What is the Squirrelling Technique? I hear you all ponder.

Do you ever find that around the middle of the month you start noticing your cash dry up slightly? The bills are still coming out of your account, you still need to fill up the car or buy a few train tickets into work and the money is looking ever so slightly like it might run out.

Plus there’s the holiday to pay for.

Aaaagh! We’ve all been there. Even if you’ve set a monthly budget and you know what’s coming in and out, it’s easy to overspend. It could be on a treat lunch or an extra grocery shop you weren’t banking on.

Step forward the Squirrelling Technique.

The Squirrelling Technique is very simple. You may already be doing it.

Simply put, you have several bank accounts or savings accounts assigned to different jobs.

Your money earned goes into your bank account and then you immediately carve it up and squirrel it away into separate accounts.

squirrelling technique

How the Squirrelling Technique works for me

As a freelancer I’ve been doing the Squirreling Technique for a while because if I didn’t I wouldn’t have been able to pay my tax bills twice a year. That money would have definitely gone on stuff that was a lot more fun! But when the tax was due to be paid, I would have been stuffed…

So here’s how I make it work for me.

Income goes into my main account before being immediately redistributed across the following accounts:

A joint account for our shared household bills

A bills account for my regular payments (including to credit cards which I am steadily paying off).

An investments and hustles account. I set aside money for domains, hosting and other outgoings.

A savings account for my tax money.

Anything left over in my main account is spending money for groceries, fun stuff and travel.

Next level squirrelling would be to have an account for your emergencies. I’m not that good yet because I have always tended to regard my tax fund as a pot I can dip into if something goes wrong. But obviously if I do, it has to be refilled before tax bill time!

Squirreling into an emergency fund

The commonly suggested amount to put into an emergency fund account is 3 month’s salary. That means that if you suddenly couldn’t work, you’d have 3 months to work out what your next move is. If you were ill it would also cover you as not all health or salary insurance pays out immediately.

So get squirrelling and you know all your most important bills are covered.

Now the only thing you need to worry about is not emptying out the spending account before the end of the month – sigh!

For more ideas on managing money see here.

Master your money with the squirreling technique