Why are investment accounts typically not on-budget?

Roo’s pouches are like digital envelopes. With paper envelopes, you split your cash into different envelopes, like one for food and one for utilities. Each envelope only holds money you really have and can spend right now.

In Roo, your pouches always add up to the same total as all your on-budget accounts. So any money in an on-budget account shows up in your pouches, ready for you to spend.

Investment accounts are different. They usually hold money you can’t just go out and spend today. If an investment account were on-budget, its money would go straight into your pouches, because the totals always match. Then your pouches would stop showing what you really have to spend. A bad week in the stock market would make your pouches smaller, even though you didn’t spend anything. A good week would make it look like you have more to spend than you really do.

Budgeting means using the money you can spend wisely. So Roo keeps investment accounts off-budget, separate from your pouches. Your investments are still yours and still count toward your net worth. They just don’t change your everyday spending money.