Multiple Accounts
I’ve found the only way to keep different budget categories straight is to use multiple accounts to manage them. About a handful.
Main Account
This is the account that all the money gets deposited into and all the bills get paid out of. Housing, utilities, insurances, internet, netflix etc. It also pays your debts. From this account you’ll transfer into others. Preferably using auto-transfers. Keep a calendar or checklist to track what dates these are due.
Most importantly is to stop charging this account for any day to day expenses such as gas or groceries!
Savings
Ideally this is in the same bank you keep your main account. This account is where you stash that maintenance and savings section of the expenses. Things like home or car repairs, co-payments, taxes, new glasses, birthday money, vacation funds and the like. It’s your piggy bank. It’s helpful to have it in the same bank so you have quick transfers to cover emergencies.
Deep Savings
This is separate from the bank that holds your main account. It’s used for your 3 months of emergency income and/ investment money. This should be a high yield savings account and take some days to transfer money out of. Even if you can’t budget to add to it on a regular basis I highly encourage you to have one to add little amounts here and there. Or even windfalls like bonuses, tax returns, birthday monies etc. In a perfect world this account just accrues interest and allows you to fund investments.
Variables
Now, in my house we have two of these. You may also opt to use a cash system. The idea is that you set up a separate account that funds all those variable expenses. We use two no fee debit accounts with Capital One. With auto transfers every paycheck from our main account. I manage groceries, gas, household supplies and my personal money. My husband tracks any eating out expenses and his personal money.
This just makes sense for us because I do all the shopping and get gas while I’m out. He LOVES to find an excuse to eat out or have date night so he gets to manage that. If you share equal responsibility for grocery shopping then just set up an account and order 2 debit cards. Make it make sense for your situation.
Tracking Maintenance and Savings Accounts
Spreadsheets- Savings
Begin by entering the date of every new pay period in the first column. Then along the top row you’ll title each column starting at B with your various categories you’re saving for. Home maintenance, auto maintenance, taxes, so on and so forth.
Now starting with your first pay period, you’ll add how much you’re putting away every paycheck. In the next row you’ll double that amount. So if you’re putting away $20 per paycheck for home maintenance the first value is $20 and the second is $40. Selecting both values you should be able to drag down the column and populate the rest of your numbers. The very last value should be your yearly total (it’s usually not a perfectly round number, that’s ok). Make that bold and green.
Paper- Savings
I would personally use some graph paper here but you can do what makes sense to you. Lined notebook paper would work fine, just use a sheet per category. Simply add the values each pay period. So on payday #1 you’ll write down $20 under home maintenance. Next pay period you’ll add another $20 to be a total of $40. All the way until the end of the year. Do it when you make the transfers.
Spreadsheet- Expenses
Do this on the same spreadsheet. Directly underneath the information you just made. The first column holds the name of the expense. Amazon, Home Depot, Oil change, Vacation gas. However you need to label it to understand the nature of the charge. I also like to note the date. Then the amount gets aligned under what category it fits into based on your information from before. If column H holds birthday expenses and I buy a gift then that charge amount goes under column H.
You’ll need two spare rows under the total amount to be saved for the year and set up functions in the cells below that last value you made green. The second cell should add all the amounts you’re going to record under that category. I bold and turn this cell red. The cell in between your green total savings and your red total expenses should be set to find the difference between the two. Thereby automatically showing you how much you have left to spend in that category.
Paper- Expenses
Have a sheet for each category such as Christmas, vacation etc. Write the total annual budget for that category at the top. Then simply record expenses as you go and subtract them from the total budget. Note what you have left after each charge.
There’s a couple advantages of each method. Using paper is simpler and less work initially. However you need to come back and update the savings totals every pay period. Some people may find that more informative and keeping the task at hand. Others may find it tedious.
There is an advantage to using a spreadsheet if you add in an extra function. By totalling the whole amount to be saved across all categories, as well as the total in expenses, you can see the overall cashflow of the savings account. In addition to merely recording the charges and having the program figure the math for you.
Setting up a ritual
While I make the actual transfers to cover charges as they come, I don’t record them as they hit the account. I typically aim to sit down every other week and imput the charges since we use a bi-weekly system.
I also use this time to set up all the payments for bills that are due before next paycheck. As well as make my grocery list and anticipate what may be coming up.
I forgot
It would be nice if it wasn’t needed but inevitably we end up encountering expenses we didn’t account for. These charges are just as important to keep track of to maintain a successful budget. I have a Miscellaneous coulumn in my spreadsheet for these. They get stolen from whatever category may have extra at the end so as not to exceed the overall cashflow. At the end of your fiscal year while making next years budget you’ll want to look back at these unaccounted for charges and either add them into the budget or keep around an oops fund around the same amount you overspent last year. For instance if you forgot a holiday that your family spends alot of money on, add that as a category. If you just had a few random charges you didn’t know where to put, oops fund. If you overspent in a category adjust that budget so you don’t do it again next year.
That’s it. The rest of the execution is on you.
