Customized Budgeting Software
A Spending Plan
A Beginner's Guide to Budgeting Success
How do you manage your spending money? When I use cash, I feel in a rush to move ahead in the checkout for the next person to go so I inevitably shove my cash in my pocket or tossed in my purse, distracted by my kids and sometimes loose it if it falls out. I never know HOW MUCH to bring. I plan on getting only certain items but never know when I will finally find that canister set that matches my kitchen. Or the times that my child announces in the department store that her shoes are getting tight as I am walking by a shoe sale. Or the stuff I am getting for a home improvement project ran higher than I anticipated.
I tried using a debit card but by the time I do my shopping and a week's worth or errands, my checkbook becomes a nightmare to balance. Thanks for your help.
Keep Debit Card Transactions Current
I would like to offer a couple of solutions in response to RL's question about cash management. My husband's paycheck is directly deposited every payday, and I hate to go to the bank. I generally use the debit card for most "cash" purchases, but I found a great way to solve the problem of balancing the checkbook. Years ago, when debit cards first became popular, I received a nice clear plastic case for the card with a miniature register that fit in the opposite pocket. I haven't seen one since and that bank does not offer them anymore. I make my own. Since I don't write very many checks, I often had old registers left over. I cut them in half and use them to keep track of my debit card purchases.
In the event that I do withdraw a week's worth of cash, I keep track of the expenditures and businesses right on the receipt with my balance from the bank. I simply subtract each amount in the car before I head to the next store. When all the cash is spent, I have a record of where it went. I throw the coins into a jar until I have enough to roll and deposit. I can usually save $30 a month in change, so I prefer to use the cash method rather than the debit card.
My husband has no concept of money and I quickly grew frustrated with the fact that he would spend his gas budget for the month in one day. I now buy prepaid gas cards from his favorite gas station so that he can't be tempted to spend his gas money. I never give him more than $50 worth at a time. He thinks that I don't know that he spends a significant amount of the gas cards on junk food and newspapers. That tip alone has saved my marriage many times over. Whenever he gets frustrated and questions my spending, I am able to produce a detailed listing of every purchase. He feels more comfortable living on a budget, knowing that I do the same. I don't, however, tell him about the change I'm saving for a vacation. He spends his change on a daily basis, so he disagrees with my plan for saving small amounts of money each day. There have been many times that my vacation fund has handled small emergencies.
Uses a Credit Card and Stays on Budget
I am responding to the reader who wants to know a good way to manage spending money. Here's what I do:
I have a budget for every area of spending in a month: groceries, gifts, entertainment, clothes, insurance, pet expenses, car maintenance, etc. Each month I add the budgeted amount to the account and subtract any spending from the appropriate account. The accounts can be kept in a software program (I use Microsoft Money) or it can be as simple as having a separate piece of paper for each account. You will be able to quickly see how much money you have to spend for any purchase.
I do not use cash. If I carry cash around, I am tempted to buy little things that add up to large amounts! I have a credit card that I use for every purchase, large or small. The credit card gives rewards for my purchases and I have received $1000 in gift certificates. I am about to receive a free airline ticket. This option will not work for everyone because it takes discipline to not spend more than you have in your budget. It makes things quite simple for me. I only have to make one payment a month for all of my expenses. I keep all my receipts and enter them into the appropriate budget account when it's convenient for me, which is usually once a week. I always know how much I can spend in any area and I never worry about paying the bills. I know the money is there because I budgeted for it!
The reader mentioned the headache of balancing the checkbook. My method has a similar problem. Each month I match all of my receipts to my credit card statement to make sure it is accurate. This takes about 20-30 minutes because all of my purchases for the month are included. Despite the time involved it is pretty easy, once you get the hang of it. This has worked well for me and kept me debt free throughout my 20's and that's hard to do.
Use Cash and Layaway
My husband gets paid every week. His paycheck covers our grocery and gas money. When I take his check to the bank I get out the same amount of cash. This helps in budgeting for us. I then put the cash into three separate envelopes each week:
- One for his gas\food money
- Another for my gas\food money
- The third for groceries\Wal-Mart.
I know exactly how much I have budgeted for each. At the end of the week, we put whatever is left in the envelopes in our "pay off credit card debt bucket" or if we had a really bad week in our "have fun" bucket.
If I were the reader and I saw a cute canister set I liked at Wal-Mart, I would try putting it in layaway then using my extra money to pay for it. This works for me especially because I have a tendency to make snap judgments. If I know that I don't have the money to buy it but have it in Layaway, it will make me save more to get it out of layaway. It will give me time to realize that I didn't like it as well as I thought I did.
Expert on Managed Money
I listen to Dave Ramsey, a financial counselor on the radio. His show can also be heard at www.daveramsey.com. He has literally changed my whole outlook on money and its management. His premise is that "managed money works harder." In light of that he suggests dividing your money into different envelopes such as "Food", "Gas", "Clothing", etc. When you go to the store just take money from the appropriate envelope when it comes time to pay. If you don't find perfect canisters for several paychecks then your "Mad Money" envelope can get quite full waiting for any wonderful purchasing surprises you may find. This system works well in assisting with your budgeting since you have divided out your pay and know exactly where your money is going.
Here's what I do to manage and save my money while shopping: I use cash only. Before I make my weekly trip to the store on Friday, I look over my cupboard and fridge and make a menu for the next seven days. I write down what I will need to buy. I also pick out coupons and look at the weekly circulars to see which stores have good specials. I try to go to just one store, but others are close enough that I do not waste time or gas if I do go to more than one grocery store. Then I go to the bank and take out $100 and that's all I have to spend for food for four people and four dogs until next Friday. I take a little calculator with me to the store and add the prices as I shop. I do not take my checkbook or credit cards with me. Nor my kids for that matter. I only buy what's on my list. I cook almost every day and always have enough on hand. We eat good healthful meals. I buy very little junk food and lots of generic foods.
Before I did this I used to pay by checks. I spent way too much because I had "unlimited" funds for food. I really stick to my budget and usually have a few dollars left over for extras for kids, like books or cheap tennis shoes.
Track All Receipts when Using the Debit Card
I do use a debit card for just about everything. What I do to keep it straight is put all receipts in the checkbook before I leave the cashier. I just keep the checkbook in my purse with the open side up and slip it right in. It takes no time at all. Then at the end of every day/shopping trip, I sit down and do the balancing. Since I keep the checkbook with me, my husband just hangs onto his receipts until he gets home and then they get entered. We've fine-tuned the system a little further by reviewing our ATM withdrawals/activities at least once a week and especially after a weekend or really busy couple of days. It's been working quite well for us for several years now. Rarely do we find a debit or ATM that wasn't registered.
Disciplined Buying Using a Credit Card
First of all, you have to become a disciplined person in your spending. You have to train yourself to be organized. I prefer using a "credit card" to a "debit card" or paying with cash. Deposit your money in your checking account and leave out a small amount of cash. Rather than use cash or write individual checks, charge when you can. Do not charge anything that you cannot pay off at the end of the month. Charge everything you normally would pay with cash or check. Putting your money in the bank and not writing checks assures you that the money will be there to pay the credit card bill to avoid interest charges. Many banks will waive checking account monthly charges if you have direct deposit.
When paying by credit card you have a record of each purchase and do not have to worry about balancing your checking account. When using a debit card you have to remember to deduct the amount from your checking account. Do not use cash unless you have to. This will give you a record of where your money is going. You will be surprised!
I charge food, gasoline, electric, oil, cable TV, entertainment/dining out, long distance service, local phone, prescriptions, doctor, airline tickets, car rental, etc., if there is no additional charge for using a Visa card. Some bills can be paid over the phone using a Visa card. This saves on postage. I can access my credit card account on line to check on the current charges before I receive my bill. I have a basket that all credit card slips are put in, and sort by the month and file. I always have a receipt if I have to return a purchase.
I have a "frequent flyer" Visa card where I earn miles for each dollar purchased as well as flight miles toward a free ticket or upgrade. I want to point out that I do not carry a balance, thereby, avoiding interest charges. We have used the upgrades to fly first class to Hawaii, which is a lot better than scrunch class!
Pay your credit card bill when it comes in. Some will allow you to pay online and the balance can be debited or deducted from your checking account in one payment, thereby, avoiding a 37 cent stamp. If you "debit your checking account", write it down immediately when you pay your bill just the same as if you physically wrote a check.
You can have another credit card if there are items you want to purchase that you will carry a balance. KNOW YOUR LIMITS - DON'T GO OFF THE DEEP END! This may not work for everyone now, but is certainly something to think about in the future when it is feasible for you. It works well for me.
Return to Duplicate Check Technology
I have always hated using cash to pay for things. I'm always fearful that I could be a target for a thief if I show too much cash. Not to mention how easily cash is lost.
I find the best way to keep track of spending is to write a good old-fashioned duplicate check. I fill in everything but the amount while I'm waiting in line and only have the amount to fill in when I am actually at the cashier. I always keep my ID where I can easily show it so I don't slow the line down too much. When I do use a debit card, I always keep the receipt in my wallet until I need to balance the account. I find that I actually save time doing this because I don't have to stop & think about where that money went. I already know! The duplicate checks are worth their extra cost because my time is worth more. Some things are just better when done the old fashioned way!
High Tech Money Management
I had trouble similar to this reader. In the past, I tried using Quicken on my computer to help me keep my checkbook balanced. However, I found that when I got home, I'd forget to enter my transactions. Quicken didn't do me a lot of good. I had so much trouble keeping it balanced that I was being charged for insufficient funds in unbelievable numbers. In 2001, I purchased a Handspring Visor with a leather case w/belt clip. I keep it with me at all times. I use Pocket Quicken. Now I enter my transactions at the point of sale. It took about a month or two to get used to this system, but since that time I have not had one single NSF charge. I also no longer have any late fees on anything else.
You can use any handheld computer that uses the Palm OS. These devices are available for around $100 at CompUSA, Best Buy, Circuit City and the like. The case I chose is available from www.ebcases.com for around $35 which is a pretty typical price for just about any case. Pocket Quicken is available for $39.95 from www.landware.com (and might be available in CompUSA).
If the reader is married, I recommend one device for each person. Just be sure to synchronize them both every day. Enter Quicken for the desktop and accept the transactions. Then synchronize both of the devices again. This will enable both of them to carry an electronic check register. They can pull it out at any time and get an accurate balance, except for what the other person might have spent since the last synchronization. Believe it or not, this system more than paid for itself in the first several months.
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