It took me a long time to find a method of keeping track of our budget that was simple and efficient. Everybody has a different system. One of my aunts doesn’t have Quicken (or a system like it), online banking, or a debit card. She loves the simplicity. Alicia uses a handwritten ledger, and explains her system here. I used Microsoft Money before they stopped updating it and no longer offered online support. I tried Mint.com for a while, but it wouldn’t upload all my accounts, or I’d have to change my password and it wouldn’t let me login, and it wouldn’t let me split transactions (if I bought both gifts and groceries at the same store) the way I wanted to. We splurged for Quicken, and I finally have a thorough but easy-to-use system.
At the beginning of each month, I figure out how much money we have leftover from the previous month, predict our salaries and expenses for the month, and record them on an excel spreadsheet* (shown above, download here). Once the income and the necessary expenses are filled in, I allot money for birthdays or weddings we’ll be shopping for that month, date nights and spending money, and most importantly, I use up the rest of our money in an extra loan payment as part of our total money makeover.
Then, I take out cash for several of our spending categories. Ideally, I’d walk into the bank and get the exact bills I need in one trip. Unfortunately, we often fail to get to the bank when it’s open, so we hit the ATM several times over the course of the first week to fill our envelopes. When I withdraw the cash, I categorize the transaction in Quicken with the exact amounts of cash that went to each category. Here’s what typically goes into our envelopes each month:
- General Groceries: $200
- Stock-Up Groceries: $50
- Church Groceries: $20
- Clothes: $50-100
- Toiletries, Cleaning & Other Household: $50-100
- Date Night: $50-100
- “Blow Money”: $20 for each of us
- “Love Budget“: $10 for each of us
We try not to use our bank cards of any of these things. If we do, whether because we left cash at home or we bought something online, we deposit that cash back into the bank and note in Quicken what category that money should go to.
Ideally, several times throughout the month, I download my transactions from my bank’s website, assign each one a spending category, and compare Quicken to my spreadsheet. This process shows me how much room we have in the budget for non-cash categories and lets me make sure none of our envelopes “owe money to the bank.” In real life, this happens once in the middle of the month before I write our extra loan payment check and before our mortgage and other larger bills go through, and then at the end of the month.
To quickly compare my spending recorded in Quicken to my budget spreadsheet, I use the exact same category and subcategory names in Quicken that I do on my spreadsheet. Quicken will create a report for me of my spending in each category for a period of time (shown above), so I pull that up alongside my spreadsheet whenever I want to check how closely we’re following our budget. Unlike Dave Ramsey’s worksheets that put things in order of priority, e.g.: tithing first, then housing, etc., my spreadsheet alphabetizes the categories and subcategories so I can quickly glance from Quicken to the spreadsheet to compare.
At the end of the month, I enter our actual income and expenses. The surplus shown in our spreadsheet should exactly match the balance in Quicken on the last day of the month. (That works for us because we’re only tracking these categories in one account. It would be harder if you had multiple checking accounts or credit cards involved in the process. Which is exactly why I don’t have those!) If the numbers don’t match, I double-check Quicken and my spreadsheet to find the problem. Then, I start over again and prepare our budget for the following month.
What budgeting tips do you have? What money management system works for you or your family?
*I didn’t create this entirely myself. I found one from a friend of a friend of a friend online and adapted it, but I can’t find the source now. If it was you, thanks!