Ummm, this isn’t about budgeting for a swimming pool although Google ads seem to think so. 😀 I’ve been using Mint.com for 6 months now and it is great for tracking expenditures, but I am getting a little tired of the “Exceeded budget for Gas & Fuel” emails.
Actually, I moved on from Mint to Personal Capital. It is similar to Mint, but it’s geared much more for the investors. Their tools and financial adviser made it no contest.
Today, I would like to share our Pools Budgeting solution that we’ve been using over the last few years.
We auto contribute to 401k and pay tax first, then we have our monthly budgeting to play with.
The monthly budget is divided into 3 big pools.
1. Checking Account – The bills in this pool are fixed costs and includes mortgages, utilities, HOA fees, and insurance. We auto pay as many of these as possible to simplify the bill pay process. The bills in this pool are paid from the checking account and the expenditure are very stable from month to month.
2. Credit Card – I call this category the unavoidable expense. These are the things that we need to function in everyday life such as gas, cell phone minutes, medical bills, formula and diapers.
3. Cash – We give ourselves $100 each/week to spend on discretionary spending + groceries. Groceries is included here because our grocery store only accepts cash or debit. Other than that, we use this money any way we want to. We use this budgeted pool for eating out, clothes, entertainment, and other fun purchases.
* Emergency fund – We have an emergency fund in our savings account and won’t touch this unless some emergency situation arises (i.e. when our car broke down).
If we take a closer look, you can see the only variable in this budgeting plan is #2 the credit card pool. Lately we have been doing really well with the credit card. The January and February bills are well under control and I’m quite happy about it. Of course, some months we slip and put more on the credit card than we should. Sometime I charge IKEA and Target purchases on the card instead of paying cash like we are suppose to.
In any case, I also have another control valve on the credit card spending. I check our credit card account online every few days and if I notice the outstanding balance creeping up near $1,000 then I put a brake on expenditures. I notify the Mrs. that our balance is getting higher and we should try to put off purchases until the next billing cycle. Amazingly, this works pretty well. Anything that puts off the actual spending is good. It give us a little time to rethink the item and sometime we figure out we don’t need it after all. Our target is to pay off the credit card balance in full every month.
What do you think about our budgeting strategy? This way we don’t have to track every pennies, but still have some control over our expenditures. This has been working pretty well for us over the last few years. When we first started out the credit card portion was always a little high. I think we have a handle on it now though. The bills are a lot more under control since I’ve started posting our monthly credit card posts. You guys keep us honest. 😉
I think this pool budgeting works quite well if you have spending under control. If you know you spend too much money, then it’s probably best to stick with the traditional budgeting plan and have a more detailed budget. Mint is actually pretty good at showing our trending and I mainly use it for that purpose.