Discover the POTS System for Family Finances
If you're looking to get a handle on family finances, I highly recommend trying the POTS system. Pot means like, a pot of cash. It’s a budgeting strategy I learned about a decade ago at a finance workshop my husband and I attended. The workshop focused on investment and financial freedom, and one key takeaway was dividing our money into different expenses and allocating funds to these categories monthly.
The system is similar to something I read about in Japanese culture, where they use a system akin to Christmas saving coupons in the UK. Think of POTS as a collection of piggy banks for various expenses, which can change over time based on your needs.
We have joint POTS for household expenses and individual POTS for personal spending. For instance, individually, I have POTS for my clothes, beauty-related expenses, and budget set aside for visiting my parents, so it's never an unexpected cost.
As a family, we keep POTS for healthcare, as medical aren’t free here. A separate pot we save for medical insurance, so we can pay a yearly lump sum and get a better deal. There are POTS for car maintenance, insurance, family trips, our son's education, extracurricular activities, and clothes. We also have a POT for birthdays and celebrations.
The key is sticking with the system for at least three months. Why 3 months? Because it takes minimum that amount of time to see results. When we first did it, we didn't do it consistently. We start and stop, and over the years we managed to build it into a habit. Any permanent change comes from genuine willingness from the inside.
For the first 3 months POTS might feel pointless, because you’re used to using money as it comes in. The first month is the hardest. You see all these money in 10 different pots and think, "I don't need to use money for that item now, I have something else I want to use it for."
Ignore those thoughts.
By the third month, you'll start seeing the benefits. You'll find you've saved $60 in one pot, and can actually do something with it.
After six months or a year, when expenses like medical insurance come up, you’ll feel relieved to have the funds ready. Before using POTS, we’d panic about renewing insurance and scramble to cut back expenses. Now, with POTS, those payments are stress-free.
If you decide to try something like this, let me know how it goes. Trust me, the POTS system could be a game-changer for your family finances.