![]() ![]() Now, the budget category amounts are not spent yet the money in them is still in our bank account, and we can move money around in the categories, if we change our mind on how to allocate them. The budget category accounting keeps track of how much money is allocated to each purpose. We don't need to put our savings goal money in a separate bank account from our grocery money, if we don't want to. In this way, we don't really need to worry about having separate bank accounts for different purposes. The appropriate budget category gets reduced by the purchase amount. The appropriate bank account (or cash wallet) balance gets reduced by the purchase amount. When we make a purchase, this also gets accounted for twice: ![]() If you add up the balances of our bank accounts and cash, and you add up the balances of our budget categories, they add up to the same number. Some goes into savings goals of ours, such as car replacement, vacation, furniture, etc.Įvery dollar that we have in a bank account or in cash in our wallets is also accounted for in a budget category. Some goes into longer range bills that only happen once or twice a year, such as car insurance, life insurance, property tax, etc. Some of my paycheck money goes into my groceries category, some goes into clothing, some into car fuel, entertainment, mortgage, phone, etc. This is separate from my bank account balances. I also "deposit" the money from my checking account into my various budget category balances. It goes into my checking account, so the balance of my checking account goes up by the amount of my paycheck. Here is what I mean: When I deposit my paycheck, I do two things with it: What I've found works best when working on my personal budget is to track my income and spending two different ways: bank accounts and budget categories. ![]()
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December 2022
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