I need advice for my personal bank account

[gbward4]

Hello all! Thanks in advance for taking to time to read and post.

I am 25, I live in Arkansas. My fiance and I are getting married this Sept. We have been through some financial classes and have been doing well, we are rid of credit cards, we have paid off our cars, and are aggressively working on her student debt and I have a house loan. Our rings, wedding, and honeymoon are already paid for!!!

However, even with our good success we are having trouble sticking to our individual budgets; and to make things easier (and thusly more complicated) we have decided to join our accounts and make one budget, in effort to hopefully iron out some of this before we get married.

QUESTION
Our biggest problem is that we do not have a good way to manage our residuals if we have money left over and we wind up not having any idea how much free money we have to give/spend on fun; and now what is unknown to ourselves affects the other. For example:

Light bill averages $88/month. This month it's $58.
I have $30 left over that stays in the whole pile of other money that's already in the account. Now we are afraid of spending anything because we know that in three months the bill is going to be $118-130; and between seven bills, variable income, and spending money we get really lost; so even if I have $1500 in my account, I have no idea if I can spend anything because bills auto draft all month. Neither of us are very good about updating Quicken on a regular basis; and when we do we just have a clearer idea that of being lost. Apps are helpful, but still not perfect. It would help the most if we could have physically separate accounts for each expenditure.

I know this works beautifully if you have an all cash system, and separate envelopes because we have done it. But, I don't like carrying all that money around, we don't live in the same house so sharing physical money is really impractical, neither employer will mail us a check (forced direct deposit) and we ATM for gas for her safety, and you have to redeposit before you can mail a check to the mortgage company. Does anybody have a good system that we could use our debit cards for?

Sincerely,
Lost

[lorraineb]

Since the two of you aren't good at updating to keep track of where the money is, my advice would be to open up three separate accounts. The first account would be solely for your bills. This is the account where once you put money in, you don't take it out. You can then check the account every 3 to 6 months to make sure that there's enough and it for all your reoccurring bills. You will need to make sure that you fund this enough so that there's always a little extra since you don't know exactly what will be taken out each month, but that Patty will allow you not to look at it every single month which you say you both are good at doing.

Since the money in the bill account can't be touched, you should both have an account for yourselves to spend money. Each of you will have an account for yourselves for the purchases that you agree each of you should make on your own.

I don't know if this is the best solution, but it is one for what you described above.

[doingitallwrong]

Congratulations on your success so far!

However, even with our good success we are having trouble sticking to our individual budgets

It doesn't sound like you actually have budgets. You know what your bills are, on average, but that's about it. A budget means you set aside a certain amount each month for eating out, for fun, etc.

That said, if you aren't going to look at your budget regularly, it won't do you much good. You might want to set your budget up on one of the online free services, like Mint.com (or, since you've had success with the envelope system, Mvelopes). These systems automatically update your accounts and transactions daily, so you don't have to worry about entering the information yourself. Mint will send you an email weekly telling you where you are with your budget, so you know how much you spent and still have available in each category. You can set alerts for when you're overbudget, as well, or various other things. (I don't know if Mvelopes has alerts or summaries.)

You should still get into the habit of sitting down together and discussing/evaluating your budget (and finances in general), at least once a month. Budgets are generally dynamic, and require regular tweaking. The online programs will keep track of how you're doing within your budget, but they won't adjust your budget for you if it needs adjusting.

[TheCudder]

+1 to Mint.com, I signed up in December and started budgeting in January and I've done great with my budget since if automatically keeps track of your spending. I've always been afraid of the old methods...ie spreadsheets and other manual techniques.

[gbward4]

Thank you very much!! I really appreciate your time, this gives us a lot to chew on that we haven't thought of yet. I think just opening an account that deals with just overhead/utilites will be a lot of help; and we may open separate spending accounts. I appreciate your frankness, and I think it will help a lot!

-GB

[breathemusic]

OP, I definitely suggest adding an account or 2. While having a million bank accounts can just make things more complex, having one or 2 more shouldn't be that big of a deal. I'm just one person and I keep 2 checking accounts. One is a smaller account that I just have an allottment from my paycheck deposited into, and from that account all of my static bills are autodebited. So all the fixed expenses like rent, phone (fixed as long as I don't go over), student loans back when I had them, monthly charity donation, etc. come out of that account and other than to log in every so often to make sure things are still tracking, I don't have to mess with it!

The other account is where I have all my variable expenses like utilities, credit cards, fun money, etc. For that, I basically just use a spreadsheet to forecast my expenses. All of my "leftover" money eventually gets withdrawn when I transfer it to my savings account, but the spreadsheet also allows me to forecast the fluctuations, so I can anticipate when my utilities are higher or lower, or that I know I spend more near the holidays, etc.

If you guys aren't much on tracking, then always keep enough in your accounts to cover the higher end of the bills, and then once all the bills are paid, you can do what you want with the leftovers (savings, etc). Of course, you should keep a buffer built up in your account so that a higher than expected bill will never accidentally cause you to overdraft.