Question of the Day: How Do You Organize Your Finances?
Be sure you don't miss a thing! Subscribe to receive updates by email. Or if you use a feed reader, subscribe to my RSS feed! Thanks for visiting!
source: Great Beyond
This week we’ll be talking about organizing your finances, with a look at various budget programs, investment options and tools for meeting your savings goals.
To kick it off, I thought I’d start with a question of the day:
How do you organize your finances?
Do you use a budget?
What budget system do you use?
How do you track your debt repayment or savings goals?
What is the biggest budgeting challenge you face?
What is your best budgeting tip?
Looking forward to learning more about budgeting and finance from you all!
I use Pear Budget (www.pearbudget.com) to manage our families budget. I love it’s simplicity to use and the fact that it’s web-based so, I can access it anywhere.
Budget is a tough one for me – not so much to build it but finding time to update and stick to it. Taking better control of it is definitely one of my most important and challenging personal goals for the year.
[Reply]
Do you use a budget? Yes, we live by a cash-based, zero-balance budget and we have a budget meeting every two weeks when the paycheck is directly deposited into our account. Our commitment to budgeting allowed us to pay off $32,000 debt in two years and create a large emergency fund. We feel very uneasy if we’re late doing the budget meeting, like our money is going to leave before we tell it where to go!
What budget system do you use? We’ve created our own budget system using a combination of Quicken to maintain balances and Excel to determine the actual line items in our budget. We have the spreadsheet set with our regular envelopes and a section for “Pork Barrel” envelopes that pertain to that budget period. We write a check for the total of all of our envelopes and cash it at the bank. We use envelopes and write each budget category on an envelope and fill it according to the printed spreadsheet. Whatever is leftover after all of our needs are accounted for goes directly into savings (when we had debt, it went straight to debt).
How do you track your debt repayment or savings goals? We tracked our debt and now our savings in two ways–in Quicken and by chart. We created a chart that hangs in our home office and for every $1,000 we save, we color in another section of the chart. When our goal is reached, it is all colored in. It’s a more visual way to remind ourselves that we’re working toward a goal.
What is the biggest budgeting challenge you face? We’re old pros at budgeting now but we still wish we could eke out a few extra hundred dollars a month to put toward savings. We’re working on it but it’s the little things that add up quickly. We realize now that those little things are how we ended up in debt before because our old habits meant that we’d just charge those “little things”–and those added up to a LARGE amount!
What is your best budgeting tip? My best budgeting tip would be to be flexible and work as a team (if you’re married). Everyone hears the word “budget” and automatically thinks that it’s restricting. I’ve found the opposite to be true. When I have an envelope with $40 in it and it is for me to spend on something I need, I KNOW that our bills are paid, our children are fed, and this is money that I am free to spend that money as I have deemed necessary. It’s so liberating!! But budgeting doesn’t come naturally or easily to most so be flexible in the first few months while you’re figuring out what you need for each category. Allow some wiggle room for mistakes in estimating (especially in the grocery and gas departments) and remember that it takes a good three months or so to really get a clear picture of what your budget should look like. Take it slow. Be consistent. Be committed.
[Reply]
I am SO looking forward to this! Right now I’m using a budget worksheet from Crown Financial. I’ve been using it for years and I basically just use it as more of a guideline and a way to get an idea of what we should be spending in each category. I would like to use something a little more organized, like Pear Budget or MVelopes but I just can’t justify paying for anything right now.
As far as savings goals, we just started being able to save. (All of our debt is paid off!!) Money is automatically transferred from our checking to our savings each paycheck.
My best budgeting tip is to record what you are spending and know what you should be spending and try to make the two mesh!!
Catie´s last blog ..Links For The Weekend
[Reply]
this is an area i need alot of help with. i have been doing reading and am learning about dave ramsey’s approach and am really liking some of his ideas. my husband and i have 4 children and i am home with them. leaving my husband in charge of “bringing home the bacon” as he likes to say. we have talked alot about an emergency fund and really need to do it. also i like the idea of living debt free. monthly e get an idea of what we are going to pay when that month. the best tip i have is right it down!then it is clear what gos where and you are more likely to stick with it.
[Reply]
My husband and I have 3 checking accounts – one joint,and one for each of us. We each keep a portion of our paycheck for “blow money” and the rest goes into the joint account. We have a budget but it is probably not so typical. We budget for all of the fixed expenses but we don’t specifically budget for the variable expenses like groceries/medical/clothing etc. We just budget one specific amount that we can use on variable expenses for the month (say 1000.00). It gives us a lot more flexibility than being so restrictive on say “$500 a month for groceries”, $100 a month for clothes, etc. I monitor all of the amounts in You Need a Budget to make sure we don’t go over the amount. It works for us – we found that it was way too restrictive to budget an arbitrary amount for things. It helps us stick to the budget easier.
We have different accounts set up in ING for savings goals. As far as the debt repayment, we only have 2 debts besides our mortgage-a student loan and a HELOC. I know exactly how much owed on them pretty much every month so its easy to track.
The biggest challenge I face is that my husband likes to buy a lot of extras – for example, if I send him to the store to buy 3 things, he comes home with 10. He knows though that if he does that, he will have less money to spend at Home Depot for his projects.
My best budgeting tip is definitely try to remain flexible. What works for someone else may not work for you. There is no one right way. When I first started getting serious about paying off my debt I read and listened to Dave Ramsey. I love his message but did not necessarily agree with his entire method on how to do it. So I adapted to our situation. We use a rewards credit cards and pay it off each month. We have a “baby” emergency fund that is one months worth of expenses(with 2 kids the 1K was was just not enough). This is what works for our situation.
[Reply]
We use Pear budget. I love how easy it is to use and it has been an eye opener to see how we spend. I’m a work in progress in making an keeping a budget. I’m trying out the zero based budget. Like I said a work in progress.
Rana´s last blog ..Life Lesson # 255 : Stranger Danger
[Reply]
I so agree with Lynn about being flexible…especially while you are figuring things out in the beginning. good word!
My husband and I have “separate” checking accounts (both our names are on both accounts – but he uses one and I use the other). It is so much easier to track our spending this way. When his monthly check hits his account, I transfer part of the money to my account to pay certain bills, part is transferred to savings, part of it stays in and goes to automatic bill payments, part stays in for his gasoline and other things.
Most everything, (tithe, savings, bills) are paid via automatic withdrawal, transfers, or checks if necessary…but then we use a cash envelope system for everything else…like groceries,eating out, babysitters, mad money for each of us, clothing budgets, gifts for others, etc…. this helps keep us from overspending in our trouble areas (i.e. eating out
once the money for that week/month is gone, it is gone until next month. And because all the rest of the of the money for the month is spoken for, if we have to over spend in a certain area, it causes us to think seriously about where that extra cash has to come from to make up the difference and whether or not it is worth it.
One area that can be difficult to manage is those once or twice a year expenses…car insurance, home insurance, car tags, Christmas ..etc…some of these, for a fee can be paid monthly if you choose. We have found it beneficial to look at the finances from a yearly perspective as well as a monthly view. We calculate how much we want to spend each year on gifts…birthdays and holidays…for our immediate family (we have 2 fabulous daughters ages 3 and 1)and for the extended family and friends. We even look at when birthdays are during the year. (May can be a lot like Christmas for us…we have 9 family bdays in May!)Adding up all of the extra yearly expenses, dividing by 12 can give you a good idea of your monthly expenses in these areas. As an example, if you determine that you will spend $1200 at Christmas, that means you could save $100 a month all year long towards that goal. It is such a liberating feeling when you head into the holidays and don’t have to wonder how you are going to cover it all. And when planning for holidays, don’t forget about travel expenses, shipping costs for packages etc…This method is also a great way to save for vacations and older kids can be privy to this info too…so when they are begging for XYZ which is outside of the budget, then you can say, if we bought you that now, then we would not have that $$$ to spend on our vacation this summer or for your birthday party in May or whatever….they need to be taught about priorities and sacrifices too!
I am writing too much…last thing. Someone above mentioned the dreaded word “budget” …we like to use “Spending Plan” instead! It’s a small thing but makes us feel like we are more in control…we are telling our money where to go, planning where and when it is spent…instead of us being run by the budget… semantics I know, but every little thing that helps helps! We plan all the spending so that every month every dollar is told where to go…work it down to zero…with a little pad in the checking account. If there is an emergency, then we go to the emergency fund in savings, but in general, expenses get paid for bills/savings/tithe and the cash is withdrawn for the rest of the months needs and the checking accounts are not an option for spending outside the plan.
Thanks for letting me share…I am loving reading everyone’s suggestions.
[Reply]
I use an old-fashioned notebook system ($5 coil notebook) to track my budget/spending plan. We are pretty strict with our budget and are well-planned (well, I am; my husband isn’t a spender and I take care of our finances for the most part)so we have no consumer debt. I revist our plan every few months to see if anything needs tweaking. In my notebook I have a folder to hold that month’s receipts and have at least three months of categories drawn up in advance so that I can plan ahead for need/wants. I love to curl up on my couch with my budget book and planner. We use online banking which greatly simplifies our life. I think the biggest help for me is planning far in advance for things. For example, I put $ aside each month for gifts, including Christmas; I don’t wait until soccer season or basketball arrive to scramble for $ for fees/shoes, etc. – the $ is already waiting. With my grocery budget, rather than spending it all each month I put aside a sum for bulk organic purchases every few months or great sales that I come across, and so forth. We have just finished building an emergency fund and after setting aside extra fun $ for this summer will begin an account to pay cash for our next vehicle. I actually love budgeting
[Reply]
I’m good at making budgets, but we’ve never been that great at keeping them:) I’d love to find some good info on how to keep your budget on a commission only income. That’s our world! When I worked it was easier b/c although my husband’s income was commission only, my income at least covered the majority of our expenses; however, now that I’m at home his income must cover it all … the problem though is we never know what his income will be!
[email protected]´s last blog ..Not for a weak stomach
[Reply]
It looks like everyone has a great plan, but I would like to throw in mint.com as a place to help record your spending. We go along with “most” of dave ramsey and it has been such a help to us. We meet before each month and decide where our money is going. We thought we were good savers before, but now we save even more. The best part is that we talk about our finances; we don’t resent or challenge the other’s spending because we’ve agreed at the beginning of the month. It has been an amazing few months. No more anxiety, instead, peace and freedom.
[Reply]
@Mandi-one of the things that I love about You Need a Budget (and you don’t need the program to do this) is that one of the principles is that you live on last month’s money. So in a commission system you would know exactly how much you have because you already have it in your account(they call it a buffer). Its hard to get that buffer and most people seem to be in limbo (as I am now) but its such a great concept that can be a help to those with irregular paychecks.
[Reply]
I use Excel to track all of my checking account expenses and then I have a separate tab calculating and itemizing how I’m spending money and whatever is left over (if anything) goes to savings. I make sure each paycheck, though, to put money away anyway, but sometimes I might not spend so much on fun items and so I add that extra bit to my savings, too. I also note which transactions are checks and deduct them from my checking account total so I know it is in a pending status until cashed when I delete the note I made. I balance my checkbook pretty much every day or every other day while at work. By the time the weekend hits I know approx how much I have available to me and then just reconcile my account on Monday. I don’t really have a budget, per say, but I do kind of forecast how much money I’ll need that month and what I can and cannot buy…without a credit card if I really need/want it.
[Reply]
My husband and I started using Excel to track our spending but more importantly to work out how fast we could repay our morgage!
In one Tab we listed all our expenses and income and after totalling the amounts ended up with an amount which we could save each fortnight.
In another Tab we listed the amount owing on our house loan. We then reduced it each fortnight by the amount left over from our savings (Also taking into account the Intrest repayments). This gave us a rough idea how fast we could repay our loan. We added a few more columns which allow us to see how increased interest rates affect us. Each fortnight we sit down and add up the amount of money we earnt subtracting the bills, and daily expenses. It is soo much fun when we see the loan going down faster than we planned, and to realise beign debt free is a true reality.
[Reply]
I used to use “Pear Budget”, but got a bit lazy with tracking everything I spent online. It is a great program for those who want digital records of everything though.
We use an envelope system now, so I only think about it once a fortnight (when my husband gets paid). Money is transferred immediately into either short-term savings (this gets used to pay those big bills when they come in), long term savings, giving to charity and church organisations, or the mortgage. Grocery money, haircut/ personal grooming money and spending money (for coffees etc) is withdrawn from the everyday account and put into envelopes. Once the money is used from those envelopes, there is no more. Some fortnights we don’t use all the envelope money, so we have a bit of give for the next fortnight.
If we have a lot of leftover money (either in envelopes or short-term savings), after 3 months (or so) we either give a one-off donation or transfer to mortgage or long-term savings…
Julie´s last blog ..Love Language #3 – Quality Time
[Reply]
mint.com… I love it and its free!
Jd´s last blog ..I’m back!
[Reply]
I use ace money lite (downloaded from cnet for free)to track my spending from my bank accounts. I’d love to use mint, but they don’t support my bank
To track my debt balances I use an excel sheet I made that just has the balances of each of my debts at the beginning of the month.
To keep me motivated, I just got a free debt snowball calculator from http://www.treesfullofmoney.com/?page_id=882 that tells me how much sooner (or later) my debt will be paid off depending on changes in my debt payments.
My best tip is to find out what works for you! I tried a bunch of different software & systems until I found something that was simple & effective for me. Now I really enjoy budgeting & saving because I can easily see my progress.
[Reply]
We also use a combination of Quicken and Excel. I enter all the spending in Quicken, my hubby balances the checkbook and prints an Excel budget for me to write my expense amount on and calculate how much is left, which I do every week or so. When I am getting low in a category, I curb spending in that area until the next money comes in. That is my best tip–wait to buy things until there is more money!
My hubs sent me my very first budget in the mail when we were engaged and I was living in Oregon–alongside my love letter! Budgeting is the only way to go! We have been married almost 20 years and will be totally debt free by the end of the year.
[Reply]
Oh this topic couldn’t come at a better time!
Almost a year ago I “graduated” from Dave Ramsey’s “Financial Peace University” aka FPU. It was a great experience. My boyfriend and I went through it together. I thought it would get us in a better situation for combining finances once we are married.
We made a budget and stuck to it for…oh 3 months…maybe. We started the envelope system and I could NOT make a go of it. Cash in my hand means one thing and one thing only to me…SPEND IT! That is sooo terrible. But we learned a lot about retirement etc and at our age– 24 & 30 it was info we needed to hear!
I just remade our budget using Dave Ramsey’s worksheets. I’m trying really hard to follow it. I’m using Mint.com to help me track where we’re spending money and then I transpose that info onto my Dave Ramsey designed sheets by hand. I’m hoping this works!
Can’t wait for your advice! I’m hoping I can use it to get back on track!!!
::Lindsay::
[Reply]
We use excel to do our budget. I do all of our bill paying through our bank. I am a SAHM & my husband is 100% commission. It has been really hard to try & budget since he is in Real Estate & we just aren’t making any money. When things were good we just lived on a tight budget & that extra money has helped us survive the last year with a very small income.
My question what do people do when you just don’t have any income coming in & you have no idea when or how much you will get?
[Reply]
I use mint.com. I like it because it downloads my checks and deposits automatically. I have entered our investment info also, so we get a full picture of our finances. Each week, Mint sends an updated summary which includes our net worth.
My hubby and I started budgeting (kinda-sorta) years ago, but I didn’t get serious about it until about 10 years ago when we were living on missionary income. A year and a half ago we made the last payment on our house, so we are completely debt free.
As a small business owner in this slow economy, I am thankful that we took Dave Ramsey’s advice and not only had a personal emergency fund but also have run our business with cash and have a retained-earnings fund, which is a business emergency fund. It has diminished but kept our business afloat.
So, my number one and two tips are to live with a monthly spending plan and set aside an emergency fund.
[Reply]
I have to admit that we don’t have a traditional budgeting system. We’re in a good financial place now; fortunately we have no consumer debt; just our mortgage. We’re relatively frugal by nature, so impulse spending isn’t much of an issue. In the past we had professional school and undergrad loans in addition to car payments.
Our “budgeting” system works well for us. My husband pays all our bills out of his paycheck; the balance of what’s leftover gets shifted to our savings once a month on average. My check covers my son’s daycare and groceries (and other small expenses) and the bulk of it gets transferred to savings 1-2 times per month. Not the ideal plan for many, but the important issue is that you find out what works best for your situation.
[Reply]