If you are looking to create a family budget, read on. We have tried several different ways of budgeting and only in the last nine months have found a plan that works.

The budgeting system that finally worked for us it one that closely resembles a cash allowance. Here is how it works:

• We have totally stopped using our credit cards.
• We have 2 bank accounts, our “main account” and our “cash account”. 
• The “main account” is where all our deposits go, including our paychecks. We pay our mortgage out of the main account, other loan payments and all other “non-discretionary” spending like utility bills. 
• We decided upon a weekly budget for “discretionary spending”. We spent some time looking at our spending to understand how much we needed for groceries, dining, Starbucks, kid’s shoes, etc. We then agreed on a weekly amount which took into consideration what we had been spending on discretionary expenses and what we thought we could get by on. It’s really important to talk this weekly allowance through as a couple so that everyone is on board. We used a great site called mint.com to track our expenditures and break them into discretionary and non-discretionary items. 
• We then set up a weekly recurring transfer (using Wells Fargo’s amazingly easy website) from our main account to our cash account in the amount of the weekly budget. 
• The cash account has a $1000 cushion so that we don’t bounce checks. So when the balance gets to $1000 we know we’ve spent all we can for the week. 
• We use our debit/credit cards from the cash account for all spending. 
• We get daily alerts as to our balance on the cash account so that each of us always knows where we are for the week. 

The net affect of this budgeting system is that we have a target each week that we’ve agreed upon, we have visibility into how we are progressing against our budget and don’t have to manually track a single expense to do all of this.

The trick is to actually stick with it, which is not easy. 🙂