• How We Budget, Part 1: Account Flow

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    This month the Money Blog Network is hosting a group writing project with the theme of budgets. We’ve had a few posts in waiting to go on this very topic for a while now, so we thought this was the perfect time to unleash them. We hope that our budgeting systems makes sense and others can learn a little from it.

    We think we’ve finally straightened out our budgeting situation for 2008. We’ve posted before on how our budgeting wasn’t adequate and how we’ve tried to change it. Well, those changes didn’t work, so we’ve worked on another budgeting system, one that’s been working for us for a little while now.

    The first step of creating our budget was to figure out where all of our dollars go. In the last few years, our money situation has started to get a little complicated. In order to maximize our dollars, we’ve setup an elaborate cash/account flow scheme. We do this in order to maximize rewards, keep our individual credit scores relatively high, and to account for every dollar that comes into our hands. Check out our cash flow in the diagram below. You can click it to see a larger version.

    cashflowBIG.jpg

    Whoa, looks complicated, no? Well, it is. It took us a while to figure out how to do this, but after a few years we think we’ve finally gotten it down. This is admittedly a little more simplified in that I didn’t put our fun money savings accounts on the graphic.

    I’ve thought about summarizing the graphic, but it seems pretty self-explanatory to me. If you have any questions about the way we do thing, please ask away in the comments.

    Tomorrow’s post will more simply detail how we budget our money each month.

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