[oxw]

Budget and finance tools as a class operate under the idea that money is fungible. One of those differences between how economists believe people operate vs how they really do

The people I know who could benefit most from budgeting do not think of money as fungible. They mentally allocate different incomes to different spending categories

This seems like an opportunity for a tool to break the mold and offer a solution that fits how people feel about money vs how they “should”

[shagie]

A dollar in an account is fungible. Are all the dollars that show up on the W2 going to the same account? Do some of them not even hit the main account?

If I made $3000 this month and $300 of that went to a retirement account and $1000 of that went to tax withholdings and another $300 went to child support, and of the remaining $1400, I had direct deposit put $1000 in savings and $400 in allowance... how would that be represented?

I contend that for this (these numbers are purely made up for ease of talking about):

    (income 1)
    $3000 -> $300 child support
          -> $300 company retirement plan
          -> $1000 tax withholdings 
          -> $300 allowance -> {various 'fun' expenses}
          -> $1100 savings  -> {various 'not fun' expenses}

    (income 2)
    $2000 -> $700 tax withholdings
          -> $200 allowance -> {various 'fun' expenses}
          -> $1100 savings  -> {various 'not fun' expenses}

The 'allowance' and 'savings' are each one bucket that have a net $500 and $2200 coming in to them respectively.

Having $2000 and $3000 go into one big bucket of a 'main' account, while working under the 'all money is fungible' fails to capture some reality of how money flows. For example, if income 1 loses their job, child support goes to $0 (not $300 from income 2) as does the $300 for retirement and the $1000 for tax withholdings.

[satvikpendem]

Fungibility != allocatability

Money itself is fungible, else you'd be marking every single dollar bill specifically with some unique mark.

But still, I'm curious what you mean by your last paragraph, do apps that utilize the envelope method such as You Need A Budget not already help you do this?

[globular-toast]

But they already have those tools. That's why they think that way. They have their current account, savings account etc. The point of these tools is to be better than those tools.

[cdchn]

Money is fungible. That is what makes it money. You're just thinking of different ways to allocate it.

[hgomersall]

Nit picking, but what "makes it money" is the fact you can redeem it; that is, some entity views your money as a liability.

It's totally fungible though.

[jamilton]

Might it be more effective to try to get such people to think of money as fungible?