Here is how I organize my checking accounts to separate my fixed expenses and my discretionary expenses. I have 2 checking accounts, one I'll call the Fixed Checking account and one I'll call the Variable Checking account. I then setup certain bills to be automatically paid out of my Fixed Checking account. I hate to write checks and since these expenses are pretty much non-negotiable I have them take out the money automatically. In the Fixed Checking account I pay expenses like the mortgage, electric bill, gas bill, telephone bill, car loan payment, etc. I put all the utilities on budget billing so the amount is basically the same all year. I also add one important thing to this account. I also add to the Fixed Checking account my savings for each month. I add an expense for my kids college savings and our personal savings. I have my brokerage then take these amounts out each month and invest them automatically. I then add up all these fixed expenses and have my employer, using direct deposit, put an amount in my Fixed Checking account every payday to cover these expenses for the month. I then have the rest of paycheck put in my Variable Checking account. From the Variable Checking account I pay things that are less important and for unpredictable amounts, like credit cards, dance classes for my daughter, vacations, etc. If we don't have the money in the Variable Checking account to cover the expense, we can't afford it.
With this method, I know the basics living expenses and my savings are covered with the money in my Fixed Checking account. I can then just concentrate my time on monitoring the money going out of the Variable Checking account. I don't pay any other bills out of my Fixed Checking account so that I don't get myself in trouble meeting those expenses. You have to monitor your Fixed Checking account every few months to make sure one of the expenses didn't go up or down and adjust your direct deposits accordingly. If one of the expenses would go down, I then add that money to my savings amount each month. This really helps me to keep an eye on my discretionary expenses. Once you get it all setup it's really easy to keep going. Try it!
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