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Cash Management Techniques in Household Family Budgeting

Updated on August 22, 2013

Start well—finish well

Many people get through the first few steps of budgeting (see four bulleted points below), but get stuck when it comes to the last one, monitoring actual income and expenses and comparing them to the budget.

The budget is useless unless you evaluate how you’re doing. There’s no way to tell unless you keep track of income and expenses and compare the actual to what was planned. This should be done on a monthly basis, but with an eye to the year-to-date accumulation as well. Early in the year, when year-to-date isn’t too useful, it may be helpful to evaluate the past twelve-month period. For cyclical budget categories, e.g. utilities or Christmas shopping, it may be best to compare with the same month of the previous year.


Four budgeting steps

  • Create a record of past income and expenses
  • Project income and expenses into the future
  • Balance your budget
  • Monitor income and expenses and compare to budget

Do you have a family budget?

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Cash management monitoring techniques

There are several cash management techniques that make budgeting and living within the family budget easier.

  1. Track expenses and download from online accounts weekly.
  2. Arrange checking, savings and credit card accounts so there are no monthly or annual charges or frills, and never incur other service fees or fines.
  3. Whenever available, use auto-bill pay, electronic fund transfer (EFT), auto-deposit, whatever will remove the human element, but only when it’s free.
  4. Use credit cards to assist cash flow during the month, not from month-to-month. Pay the entire balance by the end of the grace period.
  5. In savings, keep at least 1–2 months total salary (more if you don’t have water-tight job security), or up to enough to cover the largest single bill you expect in a year (for me that's either annual property taxes or semi-annual tuition).
  6. Keep at least 6–12 months total salary in other investments not restricted for retirement.
  7. Finance nothing besides career-motivated education and the house you live in. Never pay anything else in installments; even at 0% interest it complicates bookkeeping.
  8. Let relatives know when it looks like money might become tight, but don’t necessarily expect help. The idea is that if you actually do end up needing their help, it’s nice if they could anticipate by a few weeks so that it doesn’t interfere with their own cash flow planning.


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    • Howard S. profile image

      Howard S. 6 years ago from Dallas, Texas, and Asia

      Thanks, nicomp, but we can learn so much more from the accounting that follows making up the budget. To be honest, I think I'm about a year behind on that aspect. I couldn't get the software to easily display budget to actual--or something--and that's where I dropped it. 'Tis a new year!

    • nicomp profile image

      nicomp really 6 years ago from Ohio, USA

      People learn so much from keeping a budget. Thanks for the great advice.

    • kcreery profile image

      Kevin 6 years ago from Whistler Canada

      Great information on family budgeting. We're trying to stick to our budget this month.

    • Pamela99 profile image

      Pamela Oglesby 6 years ago from United States

      You simplified the budget process with some easy steps. Very nicely done.

    • Ms Dee profile image

      Deidre Shelden 6 years ago from Texas, USA

      Great point in making a budget worth doing in the first place. Excellent hub and helpful tips for we budget-challenged types! Sharing!