From my perspective, there is not much difference between money moving around in the banking system vs moving around on your budget sheet, except the banking system might charge overdraft fees if the accounts are mismanaged.
Based on that reasoning I've taken the approach to only have as many bank accounts as I need to utilize their services, and to interact with them as little as nessecary.
- education savings accounts for children. There's some tax advantage to keeping them separate.
- a checking account for a personal assistant to pay bills from, limited to a few months cash
- when living together with separate finances, a household account that you both contribute to with a debit card. Convenient for splitting groceries, home improvement, etc. Otherwise, you have to keep receipts and settle regularly.
- if you're paying tax to 2 countries with a tax treaty, you may have to prove that you've already been taxed on money you're bringing in. It's best if you can do that from an account with only a single source of income, or else it gets complicated.
Don't do everything at once: start with something simple like your education savings account, and expand from there (the account that you pay into the ESA with, the other accounts that account pays into, etc).
For me, it's a little bit of work each month (~30 minutes, but I've automated a lot of the work), but it buys peace of mind and a very efficient tax season.
Human nature of thinking needs a context, therefore it makes sense to provide folders or categories to get an architectural structure into a huge amount of data that needs to be processed.
Additionally, if you need to manage a business account; having multiple accounts to balance the differences and to trace money expenses is common practice. The IRS or German Finanzamt (for example) won't even accept a simple budget sheet that lists all expenses.
Because my files are not fungible.
I understand keeping business transactions separate from personal transactions. But creating lots of little pots of money for different personal expenditures makes no sense to me at all.
It’s easier for some people to not waste money by setting up boundaries. You need detailed enough boundaries that it’s not all a fungible blob. Tada, envelope budgeting.
It's a personal direct-debit, like using rules on one's email.
What's more useful to me is forecasting. If the app knows how much money I'm going to need (e.g for rent, bills, groceries, insurance, etc) and it knows how much I will probably receive by then, it can show me whether I'm on the right trajectory and how much headroom I have for discretionary spending. My Monzo app does that (somewhat imperfectly).
But if I decide to buy a new computer, I don't want to manually "borrow" money from three different pots and later replenish them manually. I just want to spend the money and have the app tell me the total amount I have to raise in order to stay solvent.
Maybe the motivation for some ordinary folks (that don't really need structured accounting, then it might be great) is different than mine. Or if I would be on a really tight budget combined with having to juggle tons of various mandatory expenses (household, kids, whatnot).
For some things those will be fixed monthly expenses (rent, insurance, mortgage. Others will be variable, like grocery shopping, maybe clothing. And others will be bigger purchases like a computer.
It's just another framework or set of tools for budgeting your money out into the future. YNAB (You Need a Budget) has some decent articles on their blog about the concept. Dave Ramsey might be helpful too if you really want to understand the motivation behind this kind of system.
Yes, and envelopes make it easier for many people to figure out if they have the cash for it. They let you "spend" the money the instant you get it, in a virtual way, even if you don't really need to spend it until later. This way you know that when it comes time to pay rent/mortgage, property tax, etc., you're good.
I think you are right though: I think the envelope idea is primarily targeted at people on a tight budget, where you really are trading off pros and cons of spending relatively small sums of money, and where the usual question is what gets sacrificed if this or that is purchased.
You suggest that in such a situation you'd look at the root cause of such behavior (e.g. compulsive spending). Often, the "root cause" is simply unawareness of spending patterns, and envelope spending is a useful technique for a lot of people. It isn't a crutch to cover up some sort of underlying personality flaw that has a deeper "root cause" -- It is just a way of tracking earmarked spending.
Root cause analysis is of course best if successful and can be completed quickly enough.
I think it's pretty easy to create a budgeting product for the 90% case but those odd lumpy purchases and split payments are something everyone wants to deal with differently.
For example, my girlfriend and roommates often split purchases by one person buying, and the other person adding an entry on Splitwise.
That Splitwise entry isn't a bank transaction until maybe weeks later when I get a Venmo payment from a roommate covering several Splitwise requests, and for my budget I want to match up the $100 charge at the grocery store with the $50 Splitwise request with the $250 Venmo payment that was only partially for the $50 owed on groceries... not an easy problem to solve in a general way that makes lots of users happy.
When you spend $100 at the grocery store you make an entry with $100 subtracted from assets:bank, $50 added to expenses:groceries, and $50 added to assets:receivables.
Once your friend pays you $250 for your outlay, you add them to assets:bank and subtract them from assets:receivables.
It’s a little tedious in a spreadsheet, because each transaction results in at least two new rows, so it can feel redundant, but this is basically double entry accounting that can handle this and many other situations.
A budgeting UI that managed this would be amazing, but I understand other people may not keep track of their money flows this way so it doesn't necessarily surprise me that it's not already built.
It was to me a PITA, and juggling with partitions, redimensionning them because circumstances changed, moving files from one partition to another because it was getting saturated etc. were horrible.
Instead of having a tool handling that horror, thinking of disk space as a continuous resource and checking from time to time where that space go and if it needs cleaning is more manageable IMO.
I have the same mental model for money, and outside of very specific cases (mortgage accounts, kids account, professional expenses etc.) I don't think it's worth it partitioning at the account levels just for the sake of it.
Edit: This almost makes me want to write a personal Hyperion Financial Management application...
The various directories all share the same disk storage. I would argue that creating multiple accounts in your bank is akin to creating multiple disk volumes.
If one volume runs out of storage, you have to resize it, and requires decreasing the size of another volume.
Just like if one bank account runs out of money, you have to move money from another account.
Though I am unfamiliar with the products mentioned, so perhaps these are virtual accounts that all draw on the same underlying “physical” account, and thus can have a negative balance without incurring overdraft fees.
In which case this would basically be a (simple) accounting app provided by your bank.
I could certainly see some value in simplified accounting added to a banking app, if however you are after “proper” view of your finances, a real double entry accounting system should be used, where you would be able to also track assets outside of the bank (like cash on hand), liabilities (debt), etc.
Personally though I do see value in having a secondary (bank) account for fixed expenses, but that is only because I am too lazy to do “real” accounting, so having this separate account makes it easy to view a history of all fixed expenses (for next year’s budget).
That's not a counter question. A file system is an abstraction over the physical layout of your hard drives. An accounting system is an abstraction above your accounts.
In the same way, you don't need one hard drive per folder, you don't need a separate bank account per bookkeeping account.
My take away from the closure of Simple and some commenters laments is that personnal accounting still suck.
I get paid twice a month. The day after I get paid a job at Simple runs that takes a share of all the above expenses from my account, moves those funds into "envelopes", and gives me a main account view of the money I have left over after my expenses are accounted for. So in the middle of the month I have half my rent and car moved off for 2 weeks in the future.
I guess a similar notion would be to just add all these up, or maybe keep a spreadsheet of them, and have it give me a number to transfer into a secondary account every paycheck, and pay bills off of that.
But the Simple expense view is great, I can see what expenses have already come out (because they are empty), which haven't been paid yet (they are fully funded, according to the progress bar), etc...
In fact, their "categorize transactions" I've found to basically be useless. Aside: Part of this is their system, which has never seemed to be able to learn some transactions. Part of it is that you just can't track Amazon spend (is this Home Improvement, Groceries, books, etc...).
I could see someone wanting to pay for a year or two until they've established the habit of disciplined saving. But to perpetually pay a service to present a (useful) facade over your money doesn't seem right if it's not also instilling habits in you that don't depend on software.
It also lets you track all expenses and let’s you keep lifestyle inflation in check.
I’ve found it well worth it (and I’m pretty responsible financially).
Mint on the other hand is totally useless.
That's hyperbole. Having a bird's eye view of every single account, transaction, investments, net worth, etc. is "totally useless"? No.
I use Mint and it works quite well for keeping an eye on your financial life at a glance. I don't need some micro-managey software like YNAB (that I'd have to pay for monthly!) to continually increase my wealth and keep debt in check - here's my tricks:
* Pay off credit card in full every month (I have one card that I use for gas, etc.)
* Invest 20% into company-matched 401k, my Roth, etc. primarily focused on S&P 500 Index Funds
* Save roughly $275/check into a liquid savings account.
* I have no car payment (paid of my 2010 Subaru that I got for $9k).
* Everything on autopay.
* Don't buy stupid nonsense.
It's worked well thus far. There's no real "need" to budget - KISS principle wins the day again.
If you can get it to actually connect to things (I have 2FA on most accounts, and since Mint scrapes the sites and stores passwords in plaintext, it doesn't know how to handle this) and tag everything properly (MCC's vary pretty widely). I think that the promise of Mint is great, but in reality it falls apart as soon as you have more than a few accounts, or start using anything that wasn't originally built in (e.g. 2FA).
That all said, I follow the same general principles: autopay everything in full, invest money first, live within my means (with certain exceptions that are the "budget").
Is there any such trend in the US?
For me, my checking account is the only banking account I really care about. So much so that I don't use my debit card for purchases and only use it for ATM. I really don't care if my credit card gets stolen since that's their problem and not money out of my pocket.
Incorrect:
> How secure is my login information I store in Mint?
> Your login user name and passwords are stored securely in a separate database using multi-layered hardware and software encryption. We only store the information needed to save you the trouble of updating, syncing or uploading financial information manually.
That bit is doing a lot of work. Seeing 'bird's eye view' is useless because it has no real effect on behavior after the fact, the feedback loop is too long and disconnected. Also - Mint's software is itself bad and intermixed with the ads it's just hard to figure out what's going on.
How much do you spend on food? How much on groceries? A gift you forgot to plan?
YNAB let's you get a real intuitive understanding for all of this, you know explicitly where every dollar is going and you do it in real time per transaction.
It gives you a lot of power.
Do you need it? No. You've got the basics down with 401k max, monthly savings, Roth IRA, etc. That's awesome.
Could you benefit from it? Almost certainly yes. I'd bet if you used it seriously (even just the 30 day trial) you could trivially double the amount you're saving per month in liquid savings.
One reason I like it a lot is the exactness of it gives me complete confidence I could control my burn rate to any number necessary, good for FI.
It's marketed to people who need help getting out of debt, but it's also good for people with high savings rates and high income. It frees you to allocate large amounts of money to index funds, or stock market bets without worrying about how much you need in your account for auto-pay expenses.
Its yearly subscription cost is effectively negative.
Bird’s eye view has been much more helpful as a middle ground. Not Mint and technically i can budget, but I’m not too interested in that.
Seems rather difficult with family.
You just described your ... budget.
If you used Simple pretty much exclusively you wouldn't have to manually enter any transactions, although you might occasionally have to categorize things.
The obvious exception would be cash transactions, which I don't believe Simple ever tracked in any detail.
EDIT: and I think it migrated to OAuth anyways so no more tokens
They seemed like a close alternative, but if I'm doing all this work manually, I might as well use a spread sheet for free.
Unfortunately, I doubt YNAB can just ask people to move banks. Honestly, that, a web interface, and how speedy ACH payments are processed are kind of my highest priorities and would switch banks just for that. But those are all hard to impossible to assess without opening an account. I had a credit union get very confused when I asked if they had a demo of their web UI before I opened an account. I imagine I was the first to ask.
I’m a long time (2012) Simple customer and I went with them originally due to their new take on banking and the promise of an API (which they backtracked on). The envelope-type system they built with goals/expenses was nice but looks like a toy compared to YNAB. Now I can pick a new bank that doesn’t need to have any clever savings tools and just use it to hold my money.
I was using the goals in the beginning, but the rates just kept going down.
> We do not pay interest on account balances above $100,000
Maybe you could edit your comment now that multiple other commenters have shown that you're wrong? There are multiple companies offering 2-3% rn.
It was going to be a total no brainer to move nearly all banking to them until I realized they block all automated financial tracking software. No budgeting with YNAB makes it a non starter for a checking account, but luckily YNAB can note transfers in automatically by looking at other accounts. When treated strictly as a basic savings its fine if my total cash on hand is missing the occasional interest payment.
So it's a neat little discount on your T-Mobile bill.
- founder's comments (claims ~3%): https://news.ycombinator.com/item?id=23786893
- the math (~3.4%): https://news.ycombinator.com/item?id=23781247
Note that it's likely to go down to get in line with other HYSAs over time (and it's fairly easy for them to change the winning probabilities to hit any interest rate). Currently they're just burning VC cash to get users...
Prizepool (https://getprizepool.com/) is another player in this space, unsure where they're at though (I know we could do the math, I just haven't).
I could chase higher yield with my emergency fund than where I currently keep it, at Alliant Credit Union (0.55% APY), but it's not worth the effort. No one does significant better without also having gimmicks.
[0]: https://twitter.com/stoolpresidente/status/12685424540867502...
But you'd be missing out on a lot of features that YNAB offers if you did this.
A consumer bank is dependent on its deposit base.
- We never fight about money because we have already planned for the next month together.
- We each get equal amount of no questions asked personal money that the other person cannot criticize how it’s spent.
- When we first started using YNAB we realized we were living off credit card float, and spending money we didn’t have until we got the months paycheck. We thought we were doing great just because we would pay our credit card off each month. But we were actually 100% relying on our future paychecks to survive.
- My wife lost her job 2 years ago and was out of work for a month due to COVID. The budget gave us an objective view rather than an emotional one. In both cases, we didn’t need to even rely on our emergency fund because of flexible budgeting.
- We are able to maximize credit card rewards without being concerned with spending too much.
- We are able to easily track our cash equivalent net worth.
Most of these things are not YNAB specific, but the software makes things so much easier.
Honestly I might just make an Excel spreadsheet and track monthly credit card billing statements and total income/month and net profit after debits (bills, living expenses, etc.)
Think this would work like YNAB to a degree until I'm fully invested in budgeting?
Banks are too busy updating their legacy systems to process their batches. They are barely catching up with mobile applications and to show transactions in real time there so they do not have resources to implement this type of things.
Of course it is a matter of priority buy that is how it works now and traditional banks still have the power to drive the industry.
I moved out of the UK and sadly never found a real alternative.
I had a simple workflow that made me happy:
I had two budgets, one for fixed spenses such as rent and phone, another for everything else (food, taxi, entertainment, whatever). I'd divide my "everything else" budget by 30 and tell monzo to move everyday that amount into the credit card account.
So basically... A daily budget. It was something like 20-30 pounds per day. I wanted something more expensive than usual? I'd "save" for a few days.
It's not the most efficient budgeting, but it was so much fun.
https://techcrunch.com/2020/04/09/monzo-to-shutter-las-vegas...
1. I want to move the money around so I don't spend it and I know I have enough to pay my bills. I don't want to see $1,000 and think "I'm going to spend that". Similarly, I don't want to see a charge come through for a bunch of bills that I don't have enough money for.
2. In Simple's app, if you overspend in an expense or goal, it takes it out of your "safe-to-spend" amount (think: your total spending money). It notifies you that you "overspent" so you can move money around in your little envelopes to fix it.
3. In Simple's case, you have one literal checking and up to two literal savings accounts. The expense/goal "envelopes" are virtual buckets in the checking account, not actual accounts with account/routing numbers. In the past, I've used many literal checking/savings accounts for this purpose.
Basically it's pre-allocating the money instead of just watching what you spend and bucketing it as you go. But unless it's actually going to overdraft the account or decline your card somehow when a bucket is empty instead of taking it from the total amount, those are equivalent.
Instead of a separate budgeting app and banking app, you can tweak your budgets from the same place that you deposit checks and transfer money to other banks.
> But you can also change the dates of charges, so you can move stuff to next month or the previous month if there was room left over which I find convenient for spreading out big purchases.
I do not want to alter the actual record of charges - that would cause lots of other problems. And I don't want to manually babysit this. I want to be able to get a balance of my account with all the money set aside subtracted out (regardless of whether it was spent or not).
Envelope budgeting is an incredibly simple algorithm, and I find it quite disheartening that most open source financial software does not support it. YNAB has shown how helpful it is to many, many people. I think Ledger and hledger are the only open source applications I know where one can do this.
If this is what works for you then great. You've convinced me that home/car repairs in particular should rollover, I'm going to start doing that in my budget. All I was saying is that by default I don't want things like food or shopping budgets to roll over, since I don't want to spend money I don't need to just because it was in the budget. It's just what works for me.
Can it categorize specific CC transactions, and pull the money out of that envelope when you pay your CC bill?
You can specify daily transfers to slowly fill up an emergency fund or vacation. The beauty is when your car breaks down, you might have a repair fund that you can deduct from and you don't see your main balance drop.
But it's all just lipstick on a bank. When I used them, I think it was Bancorp, but they moved to a spanish bank when I hopped off.
> For people who have no self control without resorting to playing tricks on themselves I guess
Bragging about your lack of empathy doesn’t make you a badass, it just makes you sound like a dick.
It’s a well made, convenient tool. Insulting people because they use tools is idiotic.
My understanding was that it was a way of enabling companies to offer bank like functionality to their existing users. For instance Uber could give drivers an "Uber" bank account.
Not that you could build your own bank on top of it...but perhaps I'm mistaken.
Dunno if it helps as a straight-up Simple replacement, but it works well for me so I thought I'd give them a shout out.
For example if you have a groceries envelope. How does that change anything for you? Would you buy more or less food at some point? Would you rebalance it at the end of the year? Is there some calculation of I are too spent too much this week so we’re making food?
I ask because I have a reasonable I does what I spend money on and it’s not really any surprise. My mortgage is x, if I owned on a car it would be y, if I’m out I buy food for the week, etc.
For the more fluid day-to-day stuff that I might make "withdrawals" from multiple times a month (like groceries and random spending), I usually stick to using checking accounts (which you only get 3 of on CO, unfortunately), but yeah, I have $X put in each month and look at how much is left to get a gauge on how much to spend or not (which does make me spend more/less on food/whatever at some points).
I rebalance every few months and look at whether I'm averaging more/less than I expect on each account and adjust the automatic deposits into each account accordingly, so it's mostly just a way to visualize a budget day-to-day while also making it easy to go back and see actual spending numbers month-to-month (which I also track with spreadsheets, but that's another conversation!).
If these are all roughly fixed costs, I have trouble understanding what you're gaining from this rather than having them all in one account, except additional headaches.
If you look in your spending account and you have $80 left for the month, you're gonna budget around that, buy cheaper meals, hold off on purchases, etc. If you look in a singular account and it's a few thousand (covering your rent, insurance, utilities, etc that'll all get withdrawn on some day), you're a lot more likely to accidentally overspend and overdraft.
If you set your money aside for expected expenses when you get it, it makes it a bit easier to know exactly how much you have left over and can actually spend (or save, or invest, etc) that month.
What I'm struggling with is why anyone would want accounts called "Rent", "Utilities", "Insurance", etc.
Ah, I specifically don't because:
1) Capital One gives you 25 savings accounts, but only 3 checking accounts, and
2) There's a federal limit of 6 withdrawals per month from savings accounts, and
3) I already use my 3 allotted checking accounts for unpredictable day-to-day purchases (an account for my spending budget, an account for my wife's spending budget, and a shared account for family/house expenses like groceries/gas).
I sometimes bundle together some things like subscriptions so 2-3 expenses can pull from the same account sometimes, but there are the occasional problems where a service or product will charge more than once per month (unexpectedly) and I don't want to risk exceeding 6 withdrawals/month and getting an account shut down. Seems easier to just separate everything out so you don't have to think/worry about it.
And separate accounts remind me of what the funds in each are for (and seeing each one filled is reassuring to know that there was enough money to transfer into each envelope without any issues -- if you see a 0 in an account early in the month, you have time to figure out how to pay for that thing, instead of getting surprised when it comes due and a shared account can't cover it). That seems useful enough -- seems like no downsides and nothing but improvements over having a single account that mixes everything.
I'd probably do things the same way even if CO offered 25 checking accounts, although it might make sense to consolidate a few of the smaller recurring expenses into slightly fewer, more high-level accounts to make things easier at-a-glance.
But... car Insurance I do get. If you get billed every six months getting that big bill out of nowhere does kind of suck.
Privacy is a proxy, not the destination.
Their landing page for the product is absolutely awful: https://www.pnc.com/en/personal-banking/virtual-wallet-overv...
You can see screenshots of at least the mobile version on the play store though: https://play.google.com/store/apps/details?id=com.pnc.ecomme...
What I had heard was that they had excellent customer support, but then they accidentally locked up my entire checking account for weeks and claimed they couldn't do anything, I just had to wait - until I literally contacted the CEO. I have, of course, since closed my account there.
Qube Money and Envel.ai seem to be the most similar competitors after searching for a bit.
Here's an article on Qube Money's website: https://blog.qubemoney.com/leaving-simple-bank-heres-why-qub...
In that article, there's a link to a Google Sheet that someone on Reddit created comparing alternatives: https://docs.google.com/spreadsheets/u/2/d/1Etr8dGtviSRpdAjR...
https://www.amazon.com/gp/product/B0721TMDCL/
The annoying part is going to the bank once a month to get the cash and then making sure you have the right denominations to easily distribute to each envelope. It took a few months for me to get used to it but my spending went way down.
Do you categorize the expense or is it automatically categorized to the correct spending envelope?
---
Treasury is B2B focused at the moment but there must be another way to do this...
So my rent payment will always get automatically categorized to rent, and then all transactions in the rent category automatically pull from a specific “envelop”.
Envelops are just a UI/helpful budgeting thing; it’s not an actually different account.
In college I used gnucash for this and even wrote a (now very old and somewhat embarrassing) article about it (https://organicdesign.nz/A_day_in_the_life_of_a_dollar).
After I got a bit tired of gnucash's relatively baroque interface I moved over to https://www.mvelopes.com, but I found it expensive, slow, and just not to my taste (it might be better now, this was still over a decade ago).
Next, I noticed this newfangled site called Mint.com. I liked it right away and even had a phone conversation with its founder about the envelope budgeting idea. He said he really liked it and would look into it but then of course Mint got acquired by Intuit and we all know what Intuit does to creative product ideas. I still use Mint to track net worth and cash flow but every time I open it I sigh at what could have been.
Some years ago I heard about Simple and was incredibly excited that an actual BANK finally grokked what was so obviously awesome about this idea. I signed up right away and for a few months enjoyed budgeting bliss. But I knew it was likely to end in corporate takeover sadness and so I avoided moving my accounts to it. This is a decision I regretted having to make, and regret being right about.
Some years ago I got the bug again and spoke to some startups who were trying to democratize the "connect to your bank API" space, which would let folks like me just make a tool ourselves and maybe productize it without having to look for VC funding just to afford the stupid license fees for bank connectivity. I had a few good conversations but no one else seemed anywhere near as excited about it as I was.
Fast forward to today: I work at a FAANG company doing interesting stuff and have pretty much abandoned my dream of doing finances this way. I've tried gnucash again. I've tried spreadsheets. I've tried custom personal programs. None of them are really good.
You REALLY want your bank to do this.
What you want is to tie this to your debit and credit cards and have them all pool from the same "virtual subaccounts".
What you want is to be able to have your credit card be declined if you go over budget (with an option to override).
What you want is to create a tree of accounts in under a second using your smartphone without having to fill out forms.
But you won't get it, it seems.
Product idea: A bank. With a a nice API. That's it. I'll take my startup idea equity now.
Gnucash is as baroque as you say, but the only one of your options above that actually works and solves this problem (aggregate view) reasonably, of course that can't help you with things like virtual CC limit above. Still, it's much nicer than doing double entry with spreadsheets.
- Checking - Food - Housing - Entertainment - Emergency Reserve
Your paycheck would go into checking and then you'd "fund" those subaccounts from the top level account. Then, when you reconcile your statements (I did it every day by going online), you "spend" out of the subaccounts.
I pay using different accounts (bank accounts or credit cards). Groceries, in particular, I pay with both checks and cards. Admittedly, this is still a problem with many envelope budgeting SW, but they usually have ways to mitigate this.
The other problem: Say I have two checking accounts A and B, and I pay for groceries with A and car expenses with B. One month I overspend car stuff and my envelope for B is in the negative, and I don't have enough emergency reserve. I take money out of my grocery envelope under A to bring the car envelope in B back to 0.
Now if I did this in GnuCash, it will show a wrong balance in one of my checking accounts (unless I physically transferred money between the two accounts).
Your setup will work if you tend to spend everything from one account. I am curious, though: If you do it this way, doesn't it make reconciling a bit of a pain? Let me explain:
When I go to do groceries, I usually have multiple categories I am purchasing (example below):
1. Groceries = $60
2. Supplies = $30
3. Miscellaneous (catch-all) = $10
I pay with a check of $100. How do you represent this in GnuCash? Will you list 3 separate transactions coming out of each virtual subaccount? If so, do you then not reconcile with your bank statement? Or does GnuCash let you mark it all as one transaction under Checking to make reconciliation easy?
Ledger CLI has good support for "true" virtual accounts, so that the "real" accounts show the real world transactions (it will show up as one transaction from Checking to the Grocery Store), while simultaneously letting you split this into the 3 virtual budget accounts.
Your actual representation of chequing accounts should really represent the bank account,so you shouldn't do what you describe (that lead to a wrong balance), your actual budgeting is done elsewhere.
If you weren't doing envelope budgeting, you might just mark things into expense accounts, so they keep a running track of what you've spent.
I haven't used it for a while so may get details a bit mixed, but the gist of it is right, If you want to do envelope style budgeting, you have a few possibilities. One is to do regular expense accounts but change your reporting period to say 1 month, and you use the report tools to see what is happening. In this way if you overspend in one, and underspend in another, it all rolls up into the same total. Another way would be more explicit, you would allocate a liability account 1st of each month for each "envelope" and then spend against that. You could freely transfer between these, and you can carry over etc. This would give you an up to date view easily. There are other schemes, depends what you want to make easy and what you make hard.
By the way I'm pretty sure I remember gnucash has a built in budget tool also, but I've never used it; might be close enough to what you want to be the least effort.
I'm aware of that, which is what I meant: If you do it this way, then you can't do envelope budgeting using subaccounts the way the original commenter said (and I agree with you that you should not do it this way).
Both the methods you propose involve significant work on my part, which to me means "Gnucash doesn't support it." For the first method:
> In this way if you overspend in one, and underspend in another, it all rolls up into the same total.
Arguably, this goes against envelope budgeting. The whole analogy is mirroring the physical world, where an envelope cannot go negative. In my envelopes, if one goes negative, then I need to move money from another envelope into it immediately. In your first scenario, since you're using real accounts, we should not do that (otherwise we lose real spending habits data).
Your second approach is closer, but it's a fair amount of work (or perhaps I misunderstood it). Using my example above, if I go to the store and spend $60 on groceries, $30 on supplies and $10 on misc, how do you propose I put that in Gnucash using those liability accounts?
There's always some way to hack it, but when you actually do it for a while, those hacks become tedious. As I said in another comment, the mechanics of envelope budgeting are easy to code, and I'd like the SW to handle those details for me.
I did play with the built-in budget tool. It's like the typical budget tool in most such SW: No carryover of excess budget - you have to manually track it and update it each month.
Sort of. At least it would give you a monthly total of everything and a roll up of everything, but doesn't handle carry over cleanly. I was suggesting it as a way that works for lots of people but fair enough if it doesn't' fit close enough.
> Your second approach is closer, but it's a fair amount of work (or perhaps I misunderstood it)
It would look like this: Your salary comes in, and instead of matching that transaction to "income" you would split it against a bunch of "envelope" accounts, each however much you want per check. If you use liability accounts (e.g. like an accounts payable account) for this they will count "backwards". This is exactly analogous to envelopes, except that nothing (other than you) stops you from going negative. You can move funds between them whenever you want.
Then when you spent your $100 check you would split that transaction also, and apply the 60/30/10 each to its own account. These carry over of course, so if you don't spend it all this month you'll have extra next month, etc.
Are you in Europe? I hear it's unusual there. In the US virtually every store will accept a check. There are still stores that will not take any card. And some stores that will take a a debit card but not a credit card. But they'll all pretty much take checks.
Eh, a little bit. I know for me, I was always afraid of using autopay because I get paid biweekly, so even if all my bills had the same due dates every month, payday was always different every month. Being able to tuck that money away made it less tempting to overspend.
As for getting out of living paycheck-to-paycheck, again, easier said than done. You're basically making the opposing higher minimum wage argument: "Get a better job if you want to make more than $8 an hour." "Get a better job if you want to have better control of your finances."
Plus there have been several studies showing that for many people, as their income goes up, they still have trouble saving because they unconsciously think that since they make more money, they have more money to spend. "Financial restraint" is easier said than done for many people, myself included. Simple's "Safe-to-Spend" has made a world of difference in my life and I'm honestly really concerned about how I'm going to keep it up when that goes away.
Probably a lot of us on HN can get by without a budget, because we are generally highly paid, so just keeping spending within reason is all it takes.
If you actually need to budget, then it would be nice to have tools to remind you that you've spent all your X money for the month/year, so either no more of that, or you need to adjust the budget.
- Monzo and Revolut are better products
- they discriminate against permanent residents who are not citizens (you can’t use their service)
So from my point of view: heh
Dear HN crowd, don't waste your time and money with the sharks at Revolut, and be doubly wary of working for them.
None of that is available in the USA yet, but something to look out for if there isn't currently a US alternative.
Was a pretty disappointing experience for a supposedly forward-thinking bank.
Monzo is launching in the US but got held up by the pandemic. https://monzo.com/usa/
I'm also a bummed Simple customer and they made it so easy to set up buckets for literally anything with zero overhead, which encouraged a ton of saving from me.
When I started, I was diligenty using the savings goals. I had a goal for a car, a house down payment, cell phone upgrade, etc.
Eventually as my account and goals grew, I found it to be stupid to leave so much uninvested. I just kept a mental note to keep my balance at around $15-20k, transferred everything else to my brokerage.
My pitch to the Simple team, or anyone interested in taking this on, is to take the app and build it on top of Stripe Treasury (https://stripe.com/treasury).