Is keeping track of your money and having a budget the same thing?
A budget is a plan for spending money in the future. Tracking spending is only looking at what happened in the past.  Many people only track their spending, a proper budget can be key to achieving financial goals. You might earn enough and not spend frivolously enough that you aren't hamstrung by lack of a budget, but if you have specific financial goals, odds are you'll be more successful at achieving them by budgeting rather than only tracking spending.  I'm a fan of zero-sum budgets, where every dollar is allocated to a specific bucket ahead of time. Here's a good write-up on zero-sum budgets: How and Why to Use a Zero-Sum Budget The two are closely related. A budget is a detailed plan for how to spend. Expense tracking is a tool to analyze your previous spending performance. Creating a plan for how to spend your money without any record of your previous spending--is an empty promise to yourself that you will never follow up on. Did I stay within my budget? Doesn't matter, I didn't track the spending anyway. Even if you do plan to track your performance, if you have not previously done so, you won't have a good basis for how much to expect in each category.  Most people have a general idea of how much they have spent and many budgets are formed based on that general intuition, but they are often surprised when they track how every penny is spent and look at the totals from month to month and over years. By actually seeing how much has been spent it's easier to pick the big financial drains and target them for reduction, if your desire is more savings, for example. I know people who keep a close eye on what they spend each month, but they don't allocate money in categories for the next month. They don't perform as well on reducing spending, but they often don't care. They feel like they make enough and they save enough, so why worry? I also know people who create an unrealistic budget each month because they haven't done a good job tracking their previous spending. They know what the monthly bills are, but they don't account well for variable or cyclical expenses  like repairs, Christmas, etc. Both tools are essential for maximizing your own personal finance. "What you are doing is neither one.  You are simply watching to make sure you don't overdraw, which itself suggests you might be living hand to mouth and not saving.  Keeping track of your money and budgeting are useful tools which help people get on top of their money.  Which tends to have the effect of allowing you to save.   How much did you spend on groceries last month? Eating out? Gas? If you were ""keeping track of your money"", you could say immediately what you spent, and whether that is above or below average, and why.  How much do you plan to spend in the next 3 months on gas, groceries, eating out?  If you knew the answer to that question, then you would have a ""budget"".   And if those months go by, and your budget proves to have been accurate, or educates you as to what went wrong so you can learn and fix it... then your budget is a functioning document that is helping you master your money.  Certainly the more powerful of the two is the ""keeping track"", or accounting of what has happened to you so far.   It's important that you keep track of every penny without letting stuff ""slip through the cracks"".   Here you can use proper accounting techniques and maybe accounting software, just like businesses do where they reconcile their accounting against their bank statements and wallet cash. I shortcut that a little.  I buy gift cards for McDonalds, Panera, Starbucks, etc. and buy my meals with those.  That way, I only have one transaction to log, $40 - McDonalds gift card instead of a dozen little meals.  It works perfectly fine since I know all that money went to fast food.  A little more dangerous is that I treat wallet cash the same way, logging say two monthly entries of $100 to cash rather than 50 little transactions of left $1 tip at restaurant.  This only works because cash is a tiny part of my overall expenditures - not worth accounting.  If it added up to a significant part, I'd want accounting on that." "A budget is a predetermined plan for spending allocated funds to a fixed set of categories according to a schedule. If by,  ""Keeping track of your money"" you mean you are only recording your spending to see on what it is being spent and when, then the answer is no.  A budget has constraints on three things: Schedule:  The mortgage has to be paid at the 1st of the month with a 2 day grace period. Amount: The mortgage payment is 1500.00 Category: The mortgage. Tracking your money would be as follows: 10/5/2016: $25 for a video game. 10/5/2016: $129.99 for two automobile tires. 10/6/2016: $35.25 for luncheon. I didn't like him! Why did I blow this money? 10/7/2016: nothing spent...yoohoo! 10/8/2016: Payday, heck yeah! I'm financially solvent YET AGAIN! How do I do it?! See the difference?"
If one has established a liquid emergency fund of 3 to 6 months income as suggested in several places here as well as being recommended by many financial planners then a savings account is a great place to keep that money. All things being equal between the savings and checking account the limited transfers should be a non issue since ideally you won't be using that money and if you need to in an emergency you could move a whole months worth of expenses to checking in one transfer.  The savings account gives you a place to keep the emergency fund segregated from your normal funds. Out of sight, out of mind as it were. A savings account also gives you a place to stash funds intended for short term goals away from normal use funds. One such example I can use is that I am purchasing several plane tickets for various family members to come visit for Christmas. I have those funds set aside in a savings account so they don't interfere with my budgeting of my normal living expenses. While these are just examples and your situation may vary they are both examples of where a savings account would be useful even if it is identical to a checking account.  Edit:  using other types of accounts can also accomplish the same thing. Since we are using the assumption that the checking and savings accounts are identical the benefit of using a savings account is that it is usually inherently linked to the associated checking account without any additional effort on the part of the account holder. Any other account type would require additional effort, however minor, on the part of the account holder to link them in such a way that would make transfers between accounts as easy as possible. "Your heart is in the right place. Especially since they've got a kid. If you really want to help them, have the uncomfortable conversation with them that they need to have about money. Specifically, how to develop and stick to a budget. It is a painful, but valuable lesson for life.  Depending on what type of relationship you have with them, you can approach it in different ways... just giving them friendly advice is perhaps the lightest ""touch"" you could have... but might not make the impression you need.  If they are asking you for money, I would personally make it a condition that they work through their personal budget with you, and then start living within that budget. If you're lending money, it's not too much to ask to follow their accounts or finances so that you can see that they're on the right track. If you're a close enough friend, you could really walk them through it and help them to develop the habits of: estimating how much they will earn in a month estimating how much they should spend in a month,  tracking how much they are actually spending, and  comparing how much they actually earn with how much they actually spend.  Doing this every month until they get out of the weeds. They should at least do it every 3 months when they're in good financial shape, but even then each month doesn't hurt. Setting them up with something like Mint.com (if they're in the US) would be a handy place to start. You can share the login information with them if they trust you... and then they can change it once whatever agreed-upon terms come around.  It sounds weird, I know, but I have helped two friends out of credit-card debt this way. The hardest part is getting around the discomfort/taboo/shame of them knowing they need help and not wanting to accept it." "The word you are looking for is ""budget"" You can't pay off debt if you are spending more than you earn.  Therefore, start a budget that you both work on at the same time, and both agree 100% with.  Evaluate your progress on that budget on a regular basis. From your question, you understand what your obligations are and you seem to manage money pretty well. Therefore your key to retirement is just the ticket you need. As newlyweds, you both have to be VERY aware that the main reason a marriage fails in the US is money issues.  Starting out with a groundwork where you both agree to your budget and can keep it will help you a lot in your upcoming life. Then, for some details Sprinkle your charitable donations anywhere in the list where you feel it is important." In my opinion, every person, regardless of his or her situation, should be keeping track of their personal finances.  In addition, I believe that everyone, regardless of their situation, should have some sort of budget/spending plan. For many people, it is tempting to ignore the details of their finances and not worry about it.  After all, the bank knows how much money I have, right?  I get a statement from them each month that shows what I have spent, and I can always go to the bank's website and find out how much money I have, right?  Unfortunately, this type of thinking can lead to several different problems. Overspending.  In olden days, it was difficult to spend more money than you had.  Most purchases were made in cash, so if your wallet had cash in it, you could spend it, and when your wallet was empty, you were required to stop spending.  In this age of credit and electronic transactions, this is no longer the case.  It is extremely easy to spend money that you don't yet have, and find yourself in debt.  Debt, of course, leads to interest charges and future burdens. Unpreparedness for the future.  Without a plan, it is difficult to know if you have saved up enough for large future expenses.  Will you have enough money to pay the water bill that only shows up once every three months or the property tax bill that only shows up once a year?  Will you have enough money to pay to fix your car when it breaks?  Will you have enough money to replace your car when it is time?  How about helping out your kids with college tuition, or funding your retirement?  Without a plan, all of these are very difficult to manage without proper accounting.   Anxiety.  Not having a clear picture of your finances can lead to anxiety.  This can happen whether or not you are actually overspending, and whether or not you have enough saved up to cover future expenses, because you simply don't know if you have adequately covered your situation or not.  Making a plan and doing the accounting necessary to ensure you are following your plan can take the worry out of your finances. Fear of spending.  There was an interesting question from a user last year who was not at all in trouble with his finances, yet was always afraid to spend any money, because he didn't have a budget/spending plan in place.  If you spend money on a vacation, are you putting your property tax bill in jeopardy?  With a good budget in place, you can know for sure whether or not you will have enough money to pay your future expenses and can spend on something else today. This can all be done with or without the aid of software, but like many things, a computer makes the job easier.  A good personal finance program will do two things: Keeps track of your spending and balances, apart from your bank.  The bank can only show you things that have cleared the bank.  If you set up future payments (outside of the bank), or you write a check that has not been cashed yet, or you spend money on a credit card and have not paid the bill yet, these will not be reflected in your bank balance online.  However, if you manually enter these things into your own personal finance program, you can see how much money you actually have available to spend. Lets you plan for future spending.  The spending plan, or budget, lets you assign a job to every dollar that you own.  By doing this, you won't spend rent money at the bar, and you won't spend the car insurance money on a vacation. I've written before about the details on how some of these software packages work.  To answer your question about double-entry accounting: Some software packages do use true double-entry accounting (GnuCash, Ledger) and some do not (YNAB, EveryDollar, Mvelopes).  In my opinion, double-entry accounting is an unnecessary complication for personal finances.  If you don't already know what double-entry accounting is, stick with one of the simpler solutions. Let an app do it for you, group items and see where you spend your money. One example: https://www.tinkapp.com/en/ Should provide a starting point for showing income vs expenses. "I live near historic Concord, Massachusetts, and frequently drive past Walden Pond. I'm reminded of Henry David Thoreau's words,  ""Simplify, simplify, simplify."" In my opinion, fewer is better. 2 checkbooks? I don't see how that makes budgeting any easier. The normal set of expenses are easily kept as one bucket, one account.  The savings 2&3 accounts can also be combined and tracked if you really want to think of them as separate accounts.  Now, when you talk about 'Retirement' that can be in tax-wise retirement accounts, e.g. 401(k), IRA, etc. or post tax regular brokerage accounts. In our situation, the Schwab non-retirement account was able to handle emergency (as money market funds) along with vacation/rainy day, etc, in CDs of different maturities. As an old person, I remember CDs at 10% or higher, so leaving money in lower interest accounts wasn't good. Cash would go to CDs at 1-5 year maturities to maximize interest, but keep money maturing every 6-9 months.  Even with the goal of simplifying, my wife and I each have a 401(k), an IRA, and a Roth IRA, I also have an inherited Roth, and I manage my teen's Roth and brokerage accounts. That's 9 accounts right there. No way to reduce it.  To wrap it up, I'd go back to the first 4 you listed, and use the #4 checking attached to the broker account to be the emergency fund. Now you're at 3. Any higher granularity can be done with a spreadsheet.  Think of it this way - the day you see the house you love, will you not be so willing to give up that year's vacation?" You have to track your spending for a month, down to the cent. Without those records, the person trying to help you has no real data. Even a week would be a start.  Heck, try just doing this today.  See if it works for you. Throughout each day: Each evening: At the end of a month (or week, or whatever period you want): Each day you do it successfully it will get easier.  Let us know how it works out!  Best wishes! "We use mint for just that. We have a ""shared"" account. We each have the mobile app and share the same pin for the application (not our phones -- you can set a pin in the settings on the application). Thus we each share a login to the site, where we have setup all of our accounts. In the ""Your Profile"" link at the top of the page, you may select the Email & Alerts option. From here you may add a second e-mail account. This way if you go over a budget or have a bill upcoming each of you will get a notification. We have setup budgeting through the web site, and either of us can modify the budget via logging in."