Comments on: Improve Budget System With Second Checking Account

By: Matthew Miller

Matthew Miller — Wed, 10 Jun 2009 05:25:43 +0000

We use mint.com to manage our budget. Using mint required that we provide our account information to them (a possible security risk) but we’ve found them very trustworthy. In return, I have an automated system that tracks my budget for me and generates a report (with graphs!) whenever I log in.

I just set up the budget categories and spent a couple months categorizing all the transactions in our accounts (ie: Costco is a food/household purchase, Baja Fresh is a restaurant, First Horizon is the mortgage payment, etc). After that anything previously categorized is automatically handled; I just log in and quickly scan through the uncategorized items (if any).

Once a week, I print out a chart of our progress for that month, so we have a visual on our fridge of how we’re doing and can discuss anything if needed. Also a great way for the kids to see us using the budget.

[A side note - Mint also has a financial health tool that makes recommendations and scores you on your progress. Almost all of them are things Frugal Dad recommends - they must read the blog, too!]

By: Eric Kies

Eric Kies — Thu, 04 Jun 2009 01:32:08 +0000

Hello everyone – I’m glad to read that people enjoyed the article in Money and the concept of the buckets (I’m the planner that Money interviewed).

From a planner’s perspective, I would say that there is a small percent of the population that are just naturally very good with money – they just “get it.” They can track expenses in a spreadsheet, or love to download into Quicken or other software. For everybody else, they need a simple way to understand their cash flow, and make decisions on a day-to-day basis.

As a planner, we end up making all these long range forcasts and projections for future goals. The problem however, is that between today and the day of that future goal, there are an almost limitless number of small transactions that will occur. Each of these transactions, in and of themselves are not a problem. These small transactions combined however, has the potential to jeapordize any goal in the future.

It’s been my experience that it is not only important to know what you’ve done in the past, but is it even more important to set up the appropriate patterns of behavior so that the individual has a higher probability of building the finanical life that they would like to have.

I am obviously biased in this particular topic, but we’ve seen huge success with people creating different buckets for spending, and then identifying their various financial goals and then automating a systematic savings program (think electronic envelope system).

I’m more than happy to answer any questions or chime in as needed – thanks for reading.

By: Janette

Janette — Sun, 24 May 2009 03:55:17 +0000

One checking account- multiple savings accounts in the same institution.Savings accounts include house and car taxes, insurance, IRAs, new car and presents. Envelopes for money (we need new ones- they are getting ragged)- travel, house repairs, minor sundries, car repairs, his allowance, her allowance, hair, carry out,pets, tools. They are bi weekly allotments from which we often save for larger things (I am buying a new Apple with part of my year of allowance). Over the years the amount has changed. We had a kid envelope and babysitting when children were young. We have learned to save more and more.
Cash upfront for everything and we never made six figures in our lives! One of us always stayed home with the kids. We traveled the places where we lived and (after 16 years of renting) bought our home for cash.Life is good and retirement is ready when we are. Now we just work because we both enjoy our jobs! The question is- will we learn to give up saving half of what we make for retirement- when we retire?

By: ehollins

ehollins — Fri, 22 May 2009 13:11:17 +0000

This is essentially what I do as well. It works well for me because I have never accidentally spent my power bill on beer and pizza. This concept (having more than 1 checking account and/or savings account) is foreign to a lot of people. When I was employed, I had built up the balance of my fixed expenses account so that I had an extra month’s worth of fixed expenses in this account which was part of my e-fund.

By: Ralph

Ralph — Tue, 19 May 2009 19:08:39 +0000

That is a great idea.

Microsoft Money has been good to me in tracking but not so much regulating my spending. Speadsheets are good for tracking income but do not work for me when tracking spending (too much keying in of figures).

I’m more aware of where my money goes but having an account that gives me an allowance sounds like a fool proof plan.

By: Mark

Mark — Tue, 19 May 2009 16:55:37 +0000

We started using this system this year, with weekly deposits working SO much better than trying to categorize and budget monthly.

We’ve been able to stay on budget 100% and we’ve only had to dip into savings for really big items (hospital cost for the baby, A/C repair).

It’s awesome!

By: Randy

Randy — Tue, 19 May 2009 14:32:52 +0000

I use a two page spreadsheet. On the first page I have our deposited pay. (we get paid once a month) Also on that page is what I call the “no deliberation” bills. Car payments, insurance credit cards etc. On the second page I have 4 categories. This is where the actual budgetin is. I have gas, groceries eating out and misc/cash. Gas, groceries and eating out were the easily defined budget items. It takes no time at all to enter the daily spending and not question where it goes.

By: amy

amy — Mon, 18 May 2009 23:33:03 +0000

We use YNAB (you need a budget) software.
It’s helped us quite a bit over the last
few years. There are sinking funds set up
for expenses that come up yearly like car
insurance,gifts, etc. We take cash out for
our 4 envelopes each payday (food,gas,household
and entertainment)and transfer a certain amt
to ING for our sinking funds. One checkbook.
No problems and YNAB keeps track of the amts
in our sinking funds so we always know where
we stand.We’ve used it for 3 years now and
wouldn’t be without it.

By: TStrump

TStrump — Mon, 18 May 2009 23:07:26 +0000

I used to use multiple categories, too, but found I was wasting my time and I stopped tracking for a while because I burnt out.
Now, I use 5 main categories, which is more than enough info.
I’ve also been struggling with my budget – my problem has been my credit card spending.
I should probably leave it at home but it feels ‘weird’ being without it.

By: Matt @ My Financial Recovery

Matt @ My Financial Recovery — Mon, 18 May 2009 20:50:12 +0000

Interesting post. The thought of not having to keep such a granular level of detail on my budget is very enticing. Plus having weekly transfers in stead of one monthly lump sum would keep me from burning through cash too.

Thanks Frugal Dad!