The Family Budget

Step By Step Instructions for Setting up a Family Budget (2018 Update for Family Budgeting) this Step by Step list and the overview takes what is on the spreadsheet and shows you a way to apply it in the real world. You personally can take what is useful from this and use it, but all of these steps may not be necessary for you at this time. Just keep things simple in the beginning and start with the white data blocks on the spreadsheet. Once you have the basic system in operation, you can move into the colored data blocks on the spreadsheet. After the Step by Step instructions for setting up a family budget there is an overview of how the family budget system works; 1. Open a Mint.com account using the primary bill payers (the one who pays the bills) email address. 2. Get all of you and your spouse's credit cards, loans, and bank accounts linked to your Mint account. (this is a little time consuming, you need your User Names and Passwords for each one) Trust me this makes things so much easier, later you will only need one password to see all of your finances. At first don't worry about correcting Mint's categories for your expenses, you can do this later, this is more about just seeing your balances all in one place. 3. Use Mint's offline bill pay function to set up bill reminders for paying your bills. It takes a little time but it will be worth it. Get all your monthly, quarterly, and yearly bills into Mint. It is okay if you miss some of them, you can add them later. After that you can change your notification preferences on Mint. 4. Use EasyBudgetOnline.com (spreadsheet) to figure out your basic budget. 5. Open one joint checking account at Capital One 360 (this is done online). Set an overdraft limit (I recommend $100 or $200 dollars). This allows this debit card to turn into a credit card if you overdraft. This debit card will be used for buying groceries. Link Capital One 360 to your current primary checking account (bill paying account) 6. Open two separate non-joint checking accounts (one for you and one for your spouse) at Chime Bank (apply online). These accounts will be for you and your spouse's personal spend money. Chime bank has no minimum balance, and reimburses ATM fees, and there are no overdraft charges, this card will decline if you overdraft. I just want to point out that these accounts are not in the same bank as your current primary checking account (bill paying account) this is intentional, just keep your current local checking account as long as you are not paying a lot of fees. 7. Separate your grocery, prescriptions, doctor co-pays, and gasoline, and figure out a weekly total budget for these combined items. Deposit this amount into your bills account and then use Capital one 360 to auto transfer this amount to your capital one 360 checking account each payday. By using Capital one 360 for your groceries you will not have to worry about over drafting. If you go past your overdraft protection limit, the card will be declined with no charges. (you can check your balance anytime using Mint) Having this ATM card allows for joint expenses that will not take away from your personal spend money. 8. Figure out the personal spend money for both you and your spouse (not your grocery money) and set up direct deposit to "the two" Chime Bank checking accounts. The remainder of your pay check will be deposited into your primary checking account. (bills account) 9. Once you get your other ATM cards from Capital One 360 and Chime Bank, Take your ATM card for your primary checking account (bill paying account) and put it in the safe, or destroy it! You should never use this ATM card under any circumstances and never use or carry this card!!! 10. Set up a secondary Mint.com account for the spouse of the bill payer using a different email address (Set the security features so you will be able to access this 2nd account. This is so you can make adjustments later) Link their "personal" Chime Bank account, the Capital One 360 "grocery" account, and any credit cards so your spouse can view them from their personal mobile device. This allows them to see what is important; how much is in your joint grocery account, and how much is in their privet spend money account. 11. Capital one 360 can have up to 10 savings accounts with no minimum balance, Take advantage of this and set up a Christmas fund, Car repair fund, Vacation fund, and accounts for any bills that are quarterly, bi-annual or annual, such as school tuition, car insurance, or taxes. That way the money will be waiting when these bills are due. Make weekly or bi-weekly auto transfers using capital one 360 from your bills account to these savings accounts. 12. Keep in mind that you can customize Mint for each user; Hide any accounts you don't need to view. It's best to just hide savings accounts. The point of having Mint is to keep track of what you spend. Try to get into a habit of not focusing on savings and just let your saving grow, and try to keep your eyes off of your savings accounts so you will not be tempted to steal from your savings. 13. The whole purpose of this system is to completely eliminate credit cards. You don't need them. At first while you are getting adjusted to being on a budget, it will be difficult, but once you start to save a little, you eventually will be able to function just fine without credit cards. In order to be successful in budgeting, you have to take away your ability to have easy access to borrowing money. Buy setting up accounts this way you will always know exactly what you have available to spend at any time you feel you have the need to buy something. Whether that might be groceries, or buying something on the fly. If the money is not there, then you just simply wait until your next deposit. In the meantime, you don't need to worry if you will have enough money to pay the bills, the money will be there when it's time to pay the bills. 14. In the end you both will carry just 2 ATM cards each, Capital one 360 Debit Card for joint purchases (Groceries, Prescriptions, Gasoline, etc.) and one Chime Bank Debit Card for personal expenses (Convenience stores, amazon, eating out, clothing, kids, etc.) If you use all the money in these accounts between pay checks, it will not affect paying your bills. You may see a little variation from the step by step instructions and the family budget overview. The main reason for the changes is the step by step directions completely eliminate the use of a credit card. For many people this is probably a best option, but there may be some people that would prefer the credit card method used in the following overview; The Family Budget Overview Getting Started So what we are going to focus on is home and personal budgets for a family. In general there will be 4 separate budgets for a single family; one budget for the bills, one for consumable supplies (groceries), and two separate personal spend money budgets; one for you and one for your spouse. I want to make clear before we start that you and your spouse would only be depositing into two accounts from your pay checks; one joint account for bills, and one "personal spend money" account. In a case where it might be difficult to make changes to your Direct Deposit, or if you don't have Direct Deposit, it may be easier to only deposit into a single account. Just follow the steps in the last paragraph "Single Income Two People" to allow for a single account deposits. Bills Home Bills will be the first thing that we look at, Home Bills would include all monthly bills for the home and any other loans or credit card bills paid monthly. This money needs to be separated from the start before any other budget is considered. There will be a "bills only account" created (this will be your primary joint checking account), and this account will only be used for the home budget and never touched for any other expenses, this account should not even have an ATM card. Also this account will have a minimum level say 500 or 1000 dollars, So in other words when your reach your minimum amount it should be treated as zero in this account. It is important to keep this safety net, but also there is a maximum which would be slightly above your total monthly budget. Anything above this should be transferred to savings. The reason for this is because you want this account to only be focused on paying the bills, we don't want this account to become a savings account. Fine tuning your bill paying There will be some additional savings accounts created to cover bills that are not monthly, some examples of this would be; car insurance, Taxes, Car repair fund, Tuition fund, Kids expense fund, Vacation fund, Christmas fund, etc. At the Beginning of creating your Family Budget you don't need focus on creating these extra accounts, it can be done later once you get your budget in place. The amounts that go into these specific savings accounts are just estimates that can be transferred from your bill paying account on a weekly or biweekly basis. Most banks have the ability to set up auto transfers and we can set that up for the day after your direct deposits are made. By doing this you will not get a false sense that there is extra money in your "bills account", when it comes time for paying these odd bills, you just transfer the money back into your bill paying account when the odd bills are due. Groceries Next we need to look at consumable supplies. Primarily this would be your groceries, but I like to put a few other items that fluctuate into this category, things that are mandatory but also fluctuate from month to month such as; gas for cars, medication and doctor co pays. You need to create an estimated amount for each of these and come up with a Bi-weekly limit for this budget. I prefer to use a credit card for these expenses, but you could set up a separate ATM if you don't have discipline to not use credit. You need to strictly only use this card for these specific consumables and nothing else. This card should be paid off every 2 weeks. I use Mint.com to monitor this card. If you reach your max budget for 2 weeks, then you have to take money from your personal budget to cover additional expenses. By using Mint.com, this will allow both you and your spouse to always check the balance before you use this card. Personal Spend Money After the Bills and consumable budgets are completed, then we can take a look at personal budgets. Each adult should have a spend money account. I prefer to use Capital One 360 to set up personal accounts. Don't set these accounts up as joint accounts, set them up as personal accounts. This is basically your individual weekly spend money for things such as eating out, buying cloths, Amazon, etc., but you will always know how much money you can spend on things, and you don't need to get permission from your significant other to spend this money. There are 2 things about Capital One 360 that make it worthwhile, One is that if you overdraft this account it turns into a credit card, there are no overdraft fees, Of course you don't want to make that a habit, but if you direct deposit to this account every pay check, you will pay almost nothing if your overdraft. Number two is that it is very easy to transfer money where you need it. You can transfer to any other account you have, plus you have the option to set up savings accounts for yourself and set up auto transfers to a savings account on the days you get paid. Once again I just want to repeat; you will only be depositing your pay check into two accounts; you joint checking "bills account", and your personal spend money account. The money you want to put into savings can be handled by auto transfers at the bank. This makes fine tuning your budget much easier; you don't have to access direct deposit every time you want to make a small adjustment. One more Detail; the money that is left over for personal budgets is not going to seem like much, but keep in mind that your consumables are separated from your personal budget. Personal is exactly what it is meant to be and you will also find that when you both have a separate personal budget, it becomes easier to help each other out when there are unexpected expenses. Monitoring Your Money Before I go into using Mint.com there is one other thing you can do to help monitor your money. Almost all banks now will allow you to set up text alerts to your phone. You can make an alert for a large purchase, low balance, or even every purchase. This can be done with credit cards as well. Now about Mint.com, this mobile App and computer service is an excellent way to monitor every part of your finances, almost without any thought, you can view everything in one place. I do not use their bill paying service, but if you set up the bill reminders using the "offline" option you will get notifications to pay bills as they become due without using the bill paying service from Mint. Also, you should set up a separate login for Mint for you and your spouse. You can put your personal spend and savings accounts on your own sign in, but also still receive information for your shared accounts and credit cards. This allows you to personalize the information that you want to see for each person. You can also hide accounts from your view; I generally only monitor the accounts that have a lot of transactions, things like my Christmas fund I hide because I only need to view that account once a year. Sometimes it's better to ignore the accounts that are meant for a specific purpose, that way you are not tempted to steal from those funds when your spend money funds are low. Single Income Two People In the case of one person not having steady or no income, The unsteady income could be deposited fully into the bills account, and an automatic transfer could be made to the personal spend money account of the person with unsteady income. Each Adult should have at least some personal spend money and the ability to save some of it, and it is best to budget this money. This will create a stable weekly amount and the individual will have a clear idea of what they can spend weekly. Credit Cards should not be used for personal expenses, there might be a few exceptions to gain an advantage, but in general it is best not to use a credit card unless you can pay it off immediately. advantage, but in general it is best not to use a credit card unless you can pay it off immediately.