Simplest budgeting technique EVER. Includes FREE printables!

Budgeting can be complicated. Frustrating. Hard, even. When my husband I went through our tough financial time we learned one glaring fact about budgeting…
Simplifying works. In this post I will break down my ridiculously simple, easy, and practical personal budget system that single-handedly got us out of major debt (including $10K on just ONE credit card!) and helped us get ahead financially. The best part? It’s worked for thousands of people too! The technique works whether you use cash, debit cards, or credit cards to do your spending. Ready for the secret sauce? Let me start by explaining why this works so well for us…

When we first cracked down on budgeting, I tried everything.
At first I…
  • I tried monthly budgets. (But getting a lump of money is hard for me to not blow through quickly.)
  • I tried multiple budgets. (But it was confusing and hard to track, especially if I needed one budget one month and not the next, like haircuts or vet visits.)
  • Tried using cash. (But it was hard to track so I would have no idea where it had all gone at the end of the month.)
Nothing was working long-term, so I wised up and created my own system.
Now I…
  • Break my budget down weekly.
  • Have only THREE budgets that encompass all our regular spending (grocery, other, and family…more on that below).
  • Use credit cards to track all transactions and pay all bills (see other reasons why HERE, and see how we chose our cards HERE)
Simplifying our budgets has – literally – changed our financial lives! Here’s a video showing how:
Click below to watch the video on Youtube, or click HERE to watch it online.

(Note: Be sure to watch the video first or the following will make absolutely no sense!)
The Simplest Budgeting Method Ever “How-To”:
The meat and potatoes of it all…

1. Open 7 bank accounts.

Yes, seven. This will help you organize and simplify your money more than you can imagine. Read and watch a video all about that HERE.

2. Divide up spending responsibilities

No reason to step on each others’ toes! Divide and conquer! Sit down and write out everything you spend money on, then divide up. If you do the cooking, you should buy the groceries. If you drive the kids around usually, you should be in charge of paying school fees. If you are the one that knows about cars, you should be the one to handle oil changes and car repairs. This will keep you efficient, organized, and give you autonomy to do things your own way! See more about that HERE.

3. Divide your spending responsibilities into three budgets:

1) Grocery
2) Other
3) Family

“Grocery” budget includes:

  • Anything you could find at a neighborhood grocery store.
We’re not talking Costco or super Walmart. We’re talking a “neighborhood Walmart”, Smiths, Safeway-type stores. They don’t have power drills and sheets for your bed, but they have most of the basic items you might need to buy on a day to day basis.
  • Examples of “grocery budget” items:
Food, shampoo, dog food, lotion, baby wipes/diapers, shaving cream, ziplock baggies, basic kitchen utensils & baking items, cleaning supplies, milk, basic cold remedy medicine, makeup and other toiletries, etc.

“Other” budget includes:

  • Money set aside for normal, regular, non-grocery expenses.

These are “want to have” items most of the time, and not “need to have” items. Once again, this does NOT include any form of bill or utility, see the next category for that. See below for more explanation.

  • Examples of “other budget” items:
Home decor needs, clothing, haircuts, babysitting money, piano lessons, getting the car cleaned, school pictures, lunch with friends, spa treatments, shoe repair, gifts for birthdays/showers, etc.

So where do bills, utilities, and gasoline come from? In our house, money for that comes from our family budget.

Family budget includes:

  • Expected, set monthly expenses involving the family, house, and travel, as well as unexpected expenses involving the family.
These are the “need to have” expenses that keeps the family running, and are NOT food-related.
  • Examples of “family budget” items:
Utilities (gas, electric, cable, internet), medical expenses (co-pays, medical bills, insurance), car expenses (gas, repairs, new tires, registering the car, oil changes), home costs (mortgage payment, homeowners insurance, home repairs, new water heater, new furniture, TV, or other large household expenses, etc.), family entertainment (travel, trips), etc.

See below (the bank accounts section) for how we separate all these budgets out.

 

4. Decide how big those budgets should be.

Click HERE for parameters on how much you should spend on groceries. (Click HERE for a full tutorial on how I save 1/2 on my groceries every month without clipping a single coupon.) For your “Other” budget here is how we decided how big that should be:
  1. Pull out your detailed statements from the last 3 months that show every dime you’ve spent (spreadsheet, credit card statement, or whatever you use to track your spending).
  2. Decide what will be covered in YOUR “other” budget.
  3. Total up how much you spent on “other” in the first month, then second, then third.
  4. Average them out (add the sum of the 3 months then divide by 3).
  5. There’s your STARTING point….
  6. …now…cut it in half :) If half seems to harsh, cut it down and start there. Make it hurt a little, it’s almost guaranteed you are spending more than you should because, well, that’s human nature!

5. Track your new budgets.

As explained in the video, an envelope is the single most effective way I’ve ever tried. Here’s a quick review of the video. You can make your own envelope like I did in the video, or you can download our free envelope printables HERE.
Envelope at the beginning of the month:
Broken down:

 

Remember…The point is that you stay WITHIN your weekly budget. However, life happens. So if you happen to go over budget, remember…NO BORROWING BELOW THE LINE! Feel free to borrow side-to-side.

 

5. Use leftover money wisely. The point is to try to stay below budget each week. If it’s the end of the week and you have money left in your budget try not to look for a way to spend it. Rather, put it toward any debt, or if you’re debt-free other than a house or car, put it in your SLUSH FUND or savings accounts.

So there you go!

Trust me, it’s much simpler than it looks on paper (that’s why watching the video is just plain easier). Making these simple changes transformed our financial lives and have allowed us to get out of a very scary situation…and get ahead! Adapt the system to fit you and your family. And remember, if we can do it, you can do it :)

Additional notes and tips:

  • If you prefer a more “techy” approach to tracking, you’re like my husband. He would rather shave his eyelids than carry around an envelope. He uses Mint.com to track his responsibilities because it’s digital, has a fabulous free app, and connects with every loan, bank account, credit/debit card we have, and he can also set and track financial goals. I recommend doing both because Mint is more comprehensive…but it didn’t work for me in terms of keeping track of day to day spending.
  • If you have a long month (one with 5 weeks), you can either make the first or last week of the month longer to include the extra days, or simply divide your budget by 5 and keep all your weeks as 7-day weeks. Just do what works best for you. In our free printables we divided everything by 4 weeks to keep it uniform and simple.
  • Try cutting your budget down a little to begin with. You probably spend money that you don’t need to be spending on little things, that could really serve your family a lot better if you put it in your slush fund and put it toward BIG, long-term things.
  • Keep EVERY receipt for the month in your envelope,so if you lose track or need to return something you have everything right there.
  • If you bring home extra money in a month(bonus, extra commissions, extra paycheck that month, etc.) DON’T alter your budget! There is absolutely no need! Put the extra money toward debt, put it in your savings, or put it in your slush fund. Don’t go out and buy more groceries with it, that is noooooo fun. Be wise with every dollar you bring in.
  • You need to get creative with how you spend money on groceries. Click HERE for a full tutorial on how I save 1/2 every month without clipping a single coupon. Additionally, click HERE for lots of cheap meal ideas, how to not waste food, and more.
  • Open 7 bank accounts. “Whaaaaat?! Hold the phone! Put on the breaks! Sound the alarm!…SEVEN accounts? Giiirl, yo’ mus be ca-RAY-zay!” Ok, maybe I am. But I will promise you something: by opening multiple accounts, it WILL make your life easier.  Watch the video below, or click HERE to watch it online, and click HERE for all the details, how-to, why’s, and info.

Once again, click HERE to download our free printables.

Good luck with your new system!

Ps Did you like this post? If so please subscribe to my newsletter so you don’t miss another one!

XOXO,

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Comments

  1. Dina says

    I am your new follower and addicted to your site. and congrats for your cheapskate appearance. I like your new website outlook. I have a question about budgeting. Our local walmart does not price match on produce except stater brothers and ralphs. So I totally go to 4 stores – smart n final and costco one week and the following week would be walmart and indian store. Our smart n final carries produce very cheap and walmart produce prices are very high compare to s &f. We do not eat meat so I can easily buy groceries in $600. My typical credit card bill is $600 – $800.grrrrr. depands. So I want to be more accountable and no more impulse buy. I do not need $150 for my walmart and indian store trip so how should I balance out since you say do not cross weekly. and my costco and smart and final trip cost me roughly $200. we do not eat outside may be once a week and mostly fast food. does your grocery budget includes eating out and family fun like chucky cheese trip, yogurtland trip etc. thanks.

    • FunCheapOrFree says

      Hello Dina! Good question. I’m not sure if I understand your situation at 100%, but this is what I would tell you…it doesn’t matter where you shop. You could go to 50 stores per week for all I care! You can shop anywhere you want, you just can’t go over your weekly budget. No matter where you go, you just can’t spend more than your weekly amount. The beauty of this system is that it allows you the freedom to buy whatever you want, and shop wherever you want…but when your budget is gone, it’s gone. So naturally I would suggest shopping the best deals so that you can stretch that weekly budget all the farther. Hope that helps!

  2. Christie W says

    Hello, I just stumbled across your site from Pinterest. I am hooked! Thank you for all your wonderful information. My husband and I are going to be starting your system this week. Again, thank you and keep up the great work!

  3. Lindsay says

    I have a question about having 7 accounts… I think it’s a great idea and I want to go ahead and open the accounts but how do you avoid monthly fees if you only have a small amount in each account every month? My bank requires $1,500 in the account or direct deposit in order to avoid paying $12/month. I was also curious how you go about using your credit card for everything. Do you pay off your credit card balance weekly, bi-weekly, monthly? I love your site by the way and can’t wait to try this out!! Thanks for the great advice!

  4. Rachel A. says

    Ok, so this has been hard averaging the three months since we were just shopping for Christmas and birthdays. I decided to take what we spent on Christmas and divide it by 12 to figure out the monthly average. So when I divided that number in half I only have $360 for everything including eating out and I have a family of five, three little ones like you, and it is my husband’s birthday this month. I know it is supposed to be a challenge, but with 5 weeks, I might need to do a spending freeze two weeks out of the month to make this work. We do have venison for meat and a bag of meatballs and chicken in the freezer. What do you think? Should I up the amount or leave it?

    • FunCheapOrFree says

      Oooh yeah, that’s true, Christmas is tough. I wouldn’t divide Christmas out, because it’s just not normal/typical spending. Just do your best. For groceries it’s easy, try for $100 per person in your family, per month. For “other”, just do your best to guess! Challenge yourself so aim low, but go back to september/october/november and average those months…then cut the average in half ;)

  5. Lauren says

    I love the envelope technique & definitely want to try it. However I’m confused with the Grocery/Other/Fam idea. If you only give yourself $600 total per month on the grocery & other – where do you account for the fixed expenses like rent, utilities etc? Are you saying you spend $600 in addition to Family budget? Sorry if that isa a dumb question :) Thank you for all the helpful info!!

    • FunCheapOrFree says

      Not a dumb question! Look under the “family budget” section. Those are hard to budget for but still need to be accounted for. So yes, that $600 for grocery/other is SEPARATE from the “family budget”. The point is that grocery/other are your expenses that you have control over and can budget for. Gas, electric, and even gasoline – you can’t really do that. While you should always cut back where you can on utilities and bills, separate it from grocery and other so you can really hone in and cut back on the things that you have 100% control over.

  6. Stephanie says

    Jordan,
    I have always been “wise” when it came to putting money into savings and whatnot. I’m especially grateful to my parents who taught me how to responsibly use a my own credit card at age 16- and to NEVER purchase something that you cannot pay for/don’t have the money for. So I’m proud to say that I didn’t even know what APR was until a few years ago, because I didn’t even realize you COULD go over! (I know- I’m a fool- but it’s gotten me this far right?! :) It has stuck with me ever since. But my monthly budget for groceries was more of a “well, get what you need” kind of thing. I NEVER spent more than I had of course, but I also knew I could be saving MORE if I had a better system to keep track of it all. I started your envelope system in April 2013, so about 8 months ago, and although it was hard (and still is most of the time) we have saved SO MUCH more then ever before. I can’t even remember how I ever survived with my budget beforehand! Your envelope system is pretty much foolproof and with receipts being in one place and having a view of what your spending every time you open your wallet is great! I tried a few systems before this, and they had their pros and cons- but with your system it’s ALLLLL Pros! :) I just wanted to share my thanks- my husband and I have both recently graduated (From BYU- whoop whoop!!) and it’s nice to have more in savings then expected. Thank you for taking the time to share your talents with us. You are blessing the lives of many. :)
    PS- I also grew up in Oregon! Right at the base of good ol’ Mt. Hood :)

    From your fellow Cougar Lovin’, Tree Huggin’ Oregonian and Stay at Home Mom-
    Stephanie

    • FunCheapOrFree says

      Haha oh my gosh Stephanie, you just made my whole YEAR with that comment!! Can’t tell you how much it made me laugh, smile, swell with pride. You’re the best, many tree-hugs!! XOXO

  7. Jenna says

    Hi Jordan!

    I don’t know if I just missed this…but I was wondering if you touched on debt repayment on here?

    I think I have our family budget figured out along with the seven bank accounts, but I’m struggling with how to pay down our debt as fast as possible.

    My husband and I both have student debt and if we were to just pay the minimum payment each month, it would take us much longer than we would like.

    Would it make sense for a family with debt like ours to not have a slush fund and instead, anything extra goes toward debt?

    Also, I’m struggling with one other thing…we have varying payments for our bills…some are to be paid bi-weekly, some monthly, and one is even bi-monthly. The issue here is that means we have some months with two pays and three mortgage payments, and some months with three pays and two mortgage payments…it varies so much that I wonder if a monthly budget will work for us?

    Any tips are appreciated! Thanks!

    • Samantha says

      Our situation is so much like Jenna’s, Jordan. How do we pay down debt as fast as possible?! We have student loan debt & medical bills, from when we didn’t have medical insurance. Are we not allowed to have a slush fund until all this is paid off??

  8. Iris Lish says

    Jordan,
    Stumbled across your system on Pinterest, and I’m totally blown away! This really is the simplest budgeting system I have found ( I also love that you feed your entire family without clipping a single coupon, cause c’mon, who wants to spend their Saturday doing that?!)
    I have also tried planning by budget monthly, but quickly became overwhelmed with the idea. Your system of tracking expenses weekly really is genius!
    I have one question: I was very interested in how you manage your money with seven bank accounts. When I clicked the link toward the top of this page, it took me to an error page. I was wondering if you could explain this method, as I have been searching to employ a similar system.

    Thanks so much,
    Iris

  9. Carine says

    Hi Jordan,
    As I am not from the US to just spend $100 per person per month is a little low. As I have 3 people in my house it would make $300/month. A small chicken here is about $12, Pork chops $20/kg, bread loaf from bakery$4.60 just as an example so with $300/month we would be starving. My question is what percentage of your income is your grocery budget? that would help me a lot. By the way I just came across your website through pinterest and I love it. It is easy to understand and makes me think that “yes I can do this!” Tried many other budgets but most are just too involved and complicated so i am keen to try your way! Thanks

    • FunCheapOrFree says

      Hello Carine! Welcome from whatever country you’re from! :) I wouldn’t ever base groceries off of income, because that means if you make more money one year than the next, you’ll spend more on food rather than putting that money toward bigger financial goals. So it really should be based per-person. Every situation is different so just figure out what you’re spending right now per person, then cut it down by at least 33% (I would suggest 50% but we can take baby steps). Find your OWN price per person. Make it sting, make it a challenge and I promise you’ll be better off for it! XOXO

      • Carine says

        Ooops forgot to say I am from Western Australia! Thank you for your help. I will have to check if supermarkets price match here. Stores usually require to see the special from another store before they give you the specials but as for supermarkets it is pretty much unheard of here. There are not that many different stores here anyway the competition is very low and the fact that we are so far away from the rest of australia makes the price of food pretty high. No hurt in asking though!

  10. Laura says

    Hi Jordan,

    I am very uncomfortable with carrying cash around. I feel that if my purse is stolen and I have cash, I won’t get that money back, but if most of my money is on my debit card (I have no credit cards), I have a good chance of recovering that money. I have had trouble with people stealing cash from me before, so this method, while extremely efficient, will probably not work for me. What do you suggest?

    • FunCheapOrFree says

      I agree! If you watch the video, I actually use credit and debit cards for my spending! Take a look and see if that helps :)

  11. Shannon says

    Hi- love this system and can’t wait try it out:)
    One question though- how do you budget/save for school shopping, Christmas, birthdays, other holidays etc? I don’t know if I missed that somewhere;)
    Thanks!!

  12. Ava says

    Hi Carrie!
    Thank you so much for this printable! I printed out January–and then somehow lost my link to the rest of 2014 and could not find it in my computer…so I googled it and found it again–THIS time I downloaded it and put it where I can (hopefully) find it again! Hope you do this again for 2015–I really like this method! Ava

  13. Ava says

    Thank you so much for this printable! I printed out January–and then somehow lost my link to the rest of 2014 and could not find it in my computer…so I googled it and found it again–THIS time I downloaded it and put it where I can (hopefully) find it again! Hope you do this again for 2015–I really like this method! Ava

  14. Liz says

    Hi Jordan,

    I like your site and ideas, and I’m also a member of DA (Debtors Anonymous), and many of the principals and ideas you have on your website sound very familiar…especially the one promoting the idea of saving (i.e. taking care of oneself and one’s needs) before paying off debt is especially familiar. Members of DA have found that deprivation only leads to more debting. The concept of using envelopes and things like that to “budget” (though we refer to it as a Spending Plan…which certainly applies to your suggestion of adding up your expenses for three months and then dividing them BY three, to determine how much you have spent and will need, etc.) is also very familiar. I wanted to let you know this, and to share this with your readers if I may, so that they may find the rooms of DA, if they are struggling with debting, overspending, or even Under-earning.
    Thanks!

    • FunCheapOrFree says

      Wow, Liz thank you SO MUCH for sharing!! I had no idea Debtors Anonymous even existed, what a great resource!

  15. Rhian says

    Thank you so much for a fresh way of looking at budgeting. I live in England and its not as cheap to shop here. You are the first person to budget for groceries including toiletries and other essentials – this is the way that I think too! I’m hoping that following your plan will be like a breath of fresh air for my family. Keep up the great work. I am looking forward to joining in with your 2014 project too.

    Many thanks x x

  16. says

    Hi there!
    i was looking at this and love it!
    Just confused on the wife and husband account..
    if i am a single parent should i double it so it is 200 per person for groceries etc?
    Thanks so much

    amazing website
    anya recently posted…HELLO Waterloo!My Profile

    • FunCheapOrFree says

      If you’re a single parent then still give each person $100 each per month. However if it’s just two of you (you and one child) $300, $75 per week, is reasonable. Hope that helps!

  17. Karen Smith says

    I have watched your videos on the 7 accounts. My question is do you have to start your monthly budget with that total amount in order to keep adding to it? I have tried doing budgets in the past and they really never worked out for me. I’m a stay at home mom for right now and am trying to do what we can so that I can stay home with our daughter that has special needs.

  18. jessi says

    I am wondering about your Costco trip. You say grocery money is for your local grocery store. I currently spent 200 a week for 4 people. That is what I budget for groceries, that includes my regular grocery store trip and my Costco trip. I would love to shave 75 off of that but not sure how to do that and still shop at Costco. Where do you fit Costco into your budget.

  19. Sonia says

    Hi, I am passionate about financial health & actually coach people at my church. But I am a mess! I love the simplicity of your system, & it will be a huge challenge to implement it. I have 2 toddlers, & a hubby who isnt into the finance thing. My issue is that I find amazing deals on items that we need, & do not want to miss out on these deals! Many are online (childrens shoes, home items, electronics, etc) We dont really buy superfluous things, & definitely dont use credit cards with interest, but I end up using savings reserves to purchase some of these items that we need. I need to get it together, but feel so undisciplined, but MOTIVATED & driven to save $ for our future. Any tips on how to organize the spending? You have little people – how do you do it? Please help! Do you do one on one consultations? I need a neutral pair of eyes to analyze us! Thank you

  20. Teri says

    Hey there I love your budgeting technique totally changed everything for us. I love your envelope budget sheets however am currently trying to set us up and plan for 2015 and cannot change the dates on the pages. Are you planning on sending out an updated version of those??
    Thanks so much

    • FunCheapOrFree says

      Wow, you’re right…we’re almost to 2015! I need to get on that for sure. Yes, I will get some updated envelopes, stay tuned!

      • Teri says

        Thank you so much, they are so simple and easy to use and obvious! Its shocking that i never thought of it before, and yet i am so very happy someone did because it changed so much in terms of our spending and tracking and it and sticking to a budget

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