doing budgeting/escrow within checking account

[Mike or Penny Novack]

Scott

>We budget very carefully on a monthly basis.  We maintain "mini-accounts"
>within our checking account to set aside money each month for various
>categories.  At each paycheck, we assign $$ to each mini-account (this isn't
>an actual withdrawal from the checking account).  Then, as we make each
>expenditure out of the checking account, we also reduce the mini-account's
>balance by the same amount.  If the money isn't available in the
>mini-account (would result in a negative balance), we don't make the
>purchase!  In other words, we use it as a forward-looking tool that affects
>our behavior *this month* instead of waiting until next month, seeing that
>we overspent, and then adjusting.
>
>  
>
I might be able to help you here as I am doing something similar with an 
organizational savings account (I am not maintaining separate bank 
accounts for each dedicated "fund").

Here's how I have set this up -- I'll give an example for checking 
instead of savings.

Current Funds (use whatever you want for the parent)
    Checking Account (this is where the transactions recording deposits, 
checks, and TRANSFERS get recorded)
    Reserve for Entertainment
    Reserve for .......
    Reserve for .......  (again you pick the names)

OK -- here' show you work this. IF you have enough money in one of those 
reserves to make a purchase of the sort that reserve is for and you want 
to make that purchase, you write a check -- and THAT's the account you 
record it in -- and a transfer from the reserve to ordinary checking. I 
suspect you'll reverse the order of those two actions but I'm only doing 
the transfers quarterly or even annually (remember, I can always use 
unrestricted funds to pay any expense -- I'm just trying to "use up" 
restricted funds on the purposes to which restricted).

Reconciling your checkbook -- the total shown for the Current Funds 
account is the total that should be the checking account balance after 
taking into account deposits and checks not included in the statement.

Michael