Looking for a simple way to budget personal and investment finances

Personal Finance
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Looking for a simple way to budget personal and investment finances

Scott K.
Rental Property Investor · Bushwick, Brooklyn · Member since 2020 · 55 posts · 16 votes

What have you found to be a simple but effective way to make a budget for your personal finances when you also have expenses related to your properties?

I often find myself asking questions like "Can I afford this improvement this month?" or "Can I afford to take my family on this trip or buy tickets to this event?"

I want to make sure we have X allocated to categories like:

- RE properties (maintenance, improvements, etc.)

- Personal savings (529, index funds, etc.)

- Monthly fixed personal expenses (utilities, groceries, etc.)

- Fun/non-necessities (tickets for events, dining out, etc.)

Have you found a good system for this? If so, how often do you update your plan? What tools do you use?

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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
2y
Quote from @Scott K.:

What have you found to be a simple but effective way to make a budget for your personal finances when you also have expenses related to your properties?

I often find myself asking questions like "Can I afford this improvement this month?" or "Can I afford to take my family on this trip or buy tickets to this event?"

I want to make sure we have X allocated to categories like:

- RE properties (maintenance, improvements, etc.)

- Personal savings (529, index funds, etc.)

- Monthly fixed personal expenses (utilities, groceries, etc.)

- Fun/non-necessities (tickets for events, dining out, etc.)

Have you found a good system for this? If so, how often do you update your plan? What tools do you use?

Open a seperate bank account for your investment properties.  Seed this account with enough capital to meet any expenses that can not be paid out of cash flow.  Then budget your personal expenses as of the investments didn’t exist. 
Private Mortgage Financing Partners, LLC
WebsiteView Page
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  • Scott Mac
    Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
    2y
    Quote from @Scott K.:

    What have you found to be a simple but effective way...

     I think you are asking about accounting, because you are talking about budgeting.

    Budgeting can be done against your chart of accounts as it stands, But you may wish to ask your Accountant if adding accounts to it for Provisions" will help you.

    You should do something like this in cooperation with your accountant because you don't want to mess up your taxes and have to pay for something you shouldn't be paying for. 

    Maybe some Accounting experts could weigh in on this regarding journal Entries for a Single Member LLC, a Multi-Member LLC, and an S-Corp (if the are different).

    Good Luck!

    0Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    2y
    Quote from @Scott K.:

    What have you found to be a simple but effective way to make a budget for your personal finances when you also have expenses related to your properties?

    I often find myself asking questions like "Can I afford this improvement this month?" or "Can I afford to take my family on this trip or buy tickets to this event?"

    I want to make sure we have X allocated to categories like:

    - RE properties (maintenance, improvements, etc.)

    - Personal savings (529, index funds, etc.)

    - Monthly fixed personal expenses (utilities, groceries, etc.)

    - Fun/non-necessities (tickets for events, dining out, etc.)

    Have you found a good system for this? If so, how often do you update your plan? What tools do you use?

    Open a seperate bank account for your investment properties.  Seed this account with enough capital to meet any expenses that can not be paid out of cash flow.  Then budget your personal expenses as of the investments didn’t exist. 
    Private Mortgage Financing Partners, LLC
    WebsiteView Page
    2Reply
  • Max Emory
    Accountant · 100% Remote · Member since 2019 · 497 posts · 216 votes
    2y

    Hey @Scott K., the first step is fully separating your personal financial accounts from your property financial accounts. Even if you hold your properties in your personal name rather than an entity, it's a great idea to keep the financials separate for tax filing purposes and for your sanity.

    Once you've done this, it's way easier to implement a cash flow management system such as Profit First (highly recommend) that allows you to properly budget for reserves, etc.

    And, of course, it makes it easier to do the same with your personal finances once you no longer have "business" transactions commingled.

    I'm happy to workshop some of this with you free of charge if you want to go deeper into these topics.

    I've been through this myself.

    Just let me know (DM)!

    2Reply
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