My son has three piggy banks. Well two piggy banks and a fish bank. One is for saving, one is for spending and one is for giving. When he receives money for a holiday we sit down with him and his piggy banks and figure out how much goes in each one.
It’s easy to pick up the dollars and coins and count them, and put them in a container.
Now, in the age of virtual money, it can be a lot harder to categorize our money.
Nowadays we rarely SEE our money. It’s all virtual. There is money that exists somewhere that has your name on it. But unless you ask for it, it is just a number on a computer screen, or an automated voice on the phone, or it’s a number on the receipt from the ATM or teller.
How do you categorize virtual money?
Multiple Savings Accounts
Online banks like ING Direct allow you to create as many savings accounts as you want. Use these savings accounts for place holders for your money.
We have seven personal savings accounts. Emergency Fund, Taxes, Retirement, Monthly, College, Heat, Investments.
We move money from each check we receive into these accounts. Our monthly fund is where we put almost all of our income first. Since my husband is self-employed too, we have a very irregular income.
The heat fund is where we budget our heating savings throughout the year, so when the cold Maine winters hit we don’t have to come up with thousands of dollars right away.
Categorize Your Budget with those Accounts
Make sure your budget items correspond to the savings accounts.
It’s a lot easier to track if all of your accounts match with your budget. We have a spot for each fund in our monthly budget. Even if you don’t use them each month it’s a good idea to keep them in your budget since they serve as a reminder of your goals.
Tracking your Virtual Money
Figure out a way to track your expenses throughout the month.
We use an Expense FridgeSheet, which is a piece of paper on the fridge where we track our spending via receipts each month. It’s an old school method that works for us. We have categories to keep track of each month, like food, gas, giving, out to eat, etc. All of this money comes out of the checking account and this is the only way we track it.
We minus and add to that sheet all month, while our actual budget just sits next to it. We almost never use cash and just keep track of all of the transactions of our debit card. ING will email me every time my card has been used and where it was used.
(Emailed transactions are a great feature to protect identity theft of your debit card too!)
Post a comment and let me know – how you categorize your virtual money?