A Money Plan
This spin on budgeting is essentially zero-based budgeting except that I use it primarily to disperse funds. The way I've been able to get myself to manage my finances is by only budgeting. I do not track every expense (I know, I'm a heretic). Of course, for my budgeting to work, I have a good idea of how much I spend and what my fixed expenses are.
By using many accounts, I've created a digital version of the envelope system. I used the cash envelope system for a while, but it's annoying because you have to go to an ATM to get cash then you have to remember to carry all your envelopes wherever you go. And I don't like paying in cash, it's tedious.
This plan assumes that you have a checking account where you receive direct deposits. From this account, you disperse funds to other accounts, to savings/investments, and expenses.
Do not use this checking account to pay for day-to-day stuff (groceries, gas, clothes, etc). Open a separate checking account with a debit card that you'll use to pay for groceries, eating out, clothing, hair cuts, etc. I personally opened an account in a separate bank.
Sample Money Plan
Each money plan correlates to a paycheck. The day I get paid, I create a money plan to immediately move money to all accounts (gotta put money to work). I get paid twice a month, so I create two money plans each month.
In this example, the debit represents the starting balance of Bank A after getting paid.
| Debit/Credit | Account | Account | Amount |
|---|---|---|---|
| Debit | Starting Balance | Bank A | 2500 |
| Credit | Bank A | Rent | (700) |
| Cell Bill | (150) | ||
| Credit | Investment Bank A | General Investing | (250) |
| Credit | Investment Bank B | IRA | (200) |
| Credit | Bank B | Checking | (600) |
| Emergency Fund | (100) | ||
| Car Repairs Savings | (100) | ||
| Credit | Credit Card A | Gas | (100) |
| Splurge | (200) | ||
| Subscriptions | (100) | ||
| 0 |
Accounting stuff
A debit is an accounting entry that either increases an asset or expense account, or decreases a liability or equity account. It is positioned to the left in an accounting entry.
A credit is an accounting entry that either increases a liability or equity account, or decreases an asset or expense account. It is positioned to the right in an accounting entry.
See https://www.accountingtools.com/articles/debits-and-credits/ for more information.