair
Health care
Car Insurance
Travel
Clothing
Wish list
Christmas/gifts

I'm going to be putting around 400 per month into it starting in May, and each subcategory will be divvied up. So I'll always have a little to spend on clothes for work, and I'll be saving up to pay my car insurance every 6 months, and if I have a copay or something, it doesn't cut into my regular budget, etc. And it's a great buffer for your emergency fund to remain safe for emergencies.