How to Create Personal Balance Sheet and Budget Plan for Several Accounts
"As your financial situation becomes more complex, it becomes increasingly more difficult to keep track of everything with a simple spreadsheet.  It is much easier to work with software that is specifically designed for personal finances. A good program will allow you to keep track of as many accounts as you want.  A great program will completely separate the different account balances (location of the money) from the budget category balances (purpose of the money).  Let me explain: When you set up the software, you will enter in all of your different bank accounts with their balances.  Perhaps you have three savings accounts and two checking accounts.  It doesn't matter.  When you are done entering those, the software will total them up, and the next job you have is assigning this money into different budget categories: your spending plan.  For example, you might put some of it into a grocery category, some into an entertainment category, some will be assigned to pay your next car insurance bill, and some will be an emergency fund.  (These categories are completely customizable, and your budget can be as broad or as detailed as you wish.)  When you deposit your paycheck, you assign that new income into budget categories as well.  It doesn't matter at this point which accounts your money are located in; the only thing that matters is that you own this money and you have access to it.  Now, you might want to use a certain account for a certain budget category, but you are not required to do so.  (For example, your grocery category money will probably be in your checking account, since you will be spending from it regularly.  Your emergency fund will hopefully be in an account that earns a little higher interest.) Once you take this approach, you might find you don't need as many bank accounts as you thought you did, because the software does the job of separating your money into different ""accounts"" for different purposes. I've written before about the different categories of personal finance software.  YNAB, Mvelopes, and EveryDollar are three examples of software that will take this approach of separating the concepts of the bank account and the budget category."
&gt; From the IT managers perspective he has a budget of X dollars to allocate. When X dollars are spent that's it, he isn't allowed to spend any more.  The IT manager should not view his budget this way. A budget is a projection of future expenses. If some expenses turn out to be different from the projection, then either (a) you need your budget to account for this by having some slack in it or (b) you have to revisit your budget and change the plan.  Viewing a budget as a checking account is wrong. That's not how it actually works in the accounting department and by not understanding what accounting is doing, the IT manager is causing himself extra pain. "I listened to about 15 minutes of the video, but then I read your other link, which gives a much better summary. This guy is an idiot. Just consider this statement: ""If everyone was taxed at 100%, it wouldn't be enough to balance the federal budget."" This is true to some extent. It wouldn't be enough to balance the federal budget in one year. Experts often cite things like debt to GDP to show that a country's debt is ballooning, but they don't mention this obvious fact: We don't have to pay off our debts in a single year. Nobody does. Debt to GDP is a ratio and not the end all be all. Reinhart & Rogoff wrote a paper about how countries with high debt to GDP tend to have slower economic growth, but they don't mention that this occurs at every stage of debt growth. See Debt & Delusion by Dr. Robert Shiller for a great article on this subject. The daily kos article goes over most of the points I would make, but let me generalize a little: Always be wary of doomsday-predictors and free advice. This guy talks about correctly calling Fannie and Freddie. Even if he's right, why is he mentioning it? If he's such a good accountant and financial expert, surely he could've seen the tech bubble before the housing bubble right? It took a lot of analysis to figure out that CDO's were junk - anybody with the ability to read a balance sheet could see that many tech companies were overvalued. Every now and then, you get one hit wonders. They might never be right again, but they have the ""credentials."" If these people were really that good, they wouldn't be selling investment newsletters. They'd be applying their strategies and getting rich. Buffett has been getting rich for over 50 years, and he's not publishing newsletters with ""secret, genius"" strategies. He's made it pretty clear what his philosophy is, and anyone who follows it patiently will make money. Stransberry's argument only makes sense if you agree with the assumptions. The US will implode if nobody accepts our money. Nobody will accept our money if we're no longer the reserve currency or hyperinflation occurs or something like that. People have been predicting doom after every bubble, but that doesn't make it true. Some of his points (like the fact that we have too much debt) are valid, and I predict that the world will go into a period of deleveraging now. Nonetheless, the whole ""we will implode"" story is a scary picture, but it's just that - a picture." "Fund a way to make mistakes with someone else's money.  It is the best business advice I got as a young person. You learn so much more by failure and f'up than you do by success and if you do it with others money then it doesn't really hurt you.   The other thing I wish I had understood earlier was basic book keeping and financial analysis. At 33 I'm just now figuring out basic thinga like how a P&amp;L and Balance sheet work together and how to do a cash forecast.   As my mentor said: ""Double entry accounting has been used in business since Jesus.  There's a reason. """ "I am a numbers guy, the math is great. Instead of ""jane was twice her son's age when he married, and is now 1.5 times his age....."" questions in math class, I think the math problems should mostly have dollar/pound signs in front of them.  In general, I like the idea of relating to the kids' situations as much as possible. When my daughter (14) makes a purchase, I'd ask her to be aware of how many hours she had to work to make the money she plans to spend. Was it worth 4 hours babysitting to buy an iPad case? Was it worth 2 to buy lunch that we could have made you at home?  (Note, the 'convert price to hours worked' is a concept that works great when teaching budgeting to anyone, not just kids.)  The math of tax and discounts for comparison shopping works great as well so long as they understand value. A $400 sweatshirt at 50% off isn't really a bargain, in my opinion.   Next, the math of balancing a checkbook should be high on the list. Accounting for the checks that didn't clear but are outstanding is beyond many people, amazing enough.  For the sport fan, there are unlimited math problem one can create for game scores, stats for the season, etc. Young boys who will fall asleep during a stats class will pay attention if instead of abstract numbers, you add 'goals' 'home runs' etc, after the numbers.  (Note - this question is probably outside the scope of the board, no right or wrong answer. But I love it as a question in general, and if not here, I hope it finds a good home.)" "One easy way to monitor costs in QuickBooks is to establish sub-bank accounts.   For example, you may have an asset account called ""State Bank"" numbered 11100 (asset, cash and cash equivalents, bank). Convert this to a parent account for a middle school by making subaccounts such as At budget formation, transfer $800 from Operations 11110 to Family Fun Committee 11130.  Then write all checks for Family Fun from the Family Fun 11130 subaccount.   For fundraising, transfer $0 at budget formation to the X Grade accounts.  Do deposit all grade-level receipts into the appropriate grade-level subaccounts and write all checks for the grades from the grade-level subaccounts.   The downside to the above is that reconciling the check book each month is slightly more complicated because you will be reconciling one monthly paper bank statement to multiple virtual subaccounts. Also, you must remember to never write a check from the parent ""State Bank"" 11100, and instead write the checks from the appropriate subaccounts." "I opened several free checking accounts at a local credit union.  One is a ""Deposit"" account where all of my new money goes.  I get paid every two weeks.  Every other Sunday we have our ""Money Day"" where we allocate the money from our Deposit account into our other checking accounts.  I have one designated as a Bills account where all of my bills get paid automatically via bill pay or auto-pay. I created a spreadsheet that calculates how much to save each Money Day for all of my upcoming bills.  This makes it so the amount I save for my bills is essentially equal.  Then I allocate the rest of my deposit money into my other checking accounts.  I have a Grocery, Household, and Main checking accounts but you could use any combination that you want. When we're at the store we check our balances (how much we have left to spend) on our mobile app.  We can't overspend this way.  The key is to make sure you're using your PIN when you use your debit card.  This way it shows up in real-time with your credit union and you've got an accurate balance.  This has worked really well to coordinate spending between me and my wife.  It sounds like it's a lot of work but it's actually really automated.  The best part is that I don't have to do any accounting which means my budget doesn't fail if I'm not entering my transactions or categorizing them. I'm happy to share my spreadsheet if you'd like." Having separate savings account for your kids college fund, retirement fund, holiday fund etc is one way to compartmentalise savings. Downside to this is the management of these funds especially if you have them with different banks. Like others here have pointed out, keeping track via spreadsheet is relatively easy and especially most banks now like OCBC, HSBC , DBS, POSB etc offer online banking, however from a financial standpoint, spreading your funds doesn't allow you to get as much interest as you would from one account that has the highest interest rate. "As others have said, the decision is a very personal one. Personally, I think you have a good idea. For those of us that thrive in structured systems having a detailed breakdown and distribution of assets is a great idea. I recommend going one step further however. Instead of having a single ""Necessities"" account have a division here. 1 account for ""Bills"" and another for ""Living Expenses."" Your Bills account should recieve the funds to pay your monthly expenses such as Rent, Utilities, Insurance. Living Expenses is for day to day spending. I recommend this because your Bills are generally a fairly fixed expense. Keeping your flexible spending separate allows you to manage it more carefully and helps prevent overspending.  I keep my Living Expenses in cash and divide it up by the number of days before my next check. Every day I put my portion of the Living Expenses in my wallet. This way I know that I can spend as much money in my wallet and still be fine for the rest of the pay period. I also know that if I want to go out to a nice dinner on Friday, it would be helpful if I have money left over at the end of the day Monday through Thursday."