Hey guys,
Long time listener; first time caller.

TL;DR: My friend and I made this paycheck organization guide for helping teens and young adults (us, at the time) sort their money into accounts that would help them (us) understand what we could comfortably spend in our free time.
The percentages will change based on income/expenses.
The institutions listed are those which I recommend to friends when I talk about this breakdown with them.


When I was a kid my parents bought these plastic, traffic-light inspired banks to help my sister and I compartmentalize our allowance.
There was a green section which we were free to spend on candy, snacks, toys, and other cheap "impulse" buys.
There was a yellow section with which we were intended to save up larger sums of money to afford big-ticket items like video games, or a bike.
And finally there was a red section, which was intended to not be touched until something important like college. When I finally broke that bad-boy open at the age of 18/19 I had a whole $400something in there which I promptly spent on weed.

A few years after that brilliant purchase, I decided to appropriate that old methodology to an adult life; one with rent and bills and the requirement of paying for your own food.
I got together with a friend and we listed out just about every category of expense that we either indulged in or were subject to.
This chart has seen many iterations over the years, and this is where we seem to have landed.

When I was earning less income the Green portion was 20% and Grey was 50%. It's important to find a value that will allow you to spend enough money recreationally that you won't have a hard time restraining yourself from dipping into Grey, but where you WILL be able to empty the account if you aren't careful, subsequently finding yourself without the funds to go out for a surprise round of drinks with some friends.

As I've researched more and more from this subreddit, /r/financialindependence, r/leanfire, and elsewhere, the way that I've come to treat these accounts isn't accurately reflected on this chart. For example, I now view Yellow as my Emergency Fund.
When you're 18, 19, or 20, and still have your parents to fall back on, I don't think that treating Yellow as a discrete Emergency Fund is completely necessary. Or maybe Green should have been increased to 25 or even 30% and Yellow SHOULD have been a discrete Emergency Fund at that age. Maybe there's no right answer here.

I think what this chart truly helps me (and hopefully others) understand is the difference between a recreational/luxury purchase (Green), a life maintenance purchase (Grey), a cushion expense (Yellow), and retirement funds (Red).
The specific values, institutions, and combination of accounts used to fund big-ticket purchases is going to vary from person to person and even grow with them.

When we first started making this chart I found it to be a great way to gently encourage my friends to spend more responsibly, when we were all waiting for our next paycheck to be able to party that weekend. I printed a few out and usually people didn't seem very interested, but two friends came back to me and asked me for a copy!
If you decide to do the same thing, it seems to be an easy, non-confrontational way to provide someone with the information to be fiscally responsible, and if they take it home and throw it away, at least you tried. There's no reason to bring it up to them again, because they either adopted it or they didn't.
Any and all feedback is super-duper appreciated, and if you decide to show this to friends, family, or your children, I'd love to know what they think and how they respond to adopting it!

submitted by /u/EetsGeets
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