I can’t do regular budgets to save my life. I’m horrible at tracking my spending and end up with mounds and mounds of unreadable receipts that I just throw away after a few months without looking at. I can’t track cash at ALL partly because they’re usually for tiny amounts and partly because of my insanely horrible memory. But, I really needed to know what I spent on and I really needed a way to save money for various short-term, middle-term, and long-term goals.
After years of trial-and-error, I have developed a system that works very well for me.
I made a list of all my financial accounts and a list of all my major goals with the shortest-term goal being about a year away. I opened ING Direct subaccounts for all my savings goals and I reclassified some of my old accounts for an emergency fund and certain major long-term savings goals like a “Home-building fund”.
Next, I set-up an excel spreadsheet with a list of my financial accounts and major bills and charitable donations in the first column. Then I split up the next columns into each paycheck as well as a column for any extra funds. Then, at the beginning of each month, I divvy up my expected income for the month as well as any other extra income that I expect. I also make sure to round down to the nearest whole number so I’ll have a few cents cushion each month. I split up my money by the major bills and all my savings goals, playing around with the numbers until it satisfies me. All the money that hasn’t been split up into the various goals and accounts, goes straight into “Fun for my credit card”.
Throughout the month, I have a general notion of how much money I can spend for daily and fun things and every so often, I’ll go check my credit card account online to make sure I’m not going over the limit I set for myself. I don’t limit myself in any number of categories. I just spend as I want and as things come up just as long as it’s within the boundaries.
At the end of the month, I take an hour and move all my money from my main bank account to all the other various accounts according to the spreadsheet. Then, I pay off my credit card in full with the money that I had already set aside for it. Lastly, I go on Bank of America’s “My portfolio” link and download a list of all the transactions/interest/dividends that occurred over the last month in my various accounts. I take that list and just spend an evening inputting everything into BudgetPulse while watching some TV.
So, now, this is why it works for me:
-I have finally been able to track my income and expenses easily
-I have a great credit score since my credit card is always paid off in full
-I am on track with my saving goals and am rapidly accumulating net worth each month
-I can spend happily without worrying too much about what it is that I’m spending my money on
-I never have to worry about over-draft charges or credit cards being declined or any extra bank or credit card fees because I always know how much money I can spend.
-There is a little bit of start-up time and work needed. But, after that, it is really quick and easy for me to integrate this routine in my normal super-busy life.