Sorting Your Money

[jeffrey]

By Terry Rigg

For anyone that is familiar with The Complete Budget and Bill Organizer, you already know that I recommend that you use your checking account to pay bills and cash to cover your household expenses.

With all of the different items that the average individual or family spends money on, it can be difficult to keep it separated. You have to have money for groceries, car gas, school lunches, Groceries, Dining Out and Entertainment just to name a few.

You could buy a box of envelopes each payday and sort the money on payday and stuff the money in an envelope until you need it. Of course, then you would have to have a safe place to keep it.

If you like the envelope method, then by all means use it. However, the entire purpose of The Complete Budget and Bill Organizer is to simplify things. Sitting down at the kitchen table each payday and sorting cash is far from simple.

It would be much better to try storing it in your wallet or purse. You would have the money when and where you need it. There is an element of risk that the money could be lost or stolen. If you don't feel comfortable with having that much cash in your wallet and don't have problems handling your checking account, you could deposit the money for groceries in your account and write a check for your normal grocery shopping. I wouldn't write a check for just a milk and bread run.

For a family, a budget keeper should be assigned to sort the money. They would be responsible to distribute the money to other members of the family. To do this you will have to clearly define who in the family is responsible for what expenses. Let me give you an example:




A family with a working dad and a stay-at-home mom with three teenage kids may distribute their money like this:

Household Income after money for bills is deposited in checking: $500

Mom is assigned as budget keeper and keeps $355. Out of this money she is responsible for buying the groceries, health items, cleaning supplies, the families clothing, school lunches, pay the paper boy and other expenses around the house. Mom takes $50 out of this money for herself that she doesn't have to account to anyone else in the family for.

Mom gives dad $100 of which he is responsible for paying for his expenses to get back and forth to work including car gas. Dad can use $50 of his money that he doesn't have to account to anyone else in the family for.

Mom gives each of the three kids an allowance of $15. This money can be used any way they choose.

By sorting your money this way, each member in the family can keep the money in their wallet and all of the responsibilities are covered. No, you won't know exactly how much you spend each month on groceries, car gas, etc. The main point of a simple budget is to make sure you have the money to pay everything without the hassles like sorting your money into envelopes and accounting for every penny.

Mom, as budget keeper, would also be responsible for keeping the budget, paying the bills and depositing money in their savings. This does seem like a lot of responsibility for just one person in the family but, to ensure that their finances are organized and everything is covered, it is absolutely necessary. It is also important to make sure dad knows how mom is handling things so that he can step in if the need arises.

While developing your budget using the Budget Worksheetyou will know what your household expenses are. Simply take that list and assign it to a member of the family along with the money to cover it. If you run into problems and somethings aren't being paid, you will probably have to review your budget and reassign these responsibilities.

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Terry Rigg is the author of Living Within Your Means - The Easy Way and editor of The FREE Budget Stretcher Newsletter and Budget Stretcher web site. He has 25 years of experience counseling individuals and families concerning their personal finances.

My goal this New Years is to re-establish my credit, by paying any collections I have and staying on top of my current bills. I need to figure out a way to budget. I have never had a budget or a method in paying my bills, and I would love to start! This way I am more organized :-) What do you suggest?

[grandpaterry]

Hi Girlmaturing,

I'm glad to see that you have an interest in learning how to budget and get control of your finances.

I offer a free and easy budget including the forms and worksheets you need to make it work. Please visit: http://www.homemoneyhelp.com/BBOonline.html

Happy Holidays,
Grandpa Terry

[marglo]

Grandpa Terry, I love your site and find it very helpful ...have even purchased a few things! Although I use Mvelopes now, I still keep a notebook with my budget set up as you teach and try to keep our expenses in line with the 10%, 30%, 30% 30% way. It seems to make my financial path clearer and gives me something to head for. I also have read Dave Ramsey's books and have taken his advice about getting a small EF, then using everything I can to pay off bills which is the step I am on at this time. So I have learned from various sources but I feel that your method is one of the easiest ways. I kind of put the two together I guess. Thanks for your help! :-)

edit: Jeffrey I now see that you copied this article here. I thought it was Grandpa Terry himself when I posted! But I still mean what I said here...it is a very good way to get a handle on your finances, in fact I have posted about this somewhere on this site too.

[grandpaterry]

Hi Marglo,

I'm glad to see that you've found a personal finance system that works for you. Combining methods is sometimes the best way. I thoroughly support the Mvelopes system.

Jeffery was kind enough to post many of my articles but I do monitor the replies. Thanks for taking the time to let me know how you are doing.

Grandpa Terry

[marglo]

Oh, good, now I don't feel quite so !

[tuscan minoque]

Originally Posted by Girlmaturing

My goal this New Years is to re-establish my credit, by paying any collections I have and staying on top of my current bills. I need to figure out a way to budget. I have never had a budget or a method in paying my bills, and I would love to start! This way I am more organized :-) What do you suggest?

I suggess when you get paid you subtract your savings first by atleast 10% of what you made, and then calculate all your overhead bills and separate the money accordingly and what left of your pay is yours.This method is a starting point for paying bills.