Friday, September 9, 2011

Fiscal Fridays: Budgeting, part 2

Almost everyone has their own methods of keeping track of their money. Now that you have your budget established (thanks to last week's post), you should create a system for organizing your money. Today I'm going to share a few systems that I use, and some that you guys mentioned in the Survey Monkey poll.

Source: via Julia on Pinterest

Cash envelopes.
Ah, yes. The tried-and-true method for budgeting your money, whether you're 13 or 33. True story: I've been using this method on and off for nearly than ten years now, ever since I got my first job, at a fast food-place when I was 14. With this method, you withdraw all the money you're going to spend until your next paycheck. This includes things like gas for your car, groceries, random spending allowances, whatever. The Pinterest image above actually links to a website with some great envelope printables, but you can do the same thing with a regular old mailing envelope. I usually just paperclip the bills together in my wallet, with post-it labels saying what the money is for.

Multiple checking accounts.
This might be my favorite method. I've been using it for about three or four years. I have two checking accounts: One is tied to my debit card, the other is not. I use the non-debit card account to pay bills—I just write checks for things like rent, electric, cable, etc. I also use to to transfer balances to pay bills like credit cards and my car loan. The debit card account is for more frivolous things. Sometimes, instead of withdrawing cash (because I hate carrying tons of cash), I will transfer money from my "bills" account into my debit card account to pay for things like groceries and gas. But I always, always, always withdraw my allotted fun/spending money in cash. That makes sure I can never accidentally go over.

Spreadsheet tracking.
If you created your budget in a spreadsheet as described in my last Fiscal Fridays post, you can use this sheet to keep track of how much you've spent. Just update the amounts as they change—for example, if you only spent $50 on groceries one week instead of $60, then update your spreadsheet to reflect that. After I pay a bill, I usually fill in those cells with a light gray color (use the paint bucket tool in Excel) to sort of "cross it off," so to speak. Although the crossing-off method doesn't always work...on more than one occasion, I forgot to cross of a credit card bill, so I wound up paying it twice in one month. Great for my credit, terrible for my budget. Those were rough months.

Paying via credit card.
I hesitate to include this one, because it can get very dangerous, very quickly. It takes a lot of self-discipline to adhere to this method, but if it works for you, your life is a lot easier. I don't use this method yet, but am considering it after I get my credit cards paid off completely. We'll see.

Basically, this consists of having a no-balance credit card that you use to pay your bills. You set up automatic bill payments for anything from your cell phone to your electric bill. As you each bill gets charged to your credit card, you set aside that exact amount of money to pay the bill later. Don't charge actual purchases to this card, unless you set aside extra money to cover those. At the end of the month, you pay off your entire credit card balance in full. The point is to never have a balance for more than 30 days, and therefore, to never get charged interest. Like I said, this can get really if you decide to only pay off half the balance one month. Then you'll be paying interest on all that money. Not good. This is a great option if you have a points system on your credit card, though. You get points for all the bills you'd be paying anyway, and as long as you're diligent about paying off your balances each month, it doesn't cost you anything extra in interest. For advanced budgeters only.

That's about all I can think of for now. Do you have any other methods you use to keep track of your spending?


  1. I do the credit card thing. Especially for my 'bills' (Groceries, gas, cable), because those are the things that I rarely over spend on, and also get extra points for. I pay it off every payday though (twice a month). But it does get me a couple hundred dollars in rewards every year (pure cash baby). It is also on auto-pay for the minimum payment just in case I forget or have an off week. But I can't remember the last time had intereest charged to the account.
    I also keep everything in a spreadsheet, because I'm anal like that.

  2. That auto-pay is a great solution to forgetting to make the payment! Thanks, I'll definitely remember that for when I start using this method :)

  3. I also love a sinking fun approach for saving. Saving a bit from each paycheck to a separate, non-emergency savings account. If you have taxes or other "gotcha!" bills that pop up through the year, it helps you save. I've also been using it for saving for Christmas and a new-er car fund. Great tips! I use cash envelopes for blow, grocery, etc. SO purposeful. :)

  4. I use spreadsheets because its the easiest way for me to visualize. Love the cash envelopes, lol! I always used to do that when I was younger :)
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