My current system for managing our household finances is super-simple. Here’s the entire process:
On the last day of each month, I review that month’s budget, income, and expenses. I make a note of any budget overages or shortfalls I also balance our checkbook.
After reviewing our budget, I use the awesome You Need A Budget software to create a zero-based budget for the upcoming month. Usually, the changes to the monthly budget are minimal, but it never hurts to review and fine-tune.
My wife gets paid on the last day of the month, and I get paid on the second Monday of each month. I wait until the first Tuesday of each month and deposit both checks in our local bank.
Bills - I pay all of our bills online, using free bill pay, and schedule all bills to be paid on the second Wednesday of each month. A couple of our bills are on auto-draft, but most are paid using online bill pay. We know longer write paper checks to pay bills.
Food / Groceries / Gas – We use the envelope system for managing our cash. Here’s a video I made, explaining the system and how it works. I also use a debit card for certain expenses, but prefer cash.
Savings – On the second Wednesday of each month, a portion of income is deducted from our bank account and deposited in our online savings account with ING Direct. The amount to be deposited is determined by our current long-term savings goals. Currently, we are saving to replace two automobiles and to buy a new kitchen table with chairs.
That’s it. I spend about two hours on the last day of the month working on the budget and making any necessary changes to our bill-payment schedule. Once in a while, I’ll have a random bill, something like a car tag fee, that will have to be paid out-of-pocket. Oh, yeah. I have to make the three minute trip to deposit our checks, once a month. Direct deposit is unavailable.
Contributions to our retirement accounts are automatically deducted from our paychecks. A couple of times a month, I’ll clip coupons and update my grocery price book, and I frequently log in to our various accounts, just to make sure all-is-well. Oh, I also spend a couple of minutes, each month, filing away payment stubs and balancing the checkbook.
Keeping things super-simple works for me. In the past, I struggled with disorganization and procrastination, especially when it came to dealing with bills. Now, I have a fool-proof system in place, one that keeps me organized, assures that my bills will be paid on time, and still allows me to relax and enjoy my life.