Home of Slightly Cracked Dreams

One of my goals for 2008 is “to manage our money according to the spending plan we have worked out.”

I am useless when it comes to budgeting. And equally useless at tracking spending, without which a budget is effectively a pretty piece of paper (well, mine always look pretty ). I just don’t have the patience to work it all out. I wish I did, but it’s just not me.

So how do you manage your money when these avenue’s don’t work? Do you just give up and spend until there’s no money left? Nope! I’m going to share what I do, in the hope it helps someone else who’s struggling to stay focused on the budget.

We have a budget. It’s rather simple at the moment (a first for me ) and has some 24 categories. But never fear, because I don’t keep track of how much is in each category. Or how much I spend in each category. I have a far simpler process than that.

I have 4 main accounts. 3 of which are high interest savings accounts, the other is a low fee transaction account with unlimited electronic transactions and a visa debit card attached. The 3 high interest savings accounts are variously labelled: Christmas & Birthdays; Bills; and Savings.

Each week on payday, all our income (which coincidentally comes in within 24 hours) is paid into the transaction account. A portion is paid into the Bills account (usually the biggest portion) and as many direct debits as possible are set up to be drawn on this account the following day (allowing for everything to be delayed due to public holidays or some such). These include electricity, phone, daycare fees, insurances, and hopefully when we get settled, rent. A further portion is sent to the Christmas & Birthdays account to save for Christmas & Birthday presents. A specified amount to cover food, fuel, spending money and entertainment is retained in the transaction account, and the remainder paid into the Savings.

I obviously have other accounts, but these are the main one’s used for our weekly transactions. What this means is, if a bill comes in that isn’t automatically direct debited (such as car servicing/repairs, or a medical bill) a b-payment is set up where possible, or if not, the amount is transferred from the bills account to the spending account, and the bill settled immediately.

This allows me to not accidentally spend extra money, because I know the money in our spending account has to cover food, fuel, spending & entertainment money for the fortnight. I generally take the spending money out in cash, and let Hubby do what he likes with it (and I try and save as much of mine as I can - doesn’t always work though). I then on payday, or soon after, make sure both cars are topped up with fuel, so we shouldn’t have to buy more in the next fortnight. I know then the money left in the account must last until the next pay day. Every other purchase, including clothing, must be thought out and pre-planned. I won’t be able to tell you at the end of the year how much I spent on take-away, or anything like that, but I will know that I haven’t been short of money to pay the phone bill because I overspent on clothes.

I call this method Divide and Conquer. I can conquer my bad spending habits, and equally bad monitoring habits, by dividing the money and automating as much of the process as possible. I don’t necessarily agree that this is the best way to budget, or track your money, but for someone who struggles mightily with monitoring anything (I’m more of an idea’s and planning person - in case you didn’t notice ) this method is the most low maintenance I have found that still allows me to manage my money according to the budget.

And as today is the first pay of the year, and I have just finished my first round of transfers, I am 1/26th of the way towards achieving one of my goals for 2008. Definitely a good start .