7 ms·

What additional benifit does moving money around provide? From my perspective, there is not much difference between money moving around in the banking system v

by mtzet 6y ago

What additional benifit does moving money around provide? 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.

cookiengineer 6y ago
Counter-question: Does your operating system have all its files directly placed in "/"? Why not? 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.
- fauigerzigerk 6y ago
  >Counter-question: Does your operating system have all its files directly placed in "/"? Why not? 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.
  - zhte415 6y ago
    It makes sense to me. I channel 100 per month for the winter heating bill, no need to think about that, it's automatically there. I channel 500 per month for petty cash, don't dive into the rest, it's automatically there. I channel 200 per month for annual insurances, no need to think about that, it's automatically there. Etc. It's a personal direct-debit, like using rules on one's email.
    - fauigerzigerk 6y ago
      I know a lot of people like to do it that way, otherwise these features wouldn't support an entire new category of fintech startups. For me, this is a mental burden and too much busy work. 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.
      - 1123581321 6y ago
        In the computer example, someone using the envelope system would decide not to buy the computer if the balance in the appropriate account was short. It’s just a different approach to timing and limiting purchases.
        saiya-jin 6y ago
        It still sounds a bit weird to me. If I need something, I will buy it unless I don't have cash for it. The concept of buying stuff just because I still have some spare cash in some bucket but I stop once bucket is empty feels so strange to me, some sort of forced self-check on compulsive buyers. If that's the case, I would rather look for solution in the root cause of such behavior rather than symptoms. 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).
        pythonaut_16 6y ago
        You don't have to buy something once the bucket is full. The idea is just to have the money allocated so it's ready when you need it. 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.
  - fennecfoxen 6y ago
    They are tools for accounting: both as in actually making a count of the matter, and as in actually holding yourself “accountable” for meeting them. 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.
- arethuza 6y ago
  Having a separate bank account for each logical account sounds like having a separate drive for each folder. Accounting already provides very high levels of organisation (e.g. Chart of Accounts) that don't map directly to bank accounts and a, greatly simplified, version of this would seem to be adequate for personal finances? Edit: This almost makes me want to write a personal Hyperion Financial Management application...
- hrktb 6y ago
  That's a good point. We used to partition our disks and assign space budgets to specific partition/mounted directories. 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.
- sorbits 6y ago
  > Does your operating system have all its files directly placed in "/"? 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).
- brmgb 6y ago
  > Counter-question: Does your operating system have all its files directly placed in "/"? Why not? 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.
intricatedetail 6y ago
I think it's a human thing - it works better with the brain if the money is "physically" in a different location (When in reality it makes no difference). It's the same why people actually use envelopes instead of just having a pile of money and a sheet of paper to note what is what.
bartvk 6y ago
That seems an easy one to me. In your case, you maintain software that provides you a budget sheet. In the case of the OP, the app does that for you.
tlb 6y ago
I've always felt the same, but a few situations have required separate accounts: - 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.
- gen220 6y ago
  fwiw, I strongly recommend trying out a double-entry ledger tool for keeping track of your finances, if they are indeed this 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.
SecurityLagoon 6y ago
The only advantage I can see is for people who don't monitor their expenditure well so their purchases get denied when they try to spend too much on a particular thing. Otherwise, I agree, there are plenty of services and other banks that allow you to categorize transactions so you know how much you are spending on particular things.
- linsomniac 6y ago
  Simple turns this on it's head. Instead of looking back at transactions and how much money has already left, this looks forward. I have house and car payments due on the first, utilities due later in the month, kids college accounts, Internet, car registration due once a year, garbage due quarterly, insurance due every 6 months. 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...).
minton 6y ago
For me it’s about a single source of truth. Paycheck comes in, it’s in my Safe-to-spend (i.e., not in a goal). I have a separate goal (virtual envelope) for each monthly bill. As I move the bill amount into that goal, it is removed from my safe-to-spend. I can quickly fill up my goals for all monthly expenses (water, electric, cell, etc) and once done, I know how much is left. I don’t have to worry about importing transactions or ensuring an external system is up-to-date and reconciled.

by mtzet 6y ago

cookiengineer 6y ago

Counter-question: Does your operating system have all its files directly placed in "/"? Why not? 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.

fauigerzigerk 6y ago
>Counter-question: Does your operating system have all its files directly placed in "/"? Why not? 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.
- zhte415 6y ago
  It makes sense to me. I channel 100 per month for the winter heating bill, no need to think about that, it's automatically there. I channel 500 per month for petty cash, don't dive into the rest, it's automatically there. I channel 200 per month for annual insurances, no need to think about that, it's automatically there. Etc. It's a personal direct-debit, like using rules on one's email.
  - fauigerzigerk 6y ago
    I know a lot of people like to do it that way, otherwise these features wouldn't support an entire new category of fintech startups. For me, this is a mental burden and too much busy work. 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.
    - 1123581321 6y ago
      In the computer example, someone using the envelope system would decide not to buy the computer if the balance in the appropriate account was short. It’s just a different approach to timing and limiting purchases.
      - saiya-jin 6y ago
        It still sounds a bit weird to me. If I need something, I will buy it unless I don't have cash for it. The concept of buying stuff just because I still have some spare cash in some bucket but I stop once bucket is empty feels so strange to me, some sort of forced self-check on compulsive buyers. If that's the case, I would rather look for solution in the root cause of such behavior rather than symptoms. 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).
        pythonaut_16 6y ago
        You don't have to buy something once the bucket is full. The idea is just to have the money allocated so it's ready when you need it. 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.
- fennecfoxen 6y ago
  They are tools for accounting: both as in actually making a count of the matter, and as in actually holding yourself “accountable” for meeting them. 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.
arethuza 6y ago
Having a separate bank account for each logical account sounds like having a separate drive for each folder. Accounting already provides very high levels of organisation (e.g. Chart of Accounts) that don't map directly to bank accounts and a, greatly simplified, version of this would seem to be adequate for personal finances? Edit: This almost makes me want to write a personal Hyperion Financial Management application...
hrktb 6y ago
That's a good point. We used to partition our disks and assign space budgets to specific partition/mounted directories. 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.
sorbits 6y ago
> Does your operating system have all its files directly placed in "/"? 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).
brmgb 6y ago
> Counter-question: Does your operating system have all its files directly placed in "/"? Why not? 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.

intricatedetail 6y ago

I think it's a human thing - it works better with the brain if the money is "physically" in a different location (When in reality it makes no difference). It's the same why people actually use envelopes instead of just having a pile of money and a sheet of paper to note what is what.

bartvk 6y ago

That seems an easy one to me. In your case, you maintain software that provides you a budget sheet. In the case of the OP, the app does that for you.

tlb 6y ago

I've always felt the same, but a few situations have required separate accounts: - 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.

gen220 6y ago
fwiw, I strongly recommend trying out a double-entry ledger tool for keeping track of your finances, if they are indeed this 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.

SecurityLagoon 6y ago

The only advantage I can see is for people who don't monitor their expenditure well so their purchases get denied when they try to spend too much on a particular thing. Otherwise, I agree, there are plenty of services and other banks that allow you to categorize transactions so you know how much you are spending on particular things.

linsomniac 6y ago
Simple turns this on it's head. Instead of looking back at transactions and how much money has already left, this looks forward. I have house and car payments due on the first, utilities due later in the month, kids college accounts, Internet, car registration due once a year, garbage due quarterly, insurance due every 6 months. 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...).

minton 6y ago

For me it’s about a single source of truth. Paycheck comes in, it’s in my Safe-to-spend (i.e., not in a goal). I have a separate goal (virtual envelope) for each monthly bill. As I move the bill amount into that goal, it is removed from my safe-to-spend. I can quickly fill up my goals for all monthly expenses (water, electric, cell, etc) and once done, I know how much is left. I don’t have to worry about importing transactions or ensuring an external system is up-to-date and reconciled.