Separate financial entities


#1

Curious if others treat their finances/budgets like this.

I recently realized my family’s budget has turned into 5 financial entities.

The breakdown of who is responsible for what is basically:
Family:
-general living expenses (mortgage, food, utilities, insurance, etc)
-Materinty clothes (seemed like a family responsibility than just 1 person :wink: )
-529 funding
-Retirement funding
-Trips

Children:
-Toys
-clothes
( mostly funded by bday and Xmas money and any we put in from cash budget leftovers)

Adults:
-Clothes
-Personal wants (new phone, video games, books)
(We take $15 allowances and hoping to grow this as our short term financial goals are completed)

Is your finances anything like this? Did you just realize it is?


#2

Mine is not dissimilar

INCOME
Earned Income (wages/business income/side hustles)
Passive Income (dividends/interest/rent/other)
Hours worked in month
= TOTAL INCOME

LESS EXPENSES
Needs (groceries/clothing/healthcare/insurance/utilities/etc but excluding housing)
Housing (rent/mortgage interest/building insurance/local property taxes/maintenance/etc)
Wants (education/entertainment/gifts/travel/pets/kids pocket money/fun money etc)
= TOTAL LIFESTYLE EXPENSES

LESS Investment Expenses
= TOTAL EXPENSES BEFORE TAX

LESS Taxes
= TOTAL EXPENSES AFTER TAX

= NET PROFIT

Doing it like this lets me keep an eye on the metrics I find most interesting:

  • The value of my time and how I’m doing with my work/life balance (a super important metric)
  • Proportion of my income happening without me doing anything (this is a happy metric)
  • How insanely expensive my housing costs are (a very unhappy metric)
  • Proportion of my income going to each of Taxes, Investment Expenses, Housing, Wants and Needs (usually in this descending order)
  • How well I’m covering off the essentials
  • How comfortably I’m living within my means
  • Identifying potential cash flow problems