Reservoir

When I started taking care of my finances — during my university years — building a reservoir was part of it. It was the second step, a natural consequence of managing the first step well. The first step was to divide my income into six percentages assigned to six accounts — this can be kept abstract, differentiating them on paper only: 1) 50% for basics, to spend on essential things such as food and rent; 2) 10% for financial freedom, or long-term savings — this functions as a retirement fund and works best when invested; 3) 10% for short-term savings, to be used for holidays, a new phone or car, repairs, or clothing if basic needs require it; 4) 10% for education, to be spent on books, courses, and anything related to learning; 5) 10% for enjoyment — drinks, cinema, a dinner that goes beyond the basics; 6) 10% for debt repayment — which was not much — and once the debt was cleared, this account became the fund for giving gifts to others.

At the beginning, my income was so small that I often had to take money from one account to cover the purpose of another — drawing from savings or education to cover something basic. But over time, as my income grew, the 50% for basics began to build a reservoir. The initial goal was to reach three months of average monthly expenditure. A few years later, I reduced the percentage to 40% and raised the goal to nine months of average monthly expenditure.