It’s been a year since I’ve started obsessively tracking my spending, and I finally feel like I’ve got a handle on how to use my bank accounts to control and track my budget. I thought I’d outline how I do it, as someone might find it useful. I’ve also done a partial “Money Map” (doesn’t include investments) for the more visual among you.
I’m paid fortnightly, which is a pretty good frequency actually. I am also lucky to have my rent due 3 days after I’m paid, so I get that major payment done early in the pay period. Not having money for rent is my worst nightmare. I collect money from my housemates for rent and bills. They’re generally pretty good about paying on time, but I’ve set up safeguards against overdrafting just in case.
My system is fairly hands on, but I’ve set up enough autopayments that it should still work even if I get distracted.
Make a budget. I’ve got a spreadsheet where I’ve mapped out my expenses for the next few months, so I just tweak what’s there. I generally have a decent idea of what I’ve got planned for the next two weeks.
Pay Day! I have my pay deposited into my transaction account. Yay:)
Set aside money for bills: I transfer money for my share of any bills that are due that fortnight into an attached savings account. I also put my housemates’ share into this savings account as I get them. This helps me keep track of who’s paid what.
Withdraw cash out to cover food and socialising. Put the socialising money in my purse, and the food money in my grocery envelope.
Autopayment of rent from transaction account. I collect the rent from my housemates and forward it to the real estate agent. I keep a buffer of $2000, to avoid overdrafting my account if my pay is delayed or my housemates don’t pay on time.
Autopayment to savings from transaction account. About 22% of my take home pay. I’ve been doing this forever, and I’ve kept the autopayment to help idiot proof things.
Check that all my housemates have paid their rent and follow up with them if they haven’t.
Transfer another 22% of my pay to savings. I do this manually after I’ve checked that all my housemates have paid, and all my transfers went through.
Days 4 – 13:
Keep an eye on my transaction account. I pay for most things out of this transaction account, but other than petrol and my private health insurance (direct debited on Day 8), not much comes out for these ten days.
Shift any bills money from my housemates into the bills account. Then, when the bills have been autopaid, shift the money from the bills account to the credit card or transaction account. I don’t autopay out of the bills account so that I don’t have to carry a buffer in it to avoid overdrafting, I autopay from my transaction account (which has a $2000 buffer) or from my credit card, whichever is cheaper or easier. I have autopayments set up, because many companies have a penalty for paying late, and I’m a bit forgetful.
Pay off credit card from transaction account. As well as bills (which I will pay direct from my bills holding account) I will sometimes put something extra on my credit card because it’s easier, cheaper or to take advantage of the travel insurance, extended warranty or price match conditions. I’ve got to have the stupid thing as part of my mortgage package, so I may as well use it. I pay it back to zero every fortnight though, as I’m paranoid about forgetting, and carrying a balance gives me a false impression of the current state of my finances.
Transfer any money above my buffer from the transaction account into savings. This is my favourite time of the fortnight. As I’m aiming to save about two thirds of my pay, this transfer should be about the same as the last two. It varies quite a lot though, as I have a few large bills that are due less often. I could put money aside each fortnight in preparation for them, but I have enough excess every fortnight to cover most of them without dipping into my savings.
Track Spending and Saving. I copy the transactions from my transaction account into a spreadsheet. I add any cash transactions, categorise everything and use pivot tables to add up each category. I add up my savings and add that onto my running total for the year.
Well, that actually sounds quite complicated, but I don’t really need to look at my bank account except just before and just after pay day for only a few minutes to check everything and do the manual transactions. Tracking can take awhile, depending on how many cash transactions I’ve forgotten about.