Friday, September 28, 2007

Household Cash Flow in a Box

One of the more frequent questions that I see asked by couples is this:

My spouse and I are having a terrible time tracking our spending. Keeping up with who spends what is a nightmare. What can we do about this?

I sort of covered this, big-picture-like, in an October 2006 post discussing how I manage our money. On a more "micro" scale, though, our household employs one other highly-complex and technologically-advanced technique:

We each have our own checking accounts, although we're joint owners on all our accounts. For the most part, my wife spends from her account, and I spend from mine. (That is, when we're not using cash-back credit cards, which is always Preference #1.)

However, all the tracking of all of our spending is done by me. Let's just say that I put my Quicken through some seriously tough use: No way could I keep our money straight without it. I depend on Quicken like Crayola depends on color.

But Quicken isn't the problem here, and never has been. Rather, the biggest snag in all this — and what I see so many other couples struggling with — has been keeping up with who's spent what, and when.

In our case, we (mostly accidentally) came up with something I call "Cash Flow in a Box:"

Initially, I just used that black-and-white checkered box to hold bills and bank statements as they came in. The bills wouldn't sit in there for long, though: I clear out the box and pay the majority of our bills right around the first of each month. (I don't usually pay bills as they come in; instead, I prefer to pay three or four at a time if I can. I love Quicken to death, but I don't want to have to mess with it every single night.)

This plan works just fine for bills and regularly scheduled outflows. Day-to-day spending, though, is another matter.

Cash Flow Box to the rescue.

Whenever either of us spends money for groceries, lunches, Starbucks, or whatever, we simply keep the receipts in our wallet or purse. Then, every few days, we throw the receipts in the Cash Flow Box.

So for keeping track of spending, wherever a receipt is generated — which is most of the time, for sure — we don't much have to worry about remembering to tell each other to log such-and-such expense. Just (1) toss the receipts in the box; (2) clear out the receipts and plug the transactions into Quicken once a week or so; (3) hand the logged receipts to your five-year-old daughter so she can scribble all over them to her heart's content; and (4) get on with life. Easy peasy.

(Handling transactions where no receipt is generated, such as writing a check for school pictures or buying Book Fair books for your kid, is a bit more problematic. We've found that situations like this require drastic measures: Scribble the pertinent info on a note and then toss the note into the Cash Flow Box in lieu of a receipt.)

Look: I really don't want to have to sit down and pound on Quicken every night ... but I also don't want to forget bills or deal with overdrafts because someone forgot to log a transaction.

Our Household Cash Flow Box — breakthrough technology that it is — is working quite nicely, I think, at solving these issues.

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— Posted by Michael @ 9:22 AM


I have two "Cash Accounts" in my quicken one for me and one for my wife. When ever on of us gets cash back, goes to the ATM, gets a refund or gets cash in any way, I make a deposit to the Cash Account. When we spend cash I enter it.
Usually MY Quicken cash account balance matches what is in my wallet.
My wife is bad about cash receipts. About once a week I call her and ask what she bought, whatever is left over I expense to MISC.

Anonymous Anonymous
, at 7:34 AM, October 05, 2007  

Ah! Yes! A Cash Flow Box. Didn't know what you were talking about at first. I've got one of those too, though mine is just plain brown. Used exactly the same though. Except for pending bills, which I queue up in order in a special location, so I can't forget them (I'm terribly absent-minded...).

Yep, I agree, an empty Cash Flow Box is a wonderful thing. Mine gets processed every 2-4 weeks or so. Not so hard a task if you don't get too far behind.

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Thoughts on my personal finances, goals, experiences, motivations, and accomplishments (or lack thereof).

My financial life began turning around when I took responsibility for it.
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