I’ve changed the way that we work our budget this year – the cash jars are gone and we’re back to using (for the most part) a debit card. It’s early days yet but so far it’s working out quite well. We do use a credit card for large purchases, but pay it off immediately.
Here’s how it all works -
Account set up:
Personal checking | Joint checking | Personal checking
Personal E-saver | Travel Fund | Personal E-saver
Gift and Mini E-Fund
E-Fund
Portugal Fund
- Both checking accounts get funded with wages – mine weekly, hubby monthly (on the 20th), we then have (weekly/monthly) automatic transfers set to fund the joint account. The transfers are all of our respective salaries minus our £80 personal spending allowances. We both have the same allowance.
- We also both have an e-saver attached to our personal checking accounts – the travel fund and gift/mini e-funds are attached to the joint checking.
- Our long term emergency fund is kept in an ISA and our moving abroad funds are kept in a separate ISA.
From the checking account we then pay the bills and fund our savings….mainly with automatic payments.
- Bills: All our automatic payments (Direct Debits) are set to be paid between the 25th and 1st of every month and are, where possible, the paper free kind.
- Savings: Are part automatic payments, part manual transfers, this way I can adjust the amounts when needed.
- Grocery: Paid for on a cash back credit card except farm shop visits, where cash is used. This is a big change for us in 2012 as we currently pay cash for all our groceries.
And the actual budget..
- Budget System: We use a zero based budget system which means that every penny is allocated, every month.
- Extra Income: Any extra income gets directed to one of our savings goals.
If you have any questions then please ask in the comments or shoot me an email at movetoportugal(at)gmail(dot)com
{ 7 comments… read them below or add one }
I love seeing how everybody organises their finances… I guess I’m turning into a personal finance nerd
. It is so helpful to get ideas for when I get out of university and start earning money. Quick question: would you recommend automatic transfers over manual transfers to everybody, or do you think it’s mainly for people that tend to forget to pay their bills or put money into savings on a regular basis?
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laura Reply:
February 22nd, 2012 at 6:37 pm
I prefer automatic payments for everything because in my mind, as an example, I treat the payments to our savings accounts as bill/expenses and not something that can be used elsewhere…which can happen if you don’t pay yourself first.
A lot of it depends on how good you are a sticking to a budget – I’m pretty good a sticking to a spending allowance now, but it did take 20 years of training…unfortunately
If you’re the type of person who forgets to pay a bill then automatic payments are a good idea
hope this helps Elizabeth – thank you for the question
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We need to do a zero based budget. Soon!
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laura Reply:
February 22nd, 2012 at 6:31 pm
I really love it Michelle and find that I stick to my budget limits better when all the money is allocated.
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How does the “cash back credit card” thing work?
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laura Reply:
February 22nd, 2012 at 6:28 pm
We have one amex account and a card each. Hubby uses it for work expenses and I use it for grocery (mainly) – when I get home from the supermarket I make a payment for the amount I’ve spent this way it keeps the card free from anything but work expenses but gets us 1% cashback – hope this is clear/!
How are you Tony?
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Tony Reply:
February 23rd, 2012 at 9:00 am
Hi Laura, thanks for the clarification. I was looking for something like a pre-paid credit card that I use just for groceries. This cash-back thing sounds interesting though. I am good thanks! Still lurking here as you can see!
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Great system! I’ve personally never had success with the jars, for me I use a credit card for all my purchases (except really cheap ones where I will pay cash). I always pay off my card and this system works best for me. I am weird, I use my debit card like once or twice a year!!
It’s interesting how everyone budgets… I too like to tell every dollar where to go
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Laura @ move to portugal Reply:
February 23rd, 2012 at 9:12 am
The jars worked for me but I always felt uncomfortable having money in the house especially at the start of a budget month.
Re budgets – I think it’s all about finding a system that works for you, whatever that system is
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Another good system to know – thanks for sharing! I tried doing zero-based budgeting but it just doesn’t work. We had about 4 or 5 different unplanned things popping up every fortnight that it would just be a big mess at the end.
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Hi Laura, I’m interested in your zero based budgeting and how it works, by which I mean do you take everything out of your everyday/transaction account or do you have a float in there that covers you for any unplanned expenses eg not being well and having to go to the doctor and get a prescription, or something similar? Cheers Judy
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laura Reply:
February 24th, 2012 at 6:58 am
Hi Judy we keep a ‘float’ of £200 in the account and then if we use any of it we top it back up by lowering house/travel saving the next month. I find £200 is always enough to cover any extra bit of spending. If though for example the washing machine broke, then I would use money from our mini emergency fund which is attached to our checking account.
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Judy Reply:
February 24th, 2012 at 8:43 am
Hi Laura
thanks for that update, really appreciate it!
Cheers Judy
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Wish I had your self-discipline!
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