To budget in two currencies, choose one base currency and stop converting in your head. Keep a separate account for each currency, record every transaction in the currency it was paid in at the exchange rate of that day, and read your reports in the base currency. The plan lives in one currency; the money can live in two.
Pick a base currency and stop converting in your head
Two currencies in one life means every price arrives with a question attached: what is that, really? People answer with a rate remembered from last year, and every answer is a little wrong in a direction they cannot see. Over a year, the small errors add up to a budget that does not match the bank.
The way out is to decide once which currency your plan is in. Usually it is the one you are paid in, or the one your rent is in, or simply the one you think in. It need not be the currency of the country you live in. The base currency is where the envelopes, the goals and the month's verdict live. Everything else is a fact about where the money is held.
One account per currency
Money in a currency lives in an account in that currency. Do not make one account carry two currencies by converting rows as you enter them; that is the mental arithmetic again, only slower. Each account keeps its own balance in its own currency, so the number you see matches the bank's.
Transfers are the one place the currencies meet. Record what left in one currency and what arrived in the other, on the day it happened. The gap between them at that day's rate is the cost of moving money, and it deserves an envelope of its own.
The rate of the day, not the rate of today
A transaction has one true value in your base currency: the amount, at the exchange rate on the day it happened. Record it at today's rate instead, look again next month at a different rate, and the same coffee has changed price without anything happening. Over a year, your reports drift every time the rate moves, and a good month in the past quietly becomes a bad one.
The rule is simple: every transaction keeps the rate of its own date, for good. Reports add those fixed values up. The rate moves; your history does not.
How to set it up, step by step
- Choose the base currency. The one you are paid in, or the one your rent is in, or the one you think in. Write it down and leave it alone for a year.
- Open one account in the plan per real account. A euro account, a dollar account, the card in each, each in its own currency.
- Build the envelopes in the base currency. Rent, groceries, transport, the flight home, a tax reserve for each country. The plan speaks one language.
- Record each purchase in the currency it was paid in. The plan converts it at that day's rate. You never type a converted number.
- Record transfers as two legs. What left, what arrived, same date. Put the difference in an envelope called fees or exchange.
- Read reports in the base currency only. If a number surprises you, check the rate on that day before you look for a mistake.
What a report in the base currency tells you
It tells you what the month cost in the currency you plan in, which is the only version that lets you compare months. It also shows how much of your net worth sits in each currency, and so how much a move in the rate changes your position. Someone paid in dollars with rent in euros holds a small currency bet every month, whether they meant to or not.
What the report cannot do is make the rate go away. A month can be over budget because prices rose or because the rate moved, and both show as the same overspend. The rate is a cost like any other; give it an envelope.
Rent and taxes in the other country, and travel
Fixed costs in the other currency are the hardest part: large, and moving with the rate. Rent in a currency you are not paid in gets its own envelope, funded a month ahead, so a bad week on the exchange never makes the rent late. Taxes are worse: two countries can each want a share, on different dates, in different currencies. A tax envelope per country, funded from every pay, is the boring answer and the right one.
Travel needs much less. A trip is one envelope in the base currency, spent abroad at each day's rate, with no second budget and no foreign account. Living abroad is when the second currency has a rent, a tax bill and a pay day. Until then, keep it simple.
The mistakes
Switching the base currency every time you move. Every switch rewrites what a month meant. Choose once, and change it only when your pay changes currency for good.
Keeping the second currency off the plan. The account you just use for local things is usually where the leak is, because nobody is watching it in any currency.
Converting at today's rate. The mistake that makes history drift, and the hardest to see, because each number looks reasonable on its own.
Two currencies in vokse
vokse holds accounts in 41 currencies and budgets in one. Every account keeps its own currency and balance, every transaction keeps the exchange rate of its own date, and the envelopes, goals and reports read in the household's base currency. Conversion happens only where a total needs a single currency, and nothing in your history is rewritten when the rate moves. The multi-currency page shows which surfaces convert and at which date; the expats page walks through pay in one currency and rent in another; the travelers page covers one trip envelope spent abroad. The budgeting page shows the envelopes and the unassigned counter. One limit to know: a transfer between two accounts in different currencies is not available yet, so record the two legs as separate transactions on the same day.