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Our system for household budgeting

January 10, 2009

Household financial management

I am putting together a financial management system for our household.  In the great words of one of Canada’s most respected think tanks, The Fraser Institute, “if it matters, measure it.”  We’ll be measuring our budget and keeping it simple.

Here is our system.  Use it, plagiarize it, criticize it or tell me what you do. 

(1)    We put together a system of accounts which is on a cash flow basis (both my fiancé and I receive the cash from our incomes several weeks after we earn it)

a.       Revenue which equals our combined income (as opposed to sale of capital assets).

b.      Expenses

  1. Cars – including fuel, insurance and maintenance
  2. Clothes
  3. Dog – all expenses related to our puppy
  4. Entertainment – including everything fun except going out to restaurants
  5. Groceries – all non-restaurant food items
  6. Household – all expenses related to the roof(s) over our heads
  7. Miscellaneous
  8. Restaurants
  9. Savings – in accordance with The Wealthy Barber this should be no less than 10% of your income (I like it to be 10% of gross income, not net)
  10.  Tax Provision – our income taxes are not deducted at source, so we need to put aside enough cash to cover our tax liabilities.
  11. Travel – personal travel including vacations and trips to visit family

c.       Net cash flow

(2)    Our accounts are listed in an accordion file folder that holds up to sixteen accounts (good for when we add more)

(3)    We collect receipts for everything we purchase whether paid for by credit card or by cash.

(4)    When we come home we each file our receipts under the most appropriate account

(5)    At the end of each month I enter the receipts into our chart of accounts, give my fiancés credit card receipts back to her for reconciling against her credit card bill.  I keep mine for reconciliation.   I throw out (recycle) the cash receipts.

(6)    We measure our actual results against our budgeted results and determine where we need to make changes.

This is a very easy system to follow, only takes a few minutes per month, ensures you know where your money is going and helps to monitor your savings. 

Let me know what you do.

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2 Responses to “Our system for household budgeting”


  1. My system is not so advanced. I know how much money comes out of the accounts every month (to within $300). I know how much money is coming in. I try to make sure I’ve got 30% more in the accounts than I think is going to come out. That’s about it.

    I know. I’m a dolt.


  2. This is a great system Mark. I found a version of this system that’s an iPhone app called iXpenseit and I’ve been trying it out since Nov 1st. It’s a powerful piece of software that not only produces report but also sync’s online and allows for Excel exports, etc. So far (25 days in) I’m impressed.


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