How to separate categories of money for budget (funds, pay, rates)

[kelly237]

I do a fairly good job of responsible spending but decided that
more careful budgeting for each category will help me even more to
stretch my dollars.

The part I am stumped on is non monthly expenses.. I plan to allow x amount per month for car repairs, gifts, vet bills, travel ,clothes ect.

But I am stumped on how to actually handle the money. Do people set up a separate account for this and sorta escrow that monthly amount into it ?? Then transfer money as needed ??

I know I could do cash but I like having the records on my bank statement of this stuff ..

I would like for my spending to be the same each month, so that if I need a car repair,travel,need dental I use the money that I had been allocating to that category.

[hml1976]

I use a separate sinking funds checking account that I stick a $1000 in every month and use to pay insurance, vacations, furniture etc. This month it will be paying for summer camp for the kids and painting our bedroom.

That said we do alter our budget monthly to deal with smaller spending fluctuations.

[user_id]

I have a separate savings account for all the common, but periodic, expenses. I use ING Direct, there are no fees, reasonable interest and once you are a customer you can create additional accounts with a few mouse clicks.

[joe moving]

Yes I escrow every month. I use ING. I transfer X dollars into ING per month.

From there I transfer some amount into different accounts. For example all insurance (car, life, home) goes into 1 account. I don't feel any need to have a separate account for each insurance, because I know that I will always have enough to pay whatever bill is due (might take a little figuring). Car fund (repairs or new car) gets another amount and another account. Condo maintenance fee gets another account.

[md21722]

I create a spreadsheet with the different categories. Each category spans three rows - one row for deposits, one row for withdrawals, and one row for comments. Column wise I list months/years. For each month I sum up the "escrowed" amounts to keep track of it.

Separating the tracking from where the money is actually held means I can get better interest rates on the money. If I didn't do it this way, I would end up with a savings account for each category and make money deposits and periodic withdrawals. Another disadvantage of the multiple savings accounts method is that most banks do not let you put comments on your transactions and if they do, they may only show up online, not on your printed statement.

[MrRational]

Originally Posted by kelly237

But I am stumped on how to actually handle the money... so that if I need a car repair, travel,
need dental I use the money that I had been allocating to that category.

Slush fund it through the VISA card.
Even if you don't have a balance make a payment as if you did.

Then when you're at the dentist office or the car shop or whatever you just lay down the plastic and you're done.

A couple times a year sit down and get specific.
Adjust the payment amount then as needed.

[kelly237]

Originally Posted by MrRational

Slush fund it through the VISA card.
Even if you don't have a balance make a payment as if you did.

Then when you're at the dentist office or the car shop or whatever you just lay down the plastic and you're done.

A couple times a year sit down and get specific.
Adjust the payment amount then as needed.

Interesting plan...I do get flyer miles which would be nice..

[Billy_J]

For expenses which are only twice a year or once a year, total them up, then divide by 12. That is the amount you need to stick in a savings account (or whatever) each month to cover those expenses.

[kelly237]

Originally Posted by Billy_J

For expenses which are only twice a year or once a year, total them up, then divide by 12. That is the amount you need to stick in a savings account (or whatever) each month to cover those expenses.

I know how to do the math..its how to hold the money I am deciding..
I don't want a bunch of accounts for each category vet,car repair,dentist,vacation ect.

I decided to put all the escrow money in a separate account, put these expenses on Visa and do a payment every month from that account (or transfer once) to pay the Visa. That way I also get the flyer miles for the spending...

For food & 25/week play money I am going to do cash..but I may change that..
I could roll that into the Visa also and have records of all my spending ..

[pandaundercover]

First, I keep track of my budgets on a spreadsheet - how much I want to add in each a month, and what the balances are at the end of the month. Then I have them transferred to ING. On ING, you can make separate accounts for different things. So I have an "emergency, vacation, school payoff, and car payoff," at the moment. And when my school payoff reaches the remaining payoff amount, i will extract it from the savings to pay it off. And in the end, you gain some decent interest by having a high savings account on ING. My only recommendation is that you set up a checking account with ING too, for easier control of that savings through money transferring, which I have yet to do. Because it takes 3-5 days for the money to transfer back and forth from an external checking account, which is a bit of a pain... especially if you'll ever need access to that emergency money ASAP.