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Family finances: our modus operandi

Here’s how we handle the family finances in our home.

Our Basic Structure

• We keep track of all our spending with a monthly zero-based budget. I’ll explain the basics of this type of budget tomorrow, so be looking for it!

• Together, my husband and I decided that I would be the one to manage our finances – which includes making a budget, tracking our spending and our cash, paying our bills, and generally staying “in the know” with where we are. We saw this as a good fit to my job as home manager, and between the two of us, I have more of the personality for it.

1. Planning for the Month

• About a week before the new month, I create a first-draft budget.

• My husband and I have an oh-so-romantic date on our balcony with coffee and dessert, and we look over this budget draft, line by line. Together, we tweak it.

• I edit the first draft, we make sure this new updated budget is solid, and I print it. It goes in my Home Management Notebook.

2. Telling the Money Where To Go

• When we receive our income through direct deposit (our main salary is paid once monthly), our money is automatically sifted into proper accounts – set monthly amounts go into various sinking funds at ING Direct. We’ve set this up at the bank, so it’s automatic – we don’t even need to remember to do it.

We withdraw the cash needed for our various categories where we are cash-only, using the classic envelope system. I’ll write how we do this soon.

Money goes into its respective envelopes (literally, a small zippered pouch, like what you’d use for pencils in grade school).

The only exception to this is our personal money, which goes straight into my husband’s and my wallets. This is the money we use for whatever we want, be it a frappuccino or a Squeasy Tea Bag Squeezer. Having a set amount of personal money helps us enjoy living on a budget.

3. Paying For Stuff

Most of our bills are paid electronically and automatically. This never surprises us, because 1. it’s always done on the same day, and 2. we check our bank accounts online almost daily anyway.

• Any time we make a purchase, be it with cash or debit card, we jot a little note on the receipt that labels it as a purchase for a particular category – groceries, clothing, gifts, and the like.

• My husband and I both make a point of emptying our wallets of said receipts when we enter the house, and we toss them into a little bowl by the front entrance.

4. Keeping Track of the Spending

Once a week, I take these receipts and enter them into our fabulous online budgeting system (which I’ll tell you all about soon!). In this program, I tag them with their respective categories, and money is deducted from each budget category. I make sure any cash remaining in the envelopes reflect these numbers.

• Oftentimes, we’ll need to tweak our budget – and that’s okay. Yes, it’s set in stone, but it’s more like limestone than granite. We can chip away at it when things change throughout the month. If our weekly dinner out cost $25 instead of the allotted $20, we take five dollars from somewhere – clothing, or groceries, perhaps. But the important thing is to shift money around, not hope money magically appears. If you’re short five bucks, then take five bucks from another category. Not from thin air.

• Unless the item is a major purchase, I throw away all receipts at the end of the month. I used to keep them all, as though I would one day need that receipt for a pair of socks I bought in 1997. No longer. It minimizes stress, clutter, and time needed to find important things.

This is about it, in a quick breakdown. It might sound complicated, or really time-consuming, but it’s not at all. I’d say the important keys to doing our finances this way are:

1. We agree on all our money decisions together.
2. Every dollar has a name – which is foundational for a zero-based budget.
3. We keep track of it regularly, so that it only takes a little bit of time each week, instead of painfully slow hours once a month.

How do you manage your family’s finances? Are you the one who does it, or is it your spouse? What’s the hardest part about dealing with money?

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  1. Laura

    I’m the one that manages the budget/money in our marriage, though we do make all the decisions together. We’re both pretty new to the tight budget stuff because just a few short years ago, we both had substantial incomes to spend on just us and whatever we wanted. Suddenly, we’re a family of four on one income and we’re trying to find our way to a new place of peace financially. Slowly, but surely, we’re getting there.

    I’m the spender in the relationship and my husband is the saver so the hardest part of finances for me is simply just not spending it. 🙂

    Lauras last blog post..True love

  2. simplemom

    @Laura – I’m sure you’re not alone here. I know it’s a whole new ballgame when you go from two incomes to one! Hang in there.

  3. Omaha Mama

    We have read Financial Peace also and enjoy the envelope system. We are not as good at tracking expenditures and need to get better at that. We sort of use the cash, but don’t keep track of the ‘on what’ part. It has helped our monthly spending, because we have money set aside for things that we usually wouldn’t like car repairs and vacation.

  4. Frugal Dad

    We are big believers in the envelope system. It’s gotten harder to fund that food envelope, though! Still, it is a great feeling to walk into a store, pay cash for something, and actually own it when you leave. Recording a single cash withdrawal also makes balancing your accounts easier rather than keeping up with debit card charges all over the place!

    Frugal Dads last blog post..Ask the Reader: Is Sneaking Candy into a Movie Theater Frugal or Cheap?

  5. Jennae @ Green Your Decor

    We’re still trying to get to the point where we have a line-by-line budget, but we’re getting there. The problem for us is that now that I work for myself and there’s no set salary coming in, it’s harder to keep track of the exact amount we’re bringing in every month. I have always handled the finances, but it’s been tough for the last few months. This post is a big help, and pretty much a step-by-step guide to getting ourselves together. Thanks for the reminder.

  6. Elysian Girl

    We are so desperately trying to master the budget! I tend to be the spender while my husband tends to make “splurge” purchases. We make a good income, but somehow we always seem to be scraping the barrel at the bottom of the month.

    Currently he is the one in charge of the finances, (our minds don’t “see” numbers the same way and he gets frustrated by my accounting) but I really would like to take this task and own it. I am so looking forward to what you have to say!

    (PS – while I LOVE the idea of envelopes, my husband is not a fan. We live in a different country from our family as well and we have acquired credit cards that offer airline points for purchases and we “pay back” the card on a daily/weekly basis to try and get a couple free tickets so we can travel as a family home each year. I would be interested on your perspective on this.)

  7. Kori

    I handle our finances as well. I use a similar system you do, except we purchase EVERYTHING we can on our credit card. It’s a card with no annual fee, and if you pay it off monthly, there is no finance charge. It gives us points for everything we purchase, then in 3 months, we get rewards coupons for our local grocery store. We get an average of $80 every three months in free groceries! This has been a lifesaver with the food costs going up. I would be cautious doing this if you have a problem paying it off each month though. You could get in a bad cycle of paying finance charges, and racking up debt. We each get an “allowance” of $12 a month for whatever we want. I’m curious what everyone else get’s as their mad money. Are we normal, or really cheap?

    Koris last blog post..Dinner Rolls

  8. LobotoME

    We use credit cards instead of cash (we have a Fidelity CC that gets us 1-1.5% back that goes DIRECTLY into our IRA’s) – last year we both got ~ $3,000 into our IRA from using the CC to pay for everything! Having said that, we do pay off the CC each month and it has no annual fee. But if you have issues with “charging” beyond your budget and aren’t able to pay it off, than cash may be the better way to go.

    We also have a monthly budget but more general – the following categories remain consistent (mortgage, sam’s preschool tuition, etc) and then food we set a rough “let’s stay within this amount” – that flucuates with how much we will be home vs. traveling; how frequently we have company over for dinner (we love having people over but that does increase grocery bills!) and then we have a misc. needed (eg. haircut, gas, etc) and a misc. wanted (new juicer). And we have an overall “amount” we desire to stay below. Once we start getting close to that overall budget amount, I begin to REIGN in the purchases. 🙂

    One of the things that has helped ME with the escalating food prices is really planning out our meals each week (beginning with looking to see what is in our pantry, fridge & freezer and attempting to use some of those items). I find that meal planning (Feed ME meal planner) helps ME from just wandering the aisles and buying things that won’t get used before they go bad. I mean, seriously, $4.99 for THREE AVACADOES yesterday. Lord.

    Thanks for all of the tips Simple MOM! You rock!

    LobotoMEs last blog post..{ rocked to the core & back on my mat }

  9. Lynn

    I do the family finances and we use a similar approach to LobotoME. We purchase everything on our American airlines credit card and pay it off each month. I set a budget but we just have an overall amount we can spend on variable expenses like groceries, entertainement, house repairs etc. Once we spend the amount of money allotted then there is no more spending for the month (I check our credit card statement every few days to keep a reign on spending). We tried to assign a certain amount for the different variable expenses but they just seemed to be a number chosen out of thin air and it just wasn’t working. Knowing that we be a little more flexible helps with the rising costs of food and gas and everything else.

    We also each get a certain amount per month of play money which helps my husband not feel as if he is tied down to a budget.

  10. Lynn

    Knowing that we *CAN* be a little more flexible helps with the rising costs of food and gas and everything else.


  11. robyn

    right now, he handles all the joint bills, but as we aren’t married “officially” all of our separate bills are handled separately. i give him money twice monthly for the joint bills, but i also know exactly where every penny of that is going. as for my personal stuff, the budget is basically DO NOT SPEND MONEY ON ANYTHING.

    robyns last blog post..Blog Button Exchange

  12. Jenny D

    I’m glad that you’re going to be posting about your zero-based budget. I am the financial “manager” at our house, but lately it feels like the finances are managing us. We’ve lost a little income and with the rising cost of food and gas, we are really feeling the pinch. We need to get on top of our spending and work out a budget to live by so we can tell our money where to go instead of the other way around. Thanks for sharing this information!

    Jenny Ds last blog post..Funny Boys

  13. Sporty Mama

    We basically do the same thing as you. Hubby is the financial manager in the family because he is better at it than I am. We have a “State of the Finances” meeting before every pay period to go over the budget.

    Since we have paid down so much debt, the hardest part is saving what is left over. We both have a tendancy to be spenders, me more so than him.

    I am really enjoying your blog. It has really helped me over the last couple of weeks. You can see that is my last post.

    Sporty Mamas last blog post..Simplifying Life

  14. Briana

    We do something similar, use “Quicken” for tracking and don’t have cash envelopes for anything but my food budget. I’ve been begging for more cash envelopes for other categories as I think it would help me stay in budget better, but alas I’m married to an accountant and this just seems to be too simple for him or something. The other problem we have is tracking things regularly…like what you do on a weekly basis. By the time we actually get to sit down and do this together, it turns out to be a monthly or bi-monthly chore (and one I hate!). The demands of our life right now, however, just doesn’t lend itself to doing it more regularly, but I think that is key.

    Brianas last blog post..Muffins and The Market Tuesday’s

  15. Jill

    thank you for permission to toss my non-major purchase receipts! they are ugly and horrible and almost as bad as wire hangers.

    {re: the ING account referrals … ummm… do I need to receive some type of something from you? (I haven’t yet.) or do I just go sign up for an account and the monies magically appear? Thanks. Hope it’s not a bother.]

  16. Amber

    I recently came across your blog and I’m really enjoying it. You’ve got a great resource here – thank you so much for your time and effort.

    I’ve just started with a zero-based budget in the last month and a half using YNAB. I’m still trying to wrap my mind around the whole concept. I used to do a prediction based budget (for lack of a better term) for years in Quicken but finally realized that it was largely a waste of time. The whole idea of tweaking the budget during the month makes so much sense, but I find it hard to do!

  17. simplemom

    @GreenYourDecor – Yeah, irregular incomes do make budgeting tricky, but not impossible. I’ve read some really good stuff on personal finance blogs out there. Some of my faves are in the “useful links” section up top.

    @Sarah Mae – Nope, not Crown’s! 🙂

    @Elysian Girl – You’re definitely not the first reader to ask for my viewpoint on credit cards, even when the balance is paid in full, so I’ll have to write a post on that sometime.

    @Kori – Our personal spending is $20/month each, so not much higher than yours!

    @LobotoME – Oh yes, menu planning definitely helps with staying in the budget! And thanks for the kind words.

    @Jenny D – I completely understand that feeling. That’s how I felt for years until I started budgeting this way. You’re not alone!

    @Sporty Mama – Thanks for the mention!

    @Vered – I enjoy it, too.

    @Briana – Yeah, sometimes some things seem “too” simple for some people. It’s not as fun unless it’s really complicated.

    @Jill – That’s odd, I sent it to you awhile ago. I’ll try again in a minute. No bother at all.

    @Amber – Glad you like it! I’ve heard good things about YNAB. I like your term, “prediction-based budget.” That’s really what it is, isn’t it?

  18. Org Junkie

    We track all our finances with Quicken. I like the balloons I get when I balance 🙂 I also like being able to print out a report anytime lickety split.

    Org Junkies last blog post..Don’t look up…..


    I read on this blog (or another, I don’t know) about how to make homemade reusable sandwich “baggies”. They were little vinyl material bags with velcro closures. I am going crazy trying to find out the blog name with this info. If it is this one, please email me @ if you get a sec. Thanks for your help!
    Shine On!!

  20. Ron@TheWisdomJournal

    I think the strength of this system lies in the fact that you do it together. When two people are pulling their finances the same direction, they get there so much easier. Looking forward to all your “I’ll tell you about this later…” posts! 😀

  21. bee

    Zippered pouches! Why didn’t I think of that?!

    I know, all that good stuff in your post and “zippered pouches” is all I take away from it? 🙂

    Actually, we are almost 100% the same in how we handle our finances. I make the budget and track everything, but I make sure that HH gets consulted on everything. I use my own Excel spreadsheet and a manual bookkeeping pad to track everything. (I know, it’s very archaic, but I enjoy doing it this way.) I do need to work on throwing my receipts out in a more timely manner!

  22. care-in

    I am really enjoying your posts about finances. We are going from a limited two income household to an even more limited one income. It’s scary but I am taking a break from working to stay home and we are open to giving it a try. I am the one that manages the finances but I am also the spender. We use a very simple envelope system for groceries, entertainment, and car repair money. The hardest part for me, at least when we had two incomes, was once bills were paid and money was in the envelopes not spending the little bit that was leftover. Our budget is becoming even tighter so it will be a learning experience I’m sure.

    care-ins last blog post..Monkeying Around

  23. Fontaine

    Hi, I know this was posted in June, but I just found your blog. I spent hours the other day reading all of your money management posts and I have a couple questions, if you don’t mind.
    Ok, you say that your paycheck gets deposited, then part of it is swished away to the various sinking funds and part of it goes to pay your bills automatically.Can I assume that the cash you withdraw for the month to put in your envelopes comes from the main checking account? The part that I’m confused about is how you use your sinking funds. When you want to buy something, say a birthday gift, do you use money from an envelope (groceries for example)? Then when you get home you transfer the money from the “gift” sinking fund to checking, then withdraw that cash to replace the money in the groceries envelope? Or do you use a debit card to take that money out of the main checking account (which has to have some money floating around in it in order for this to work) and then transfer that money from the sinking fund to the main checking account? Or are you pre-emptive and if you know you need a birthday present that month, do you add another envelope to the pile with the money for that gift from the cash you withdrew at the start of the month?

    I’m sorry, I’m probably overthinking this, but I need to explain it to my husband who is deployed right now so I only have a 15 minute phone call to do it in. Thanks so much for your help. Your blog is great, I look forward to reading more of your posts 🙂

    Fontaine´s last blog post…150% increase!!

  24. sam

    hi i have a question for u i am new to budgeting and couponing i want to how much u send on grocerys each month and if that includes all other household and personal items also

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