How I Run my Budget

From the wide variety of PF blogs I read everyday, I”m always fascinated by the different methods authors employ to manage their monthly income. Some have detailed budgets that track every last penny, while others are a bit more lax, pay themselves first, and use what”s leftover after bills to fund whatever they might be wanting at that point in time.

In that vein, I”ll let you in on how I run my finances.

Personally, I think there are good forms and bad forms of automated deductions and withdrawals. On one hand, automatic monthly deductions eat away at your income each month. Some of them are necessary like utilities, and others grow to be over-sized luxury items on the budget. The former includes rent/mortgage and utilities, while the latter is the 90$ a month you shell out for digital cable. I like to keep a close watch on the ins and outs of my account, so I drew up a spreadsheet tracking what goes out each month, for what, and on what date. This way I don”t have the looming specter of overdrafting my account.

Second, all of my money is compartmentalized, preferably into interesting bearing vehicles. My rent money is taken out bi-weekly . online from my paycheck and placed into a money market to earn me interest until its time to pay my landlord. My spending money is deducted at payday to my ING Electric Orange checking account to earn a few pennies of interest before I go ahead and spend it. All bills that are due at the end of the month are also lumped into the money market. Automatic deductions such as my netflix subscription, as well as gas and groceries, are placed onto our Rewards credit card. This way we earn some yummy points before paying the balance in full at the end of the month.

I”m sure everyone has their own way of doing things, and my thinking is always to go with whatever works for you. I like to make my money work for me as much as humanly possible, and so I”ve set my budget up accordingly. Once established properly, your finances can almost run on auto-pilot.

-Xias