Yes but it wont work. I have not found a way to fully automate a personal budget and be effective. You can sign up for Mint or another online budget software and let it auto assign your spending by merchant code. That is fully automated but totally ineffective. At least it was for us, I tried it. A passive approach like that will never win when it comes to money. You have to actively manage money to be successful.
When I ask FPU classes how they execute their personal budget I get many different answers. What follows is what is working for us. There are many ways to accomplish this, time, temperament, personality all come into play when finding what works best for your family. I submit the principles are universal but the execution may be different.
Our personal budget is highly automated but we still use the pen, paper, and the allocated spending form to execute our plan every paycheck (or at least most). The picture accompanying this post is an actual worksheet we created this weekend and it got me thinking. How is everyone else doing this stuff? Time poverty continues to be a battle we fight in our home so we have to leverage technology to help keep us on track. We use automated sinking funds via Smartypig for 23 items including: (I know that sounds like a lot but that is where the automation makes managing it easy) They are - auto registrations, birthdays, Christmas, summer kid care, HOA dues, property taxes, insurances (life, auto, home, umbrella), back to school clothes and supplies, future mission trips. We also pay every bill possible via ach. I prefer to initiate these from the service providers website vs. the bill payment service at the credit union. That way if the address or amount changes I have no issues with them being paid on time. We get almost no statements via the US Mail anymore, that is all automated too. We use Inzolo web based envelope budget software and take advantage of the automated rules you can create to automatically assign transactions to the correct envelope.
With all that automation the grease that turns the budget wheel at our house is still old fashioned communication, some times passionate. My advice (it's free and probably worth just that) is to take advantage of all the technology out there but still have a budget committee meeting with your spouse or accountability partner to walk through your plan on paper. You will feel a sense of accomplishment throughout the month as you see your plan executed via the technology you have leveraged to reach your goals. Seeing your plan happening is empowering and creates hope. I'd love to hear your thoughts. Post a comment below or contact me - dave
4/24/13 Update - We have modified this somewhat recently and it is working really well. Relationally the tracking of every category was creating problems for us. Christy felt controlled and I felt disrespected. A lot of "what category do I charge this to" was not good for our marriage. Since November 2012 we have implemented a cash envelope twist. Like I said above a large portion of our budget is automated. What we have done with that leftover component is decided to take 1/2 of it out on payday in cash. We use $100 bills because it's harder to spend than $20 bills. Go inside the bank and get big bills! The rest stays in the account. We use these funds to spend against our budget. We created a Cash Withdrawal envelope do code the cash to vs specific envelopes. Christy uses that for groceries and household and whatever. We stay off the debt card and use mostly cash. This twist has worked very well for us. We are rolling into the next paycheck with a slight positive balance vs having an accumulated negative balance.
01/15 Update - This post shows what a work in process personal budgeting is. The Cash Program I described in the 4/23/13 update, failed. We ended up with a bunch of off budget spending and didn't have good visibility to what was actually happening. We slipped back to Quicken running consistent negative balances and the stress associated with that. As of September we dumped Quicken and got on the YNAB band wagon. Since then it has been some of the best budget months results and relationship wise since we started following the FPU principles in the spring of 2004. What I've learned over the years is is there are many different ways to do this and different ways will work for different people. What is consistent across everyone is you have to be INTENTIONAL to win with money. We have replaced Smarty Pig mentioned in the original post with our main checking account at the Credit Union using YNAB to allocate it. Happy Budgeting. dave
Dave Smith is part of the KCC finance staff and a Dave Ramsey Certified Coach.