Why is this so complicated?Budgeting is supposed to help keep your money on track, but keeping it too simple can lead to complications down the road. It would be nice to be able to keep everything as automated as possible but sometimes we have to do some legwork to keep all the automatic parts running smoothly.
Making Mint work with weekly paychecks
One my biggest frustrations in using tools like Mint.com for budgeting is that it is based on a monthly system, but most of us don't get paid monthly and many of our expenses are weekly. Some get paid every 2 weeks, some on the 1st and 15th and others, like myself, get paid weekly. This complicates the Mint budgeting system a bit and requires you to do a little extra work if you want to keep it all straight.
I get paid on Thursdays. Actually I get paid on Fridays, but my direct deposit through USAA comes through and the money is available a day earlier. I have an excel spreadsheet where I input the number of Thursdays in the month for which I am budgeting and have it automatically multiply my weekly expenses by that number. I have all of my savings goals on automatic weekly deposits that are withdrawn on Thursdays as well so those numbers are also computed.
On the first day of each month I go into Mint.com and update the budget and goals numbers to reflect these calculated values. In months with 5 Thursdays, like this current month, I assume we will do our grocery shopping, refill our gas tank and spend money on a host of other regular expenses on Thursdays. So those values are higher on a 5-Thursday month, but so is my income. My rent, on the other hand, is the same amount every month as are a few other expenses. Because these values don't get larger in a 5-Thursday month, my fifth paycheck more than covers the increase in expenses and I am able to save the difference into one of my savings goals.
Keeping what I owe less than what I have
We are planning to buy a house in the next two years, so keeping my credit score in tip-top shape is imperative. One of the key metrics in determining your credit score is your credit utilization. I try to keep this down around 1-5% by paying off my credit card every couple of weeks. I don't like my current balance to be above $400. One of the problems I ran into with just letting my credit card autopay each month is that my bank balances end up getting out of sync. I always like to have enough money in my checking account to cover what I owe on my credit cards and I don't want to overdraw on any of the bills that have to be paid directly from my checking such as rent and utilities. But I also don't like extra cash sitting in my checking account when it can be allocated to a savings goal and be earning interest in the bank. It would be simple to switch to debit card only and remove the credit card from the loop altogether, but I like the protection the the credit card offers and the rewards we receive are nice. Every little bit helps.
I already use my Excel spreadsheet and Mint to make sure that any extra funds get transferred into a savings goal each month, but when we under-spend or, heaven forbit, overspend on a particular budget line, I have to transfer some money one way or another at the end of the month. This can make it tricky to keep my checking account from getting too low or too high.
Enter Google Calendar. I created a calendar that tracks my income and expenses one month at a time. I created recurring events that show how much money is going in and out and on what day of the month. That way I can take my current checking account balance today and run through this month a day at a time and make sure that I will have enough money in my account.
What does your pay schedule look like? Does it affect your budgeting methods? What do you do to keep your finances running smoothly?