1. We’ve been doing something similar for years — I just never knew what it was called! I like the idea of tailoring a budget to your personal style. That way you find what works for you.

  2. Tracking every expense is exhausting! I like this idea of the bucket budget. I find myself, like you FD, in front of the accounting TOO MUCH.
    Considering I’m also working on side hustles and debt reduction, tracking dollars and cents sometimes leaves me feeling down and depressed!
    Thanks for the great tip about the bucket budget idea!

  3. I found myself spending too much time in front of an Excel worksheet, and too much time beating myself up for overrunning the “Magazine” category because I renewed my Money subscription last month.

    The way I do it is to have a monthly amount for each category that is the average amount spent on that category each month. In particular months the amount spent can be less or more than the average and that is not viewed as a problem.

    Reconciliation is done once per year. At that time, you add to the categories in which you often came up short and subtract from the categories in which you often did not spend the full budgeted amount.


  4. Hi! I have three accounts with my bank. Two are checking, one is savings. Plus I have my quick $1,000 emergency fund in a cd.

    One checking account gets all the money deposited into and I pay all the bills from it.

    My second checking account I call a freedom account (Mary Hunt’s term.) In this account I deposit money, a set amount each month, to cover all bills that will come up in year that are not regular monthly bills (I.e.-car registration, AAA membership, my boys birthday parties, my glasses each year, my oil changes, a ceratin amount for car repairs, Christmas, and gift money.) This account has saved me. This stuff has to get paid, especailly car stuff (do we forget that each time we drive our cars we are using them up so to speak, they will break, that is not an emergency.)
    I keep track of how much is in each subaccount. It is not hard at all. You can have as many categories as you want (vacation, house repairs, etc.) Just add up all proposed expenses for year and divide by 12, that is how much to put in each month.

    My savings account has my long term savings, which I am looking to put elsewhere to earn a bit more interest.

    Thanks for your blog! -Becky

    p.s. I agree each checking should have a cushion you forget about as to not bounch any checks (I only have $100 cushion in each checking.)

  5. Regarding your last paragraph about spending too much time on your budget: I was in a similar situation. I have 24 envelopes that I tracked with a spreadsheet. It took me about 3 hours every week to keep it updated. That’s why I created NeoBudget ( It automates much of the budgeting process and now I spend about 5-10 minutes a week on my budget.

    I can see your desire to simplify your budget though. That’s certainly one solution. I’m a bit too picky to give up my 24 envelopes Actually, since then it’s expanded to 32 — I like to be precise and know where every dollar is going. Of course, you don’t *have* to be that particular with NeoBudget, but it does make it a lot easier.

  6. This is similar to what my girlfriend and I do. We share a joint account for common expenses such as food, rent, cable and entertainment I tracked our spending for a while to get a general idea of how much we spent and then we make weekly deposits of this average. When the bills come around there is money in the account and we have also allowed ourselves spare money to go out together and have fun.

    This has worked pretty well so far and it seems like I spend much less money as a result.

  7. My wife and I have a certain amount of each check deposited into our checking account for bills and then the rest comes in a paper check.

    We then cash that check and break it down into our cash folders. This works better than the two checking account system (which we tried) because it does a better job of “forced scarcity”. We have “X” amount to spend each week and that is it.

    If we have a genuine emergency or another unexpected but necessary expense, we use a savings account appropriated for just that.

  8. Great idea – I too will consider this. It sounds like a great option for people like me who work for themselves and have a variable income — you can more easily set a baseline.

    If you don’t have employer direct-deposit options, you can have a savings account such as ING Direct pull the savings amount automatically, like a bill. I use that to save in various categories each month (tuition, holidays, emergency fund, vacation).

    I also use a rewards credit card, and I wondered if it was worth it, but we just got back more than $300. I think you could use that with this system by charging expenses, and then paying them off (even weekly) from checking account #2.

  9. This reminded what I used to do when I was single. It also made me think that I should start doing things this way again.

    I had a checking and savings account at my bank. I had all my money deposited into the savings account. Then when I will pay the bills, I would total the amount and transfer the total from savings to checking. I always knew that the checking account total was not available to spend and the savings account total was the amount of money I had available.

    Yep. I think I’m going to open a savings account today and start doing things this way again.

    Thanks for jogging my memory!

  10. I track every dollar I spend. For a while I was very miserly and didn’t want to spend anything but the very basics. I found doing this can have serious consequences in regards to relationships. I’m not as tight now, but I still ask myself if an expense is a need, want or desire. If it’s a want I then have to decide if my “spending money” has the funds to pay for it. A desire will get shunted aside until I have the funds saved for it.
    I have one checking and two savings. I pay all my bills from the checking and then transfer the balance minus $500 into Savings #1 or 2.
    Savings #1 is my spending money and non-regular bills account. I use it to store funds for things like Home and Car insurance, Car registration (and magazine subscriptions, hint, hint). By dividing each annual expense into 12 smaller payments to myself I know I will have the money to pay them when they come due. I had done this even before deciding to get out of debt because I always struggled to come up with the car insurance premium. I just added the home insurance and car registration recently.
    Savings #2 is my Credit Union, they are located about 100 miles from me and the only way to get funds is by a co-op ATM with a $200 limit or ask for a check to be sent. This is my emergency fund and right now has about 12 months in it. I’ll also use this to “bank” for next years Roth IRA.

  11. I do something similar, except I have 3 savings accounts through ING Direct, a tax impound savings account (for my freelance work), a checking account (for fixed items and online purchases) and then I use the cash system for everything else. Even groceries, transportation and other items are “fixed” because I’m young and sometimes I’ll eat out more one week than another week. But I know that I have to keep everything to a certain amount and I just shift things around depending on what’s going on that week.

  12. The bucket budget is exactly what I’ve ended up with after some trial and error. Although I am the type who would prefer to know where every dollar is going, my husband perceives any budget at all as constraining and frustrating, so the kind of precision I prefer would destroy our relationship. This method is an acceptable compromise for both of us.

  13. I struggled with getting this right but went way too far and found the multiple checking accounts to be a hindrance and an incentive for me to not really manage my money. I don’t like to recommend products but You Need a Budget software at the website of the same name has done it for us.

    We are actually using the idea of sinking funds, dedicating a monthly amount of money for a variable item such as home repair, car licenses etc and can actually track it. YNAB keeps running balances in all your categories. I keep all my money in the same account now and you know what we have a positive balance at the end of the month finally! It’s awesome, I know everyone approachs this differently based on their styles but it has really worked for us.

  14. Interest ideas, thanks for sharing. We’ve pretty much outgrown the need for a written down budget – instead we tend to follow guidelines where our weak spots pop up:

    1)eating out – try to stick to once a week (usually Sat night dinner)
    2)groceries – try to stick to $75-85 a week
    3)household/toiletries/etc – weekly trip to Target instead of going 2-3 times like we did in the past

    Everything else in our lives is pretty well automated and stripped down – no magazine subscriptions, Netflix, etc. We review the expenditures at month end to make sure there were no surprises and that our savings goal was accomplished.

  15. I used to use multiple categories, too, but found I was wasting my time and I stopped tracking for a while because I burnt out.
    Now, I use 5 main categories, which is more than enough info.
    I’ve also been struggling with my budget – my problem has been my credit card spending.
    I should probably leave it at home but it feels ‘weird’ being without it.

  16. We use YNAB (you need a budget) software.
    It’s helped us quite a bit over the last
    few years. There are sinking funds set up
    for expenses that come up yearly like car
    insurance,gifts, etc. We take cash out for
    our 4 envelopes each payday (food,gas,household
    and entertainment)and transfer a certain amt
    to ING for our sinking funds. One checkbook.
    No problems and YNAB keeps track of the amts
    in our sinking funds so we always know where
    we stand.We’ve used it for 3 years now and
    wouldn’t be without it.

  17. I use a two page spreadsheet. On the first page I have our deposited pay. (we get paid once a month) Also on that page is what I call the “no deliberation” bills. Car payments, insurance credit cards etc. On the second page I have 4 categories. This is where the actual budgetin is. I have gas, groceries eating out and misc/cash. Gas, groceries and eating out were the easily defined budget items. It takes no time at all to enter the daily spending and not question where it goes.

  18. We started using this system this year, with weekly deposits working SO much better than trying to categorize and budget monthly.

    We’ve been able to stay on budget 100% and we’ve only had to dip into savings for really big items (hospital cost for the baby, A/C repair).

    It’s awesome!

  19. That is a great idea.

    Microsoft Money has been good to me in tracking but not so much regulating my spending. Speadsheets are good for tracking income but do not work for me when tracking spending (too much keying in of figures).

    I’m more aware of where my money goes but having an account that gives me an allowance sounds like a fool proof plan.

  20. This is essentially what I do as well. It works well for me because I have never accidentally spent my power bill on beer and pizza. This concept (having more than 1 checking account and/or savings account) is foreign to a lot of people. When I was employed, I had built up the balance of my fixed expenses account so that I had an extra month’s worth of fixed expenses in this account which was part of my e-fund.

  21. One checking account- multiple savings accounts in the same institution.Savings accounts include house and car taxes, insurance, IRAs, new car and presents. Envelopes for money (we need new ones- they are getting ragged)- travel, house repairs, minor sundries, car repairs, his allowance, her allowance, hair, carry out,pets, tools. They are bi weekly allotments from which we often save for larger things (I am buying a new Apple with part of my year of allowance). Over the years the amount has changed. We had a kid envelope and babysitting when children were young. We have learned to save more and more.
    Cash upfront for everything and we never made six figures in our lives! One of us always stayed home with the kids. We traveled the places where we lived and (after 16 years of renting) bought our home for cash.Life is good and retirement is ready when we are. Now we just work because we both enjoy our jobs! The question is- will we learn to give up saving half of what we make for retirement- when we retire?

  22. Hello everyone – I’m glad to read that people enjoyed the article in Money and the concept of the buckets (I’m the planner that Money interviewed).

    From a planner’s perspective, I would say that there is a small percent of the population that are just naturally very good with money – they just “get it.” They can track expenses in a spreadsheet, or love to download into Quicken or other software. For everybody else, they need a simple way to understand their cash flow, and make decisions on a day-to-day basis.

    As a planner, we end up making all these long range forcasts and projections for future goals. The problem however, is that between today and the day of that future goal, there are an almost limitless number of small transactions that will occur. Each of these transactions, in and of themselves are not a problem. These small transactions combined however, has the potential to jeapordize any goal in the future.

    It’s been my experience that it is not only important to know what you’ve done in the past, but is it even more important to set up the appropriate patterns of behavior so that the individual has a higher probability of building the finanical life that they would like to have.

    I am obviously biased in this particular topic, but we’ve seen huge success with people creating different buckets for spending, and then identifying their various financial goals and then automating a systematic savings program (think electronic envelope system).

    I’m more than happy to answer any questions or chime in as needed – thanks for reading.

  23. We use to manage our budget. Using mint required that we provide our account information to them (a possible security risk) but we’ve found them very trustworthy. In return, I have an automated system that tracks my budget for me and generates a report (with graphs!) whenever I log in.

    I just set up the budget categories and spent a couple months categorizing all the transactions in our accounts (ie: Costco is a food/household purchase, Baja Fresh is a restaurant, First Horizon is the mortgage payment, etc). After that anything previously categorized is automatically handled; I just log in and quickly scan through the uncategorized items (if any).

    Once a week, I print out a chart of our progress for that month, so we have a visual on our fridge of how we’re doing and can discuss anything if needed. Also a great way for the kids to see us using the budget.

    [A side note – Mint also has a financial health tool that makes recommendations and scores you on your progress. Almost all of them are things Frugal Dad recommends – they must read the blog, too!]

  24. I’ve created a very similar budgeting method, actually. I figured, if we separate business and personal transactions, why not separate bills and personal transactions as well? Pretty soon I’ll be posting the spreadsheet I’ve created on my website, for free for anybody interested. There are a few criteria one must meet for it to actually work. But I expect to have it online within the next month with a lengthy “how-to” post.