Budgeting - Where do you put your money

BeachBaby516 · October 2016

I'm new to this budgeting thing. We are trying to get out of debt. Where do you put the money for all your categories? Do you have multiple checking accounts to directly transfer the money after you get paid? Or do you just keep this money in cash envelopes?
Thank you all for you help!

als1982 · October 2016

We have a single checking account for our living and household expenses, and a single savings account for our emergency fund and other savings goals. Budgeting is about tracking your expenditures (we use an Exel spreadsheet but there are other programs and apps available too) and most importantly, limiting your spending to only what's allocated in your written budget. So I'm not sure I see the point of multiple accounts.

How else we help? So glad to have you here!!

lbonga1 · October 2016

I personally have just one checking account, but I keep track of what is being spent with the website Every Dollar. I have a separate savings account that we are using to save for a house down payment, and I recently started initiating a transfer to it from my checking as soon as I receive my paychecks so that I know that money is not available to be spent. We have one additional separate savings account that we use for our emergency fund, and I add small amounts to that periodically.

formerlyjessica490 · October 2016

We have one joint checking account and an online savings account so when we get paid, we pay all the bills that need to be paid, then we decide what we are going to do with the money we have leftover...Normally it gets sent to our house fund (repairs or purchases), vacation fund, emergency fund or ROTH accounts

LillibetteV · October 2016

We also have just one checking account for spending and bill paying. We currently have 2 savings accounts - one short term and one long term. We also have a taxable investment account for additional long term savings.

For us we don't keep to a hard and fast budget anymore because we're kind of lazy and don't need to. Our take is that as long as the bills get paid and saving at least 25% of our paychecks (retirement is taken out of our pay first) then we don't worry about it too much.

ETA: We do use Personal Capital so that I can check in and analyze our spending by category. For example, I don't care if I think we should spend $500 on groceries and I spent $525 this month. But if I look at it and I spent $800 well then I need to take a month and eat up the stuff in the freezer/pantry to make up for it and be a little more careful about shopping sales.

short+sassy · October 2016

Welcome! I use one primary account and keep track of my income and bills on an Excel spreadsheet. I use the same Excel spreadsheet to keep track of my due dates and loan balances. I also have the dates/amount I'm paid from my income sources.

Not necessarily in regards to the PPs on this board, but the envelope system is a really popular method. There are a variety of ways to budget/track expenses, but it's whatever works best and is the easiest for you.

Try a few different ones. Mainly, you want to be honest with yourself on your true expenses. Many people are surprised when they first start budgeting, how much of their money gets spent randomly. In the beginning, it might take a few months of adjusting to get a really good picture of "what" is being spent "where".

This is a great board to come to for advice.

brij2006 · October 2016

We used Dave Ramsey's Total Money Makeover book to get us on track and aggressive with debt payoff. So while we were paying off debt we used envelopes for things like groceries, eating out, clothing, and entertainment. It helped us to stay on track with those categories we had a hard time sticking to.
All other things we used our debit card or checking information. So set bills like utilities, mortgage, etc. We also used our debit cards for gas since it was easier and we're both heavy commuters so we fill up often.
As for accounts, we have 1 checking and 2 savings accounts. All of our income funnels through our checking. The 1 savings account had our emergency fund, and the other savings account we use for sinking funds. So bills/expenses we pay annually but save up for monthly.

For tracking our budget we used a spreadsheet at first but now we use Everydollar.com

cbee817 · October 2016

We have a few accounts that do hold different things. Checking account, emergency fund savings, vacation account, CDs, and the girls have their own savings accounts. The CDs are not earmarked for anything in particular- just like having the extra available in case of long term job loss. Everything is budgeted by month in excel. We pay everything with credit cards to get points, rewards, etc. All balances are paid in full by the due date. We also have Roth IRA accounts, 401k, 403b, and 529 plans.

jtmh2012 · October 2016

LillibetteV said:
For us we don't keep to a hard and fast budget anymore because we're kind of lazy and don't need to. Our take is that as long as the bills get paid and saving at least 25% of our paychecks (retirement is taken out of our pay first) then we don't worry about it too much.

This is pretty much where we're at. We don't carry cash except a bare minimal amount because there are still places in 2016 that won't take credit cards.

We have two checking accounts. One is our main checking account that just about everything funnels through and a mortgage checking account because the bank that has our mortgage refunds 1% of the principal/interest payments if we let them auto-pay from their own checking. We transfer any extra out of our checking at the end of the month to higher paying accounts/CDs.

We have 7 savings accounts. 3 of those are because our credit union requires each member to have a savings account. We keep rather minimal amounts in there because savings accounts don't pay crap in interest. The remaining 4 break down to the following: Emergency fund/Roth savings, my Corvette fund, emergency travel fund (my wife is Thai and should something happen, not buying tickets because they're $5k/piece isn't an option), and a slush account for my wife's mother.

labro · October 2016

We keep a few accounts for similar reasons to what everyone else has said here. We have a primary checking and savings, a secondary checking from before we were married that was my account, a secondary savings for my Roth IRA savings/secondary emergency fund, and a third savings account that we keep exclusively for vacation savings and expenses.

We use a program called You Need a Budget (YNAB) to keep track of our expenses. It keeps everything consolidated and it's clear to see at a glance where we are at at any given time in regards to savings goals, eating out expenses, etc.

als1982 · October 2016

Out of curiosity, why do some of you put money into savings to make ROTH contributions at a later date? We always just included them as a budget line item and had them withdrawn directly from our checking account on the same day every month. Is there a benefit to doing it as one large chunk annually? I would think you could be missing out on some quarterly dividends and market fluctuations that would outweigh the benefits of a few cents earned in interest just sitting in a traditional savings account over the course of a year?

labro · October 2016

@als1982 I've just been doing it that way this year because I didn't have the extra funds to start doing it until fairly recently because of aggressive debt pay-off. Maybe next year it will be a little easier to start auto-contributing every month.

ETA: The more I think about it...I may end up doing the same thing next year - save up the money and wait to contribute. We're borderline in the range where we may not be able to do a full Roth IRA contribution because of our AGI so it's just easier to wait until tax time to make sure we qualify.

hoffse · October 2016

@als we hold everything in a separate savings account and do Roth contributions once a year. We do it this way because I have to do a contribution to a traditional IRA first and then do a conversion to the Roth, and it makes the reporting easier on us if it's all done on one day in a single lump sum.

Mathematically you probably come out ahead if you can time it so that you are doing single lump sums at the beginning of the year, simply because you build in an extra year of growth that way. H and I began making contributions at the end of the year a few years ago, and we have slowly been backing our contribution date up to get it earlier and earlier each year. Eventually I would like to be making our Roth contributions on January 2.

To answer the original question, I keep separate "buckets" for various sinking funds that I rename as our savings goal changes. I recently merged everything into Fidelity so I can see it all on one screen, and that's nice. I just visualize our various savings goals better when they are separated out.

We keep about $500 in cash at any given time (plus 100 euros or so), but it's really for emergencies and convenience for those rare times cash is easier. I try not to keep more than this in cash because cash is really insecure.

brij2006 · October 2016

hoffse said:

Mathematically you probably come out ahead if you can time it so that you are doing single lump sums at the beginning of the year, simply because you build in an extra year of growth that way. H and I began making contributions at the end of the year a few years ago, and we have slowly been backing our contribution date up to get it earlier and earlier each year. Eventually I would like to be making our Roth contributions on January 2.

This is pretty much what we've been doing with H's Roth. Mine is automatically contributed to monthly, but with his we do a sinking fund of my bonuses and commissions to fund it (since they're not predictable). At this point we're trying to save up enough to fully fund it by April of that year. This year we should have it by February and will do a lump sum to fund it.

jtmh2012 · October 2016

als1982 said:

Out of curiosity, why do some of you put money into savings to make ROTH contributions at a later date? We always just included them as a budget line item and had them withdrawn directly from our checking account on the same day every month. Is there a benefit to doing it as one large chunk annually? I would think you could be missing out on some quarterly dividends and market fluctuations that would outweigh the benefits of a few cents earned in interest just sitting in a traditional savings account over the course of a year?

Multiple reasons.

1) Initially, I didn't have access to an employer sponsored Roth. Just a 403b (kinda like a 401k). So my Roth IRA is handled on my own.

2) We made all of our Roth IRA contributions in January. So we're saving toward 2017 at this point. $150 left.

3) We opened a spousal Roth IRA for my wife before she had a job. So her's is also separate from work and we can contribute to her's without her having to have her own income.

Just as a side note. I like having them separate from work. Not worries about having to move them as we switch employment which is fairly frequent in my line of work.

AprilZ81 · October 2016

If you are focused on debt payoff I think one checking account and one savings account is all you need. Once the debt is lowered/eliminated then you can think about branching out to find what works for you.

We have a main checking account and a handful of savings accounts for large sinking funds (ROTH, Christmas/gifts, car insurance/repairs, general savings and vacation). Smaller sinking funds just stay in our checking account.

BeachBaby516 · November 2016

Thank you all for your help! Yes my question was geared more to getting out of debt. I have read the Total Money Makeover thanks to this board and I'm totally hooked on Dave Ramsey's podcast that I listen to everyday commuting to work. I think I am going to try the envelope system because I have a hard time sticking to my budget! I'm sick and tired of living paycheck to paycheck and I'm determined to get out of debt asap. Any other helpful tips would be greatly appreciated!

AprilZ81 · November 2016

BeachBaby516 said:

Thank you all for your help! Yes my question was geared more to getting out of debt. I have read the Total Money Makeover thanks to this board and I'm totally hooked on Dave Ramsey's podcast that I listen to everyday commuting to work. I think I am going to try the envelope system because I have a hard time sticking to my budget! I'm sick and tired of living paycheck to paycheck and I'm determined to get out of debt asap. Any other helpful tips would be greatly appreciated!

Don't get discouraged if it takes you a few months to get your budget down. It might take a little for you to find what works. Remember that a budget is based on actual numbers and not what you want it to be.

I know when I first started budgeting I wanted to spend $150 a month on groceries. That just didn't work and wasn't realistic and I had to readjust.

abrewer5 · November 2016

I just wanted to add that taking steps one thing at a time helps a lot. When I was following his plan to get rid of CC debt and pay off my car it was easy to get overwhelmed looking at all the debt together. Just focus on one thing at a time to keep your sanity.

Also, when you finally get out of debt don't trust yourself with credit cards (if you are anything like me) :P It's so easy to fall back into the trap of over spending because you aren't paying for it right away.

LillibetteV · November 2016

For getting out of debt you obviously need to cut your spending, but I would start with stuff you really don't care about first and then see how much deeper you can cut. A lot of people seem to think you have to suffer and be miserable to stay in budget and pay down debt and that's not true. When I was young and broke and trying to pay off a car while saving for a house I didn't have cable, or fancy groceries ($30/week was my budget. There was a lot of rice, beans, peanut butter, frozen veggies, and bananas on that kind of budget!), and drank the office coffee instead of stopping for a latte. But I most definitely still paid about $100/month on a bunch of different sports leagues (including cheap beer after games) because the exercise and social interaction were important to me. It's about maximizing your budget - not squeezing every last penny out of it.

brij2006 · November 2016

BeachBaby516 said:

Thank you all for your help! Yes my question was geared more to getting out of debt. I have read the Total Money Makeover thanks to this board and I'm totally hooked on Dave Ramsey's podcast that I listen to everyday commuting to work. I think I am going to try the envelope system because I have a hard time sticking to my budget! I'm sick and tired of living paycheck to paycheck and I'm determined to get out of debt asap. Any other helpful tips would be greatly appreciated!

You can totally do this! We started his principals 3 years ago and are on baby step 7. We can now "live and give like nobody else." It's worth every sacrifice.

Listening to his podcast is a great tool. I still listen to his show in the afternoons at work as well as if I'm having a longer drive somewhere.

The budget truly is the key to getting out of debt. It will take a while to get it tweaked though, and know that no 2 months are the same. For example, this month we have $200 budgeted for Christmas gifts, and an extra $75 budgeted for gas since we'll do some extra driving Thanksgiving weekend. So our budget never looks the same for 2 months. There's always something we have to add in or take out.

Very similar to what @LillibetteV is saying, cut the budget down in areas that aren't as painful first. Then go from there. For us, we didn't cut cable right away. But 4 months in we realized that we could save $100/month if we cut it and just used Netflix. We've never gone back. Also, for every $100/month we earned more or cut, it shaved off 1 month of our timeline to get out of debt. So after a couple of months we really looked at the budget and aggressively cut. As you start paying off those smaller debts you start to gain momentum and start finding things to sell, other things to cut, how to make some extra cash, etc.

julieanne912 · November 2016

Also for budgeting, I find it helps to sit down with every paycheck and tweak it. I have one "base" budget in a google doc that I work from. So like, for my paycheck on 11/20, I know that will include a lot of my Thanksgiving food purchases. So I'll up my grocery budget for that paycheck, and reduce something else. Same for Christmas, we will be travelling to see family, so I'll reduce my grocery budget, but up my gas budget. Or, in the summer, I increase my utilities budget because our water bill goes wayyy up, but in the winter I can reduce it a bit and move that money somewhere else. I find little tweaks like that make it easier to stay on track.

Another example is that like, we go to a lot of sporting events, we have 10 sets of tickets to NHL games this year. My husband has already paid for the tickets, but if I know that we have a game coming up, I'll keep a little extra in my "spending money" budget to pay for stuff like parking, or a few drinks at the game. I've also recently started a new job that has a different dress code than my old one. So I've increased my spending money a bit so accomodate a few extra clothes purchases (I don't have a separate clothing budget since it's not normally something I spend money on regularly).

Also agree about being realistic with your budget. I just recently upped my grocery budget to $100/week from $75/week because of this. I found I was pretty regularly overspending in that category so I went ahead and just increased it. Some weeks I don't spend that much so if I don't, I just move whatever's left over to something else, ideally, savings since that's my focus right now.

Budgeting - Where do you put your money

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