When I was single back in the 1980’s, when my paycheck came I would deposit it and pay all my monthly bills. I knew what was left after I paid my bills was food and discretionary income.
After we got married, it became harder to tell where our finances stood due to credit card balances. We paid off our credit cards each month, but they still would have balances which were the business equivalent of accounts payable. We would have budget item balances that didn’t match the amount of money we actually had in the bank.
We started doing a monthly balance sheet. On the assets side we list our bank balances and what we have borrowed from ourselves (the equivalent of accounts receivable). I borrowed from our savings for my MBA, which I completed in the summer of 2014. We also borrow for beer in the house and take it off our budget as we use it. On the liabilities side, we list our credit card balances and our budget and designated savings. We call the credit card companies to get our current balances.
We do have another savings account, but we haven’t specifically designated how to use it, so we don’t list it. The assets total and the liabilities and savings total need to balance. A balance sheet is only true at a particular moment in time, but checking it once a month and balancing it makes sure that you actually have money in the bank for what you are budgeting.
Here is our last balance sheet: