Automate Savings by Percentage on varying paychecks?
When I have been faced with this sort of situation I have done the split at the bank.  They had the ability to recognize the deposit as a payroll transfer and split it the way I wanted. I put a specific amount of money into checking, another amount of money into the mortgage, and a specific amount of money into another fund. The balance, whether it was $1 or any other amount, went in to savings. That meant that I transferred the amounts I needed to pay my budgeted living expenses and what ever I made above that went to savings. In months I made extra, more was available to be saved. You just need to average out the weekly hours and income over the year. So if his yearly income is $100,000 p.a. then this would average out to $2000 per week of which 15% would be $300 per week. It does not have to be exactly 15% per week as long as over the long run your saving your target 15%. If he gets a pay rise you can include this in the saving plan. Say he gets a 5% increase in pay you would increase the $300 per week by 5% to $315 per week.
This is assuming that you are now making some amount X per month which is more than the income you used to have as a student. (Otherwise, the question seems rather moot.) All figures should be net amounts (after taxes). First, figure out what the difference in your cost of living is. That is, housing, electricity, utilities, the basics that you need to have to have a place in which to live. I'm not considering food costs here unless they were subsidized while you were studying. Basically, you want to figure out how much you now have to spend extra per month for basic sustenance. Then, figure out how much more you are now making, compared to when you were a student. Subtract the sustenance extra from this to get your net pay increase. After that is when it gets trickier. Basically, you want to set aside or invest as much of the pay increase as possible, but you probably have other expenses now that you didn't before and which you cannot really do that much about. This mights be particular types of clothes, commute fares (car keepup, gas, bus pass, ...), or something entirely different. Anyway, decide on a savings goal, as a percentage of your net pay increase compared to when you were a student. This might be 5%, 10% or (if you are really ambitious) 50% or more. Whichever number you pick, make sure it's reasonable giving your living expenses, and keep in mind that anything is better than nothing. Find a financial institution that offers a high-interest savings account, preferably one with free withdrawals, and sign up for one. Each and every time you get paid, figure out how much to save based on the percentage you determined (if your regular case is that you get the same payment each time, you can simply set up an automated bank transfer), put that in the savings account and, for the moment, forget about that money. Try your best to live only on the remainder, but if you realize that you set aside too much, don't be afraid to tap into the savings account. Adjust your future deposits accordingly and try to find a good balance. At the end of each month, deposit whatever remains in your regular account into your savings account, and if that is a sizable amount of money, consider raising your savings goal a little. The ultimate goal should be that you don't need to tap into your savings except for truly exceptional situations, but still keep enough money outside of the savings account to cater to some of your wants. Yes, bank interest rates these days are often pretty dismal, and you will probably be lucky to find a savings account that (especially after taxes) will even keep up with inflation. But to start with, what you should be focusing on is not to make money in terms of real value appreciation, but simply figuring out how much money you really need to sustain a working life for yourself and then walking that walk. Eventually (this may take anywhere from a couple of months to a year or more), you should have settled pretty well on an amount that you feel comfortable with setting aside each month and just letting be. By that time, you should have a decently sized nest egg already, which will help you get over rough spots, and can start thinking about other forms of investing some of what you are setting aside. Whenever you get a net pay raise of any kind (gross pay raise, lower taxes, bonus, whichever), increase your savings goal by a portion of that raise. Maybe give yourself 60% of the raise and bank the remaining 40%. That way, you are (hopefully!) always increasing the amount of money that you are setting aside, while also reaping some benefits right away. One major upside of this approach is that, if you lose your job, not only will you have that nest egg, you will also be used to living on less. So you will have more money in the bank and less monthly expenses, which puts you in a significantly better position than if you had only one of those, let alone neither. I don't know of any rule of thumb for travel. In general, what you spend on entertainment should be what you have left after paying for the more mundane things in life -- housing, food, electricity, and so on -- and setting aside reasonable amounts for retirement and emergencies. Entertainment varies widely as a percentage of one's income. Someone making minimum wage and trying to support a sick wife and three kids probably has pretty much zero left over for entertainment. Someone who makes a million a year and has no debts might spend 50% or more of his income on entertainment. Yes, I've heard rules of thumb for charity, housing, and retirement that are probably at least useful ballparks. But for entertainment? No, I think that's just what's left over. The compound interest argument is a good one.  While you are young, it is important to save, since time is on your side for compounding of interest.  I think the 401K is a good idea, but not for all of your savings.  Think about saving a percentage of your income, but put it in a couple places. Your Roth is also a great thing, since you'll be able to remove money without paying tax again.  The 401k (tax deferred) is a good idea if your company matches any of it (FREE MONEY!), and because it lowers your taxable income now, and it's taken out of your check before you see it, so you don't miss it.  It's still important to save other money that you can have for ready cash (unexpected dead car, for example, or medical bills, or what have you.) I find that I don't want to be managing my investments from minute to minute, or doing my own trades (I'd rather do other things), so I have a mix (Roth, 401k, cash savings) of automated contributions for savings, and I think hard before buying new stuff.  The point is to save, and if possible, try to save at least 10% of your income. First of all, I agree with both the conclusion in the question and Ganesh’s answer – avoid funds or stockmarket based instruments, given the short timescale and need to draw an income. However I think looking at savings accounts only is missing a trick. At the moment there are several current accounts that pay >2% interest on balances the size of which you’re proposing. The list of which accounts are offering which rates / conditions at which point in time will vary, so here is a link to a good source of regularly  updated information: https://www.moneysavingexpert.com/savings/savings-loophole  There are some conditions, but the best interest rate on offer (that isn't limited to one year) appears to be 3% – much better than the leading instant access savings account. "This seems like a risky setup.  All it takes is one missed or delayed transfer for you to overdraw your ""savings"".  There is a benefit to keeping your regular expenses and savings separate, and I can see some benefits in having multiple checking accounts depending on how you organize your finances, but I don't see a benefit to having a paycheck go to one account and all regular spending (and ""savings"") come from another.  It requires some regular maintenance to transfer money over to use for regular spending.  I suppose if you have a checking account that earns interest, but requires direct deposits, and a savings account that earns slightly higher interest you could squeeze out a bit, but it's probably not worth the effort these days unless you have a LOT of money going in and out. Also, it should not be easy to tap into savings, but your day-to-day spending should be very accessible.  All those factors suggest (to me) that your paycheck should go into your regular spending account, and keep your savings separate." I use MoneyStrands.com to manage my spending. It's a lot like Mint, but provides support for more banks, and works with most Canadian financial institutions. I can't really compare them fairly though, since I didn't bother with Mint after learning that they don't care about Canadians. If your bank isn't supported by MoneyStrands, or you don't want to trust an online webiste with your account login, you can create accounts for manually uploaded files. It just means you have to log into your bank yourself, download the transactions as QFX, OFX, CSV or other supported formats, and then upload the files to the appropriate account in MoneyStrands. I love the expense tracking and reporting that MoneyStrands offers, but like Mint, their budgeting feature is seriously lacking. Fortunately I don't need to budget month-to-month, I just use it to see how much I spend on various categories, to help create annual budgets and decide how much I can invest or use for a vacation. "Most online ""high yield"" savings accounts are paying just above 1%.  That would be 1.05% for American Express personal savings, or 1.15% for Synchrony Bank‎ (currently). Depending on the length of the season, you might want to work in some CD's.  Six months CDs can be had at 1.2%, and 9 month at 1.25%.  So if you know you won't need some of your earnings for 9 months, you could earn 1.25% on your money. However, I would proceed with caution on anything other than the high yield savings account.  With your one friend having such a low emergency fund, there is very little room for error.  Perhaps until that amount is built up into something significant, it is just best to stick with the online savings. Of course, one solution would be to find a way to create income during the off season.  That will go a long way into helping one build wealth." "For a personal finance forum, this is too complicated for sustained use and you should find a simpler solution. For a mathematical exercise, you are missing information required to do the split fairly.  You have to know who overlaps and when to know how to do the splits.   For an extreme example, take your dates given: Considering 100 days of calculation period,  If Roommate D was the only person present for the last 10 days, they should pay 100% of the grocery bill as they are the only one eating.   From your initial data set, you can't know who should be splitting the tab for any given day. To do this mathematically, you'd need:  But don't forget ""In Theory, Theory works.  In Practice, Practice works."" Good theory would say make a large, complicated spreadsheet as described above.   Good practice would be to split up the costs in a much, much simpler way."