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The bank Simple has three great features:

The Safe-to-Spend balance is pretty simple: it's just the balance in your checking account minus the total amount set aside for goals and upcoming expenses.

Safe-to-Spend = Checking balance − sum(Goals) − sum(Expenses)

Goals are "accounts" to track money set aside to cover future purchases. You can move money between Safe-to-Spend and any Goal at any time assuming there's enough money. You can mark any transaction in the checking account as being spent from the Safe-to-Spend balance or a Goal balance.

Expenses are almost identical to Goals, except Expenses are on a recurring schedule and have two balances: a Ready balance and a Coming Up balance. You can readily move money between either of those balances and the Safe-to-Spend balance.

This is really useful for keeping track of things in my Simple checking account, but it doesn't help me with account anywhere else, so I'm looking into setting up an accounting system that can do this for any bank account.

Question: What's the double-entry bookkeeping method for tracking Safe-to-Spend, goals, and expenses balances?

If we want to keep track of the Safe-to-Spend, Goals, and Expenses balances and move money between them freely, we need accounts for each, right? What kind of account is each? Asset? Liability? Equity? Revenue? Expense? If we build a balance sheet, we have to avoid double-counting the amount in the bank account and the amount in the Safe-to-Spend, Goals, and Expenses accounts.

Is double-entry bookkeeping able to account for these kinds of balances?

  • I prefer Every Dollar Has Function to Safe-to-Spend if for no other reason that because when every dollar is already in it's own account (even if that account name is "Miscellaneous") you don't need to worry about calculating how much is safe to spend: just look at that cell in your spreadsheet... – RonJohn Oct 6 at 19:14
  • The more I read about Safe-to-Spend, the more it looks like my "check register is the budget" method except my check register has a cell for the Safe-to-Spend money so that I know what my end of month balance will be. – RonJohn Oct 6 at 19:20
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One way to implement this is to use accruals accounting (which is typically built on double-entry accounting).

That is, enter the expenses when they are incurred rather than when they are spent. You’d also enter the income when earned rather than when received.

Then the balance of the account would be your ‘safe to spend’ amount.

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