budgeting

[nigel_gnucash-devel@unos.net]

On 30 Sep, Josh Sled wrote:
> On Fri, Sep 28, 2001 at 03:04:06PM -0500, Todd T. Fries wrote:
<snip>
> | it is possible to keep track of 'pools' of money independent of what
> | account it is in?  For example, we have 'educational savings' since
> 
> Hmmm.  It strikes me as both useful and not-useful... depending on the
> situation.
> 
> Example: We have two accounts A and B.  We have two savings goals, X and Y.
> Let's assume that they're both at their goals; X is $1000, and Y is $2000.
> We have all $1000 of X in A, and $1000 of Y in A.  The remaining $1000
> of Y is in B.  Thus, A contains $2000, and B contains $1000.  However, we
> could equivalently say that A contains all of Y, and B contains all of X...

(Note: remember that when I say "bucket", I mean "logical budgeting
unit/category")

FWIW, I don't personally care to know *where* my budgeted money is - I
have to manage my *physical* account balances separately from my
*logical* bucket system anyway.

Consider this:

I have $500 allocated in a bucket for groceries.  I spend $65 of that at
the grocery store and charge it to my credit card. Now there's $435 left
in my grocery bucket...

... but no physical transfer of funds has taken place, nor is one likely
to take place for some time.  If the $500 allocated in my grocery bucket
was physically located in my savings account (likely), it's going to
*stay* in my savings account until I have to pay my credit card bill, at
which time I'll transfer it to my checking account, then pay my credit
card.

This will generate two *physical* transactions (Savings -> Checking,
Checking -> Credit Card) which, in turn, won't affect the buckets at
all.

So there doesn't seem to me to be a natural mapping between budgets and
physical accounts.

> However, this assumes that the accounts are equivalent, whereas in
> reality they are likely not.  For instance, 'A' may be a less-liquid or
> less-accessible account, in which it is not desireable to place allocations
> toward short-term-needed savings goals.

But this is really going to have to be managed by the user.  Short of an
expert system, I don't see a really good way of implementing this.

However, if the budget subsystem is doing it's job, then I, as the user,
should know *exactly* how much money is in my "Savings" budget, which
will allow me to shift my physical monies between accounts as I see fit.

> So, we have to have knowledge of the Savings Goal, and knowledge of the
> accounts in which money may be stored.   There's also some integration with
> interest and the time-value of money... we shouldn't have to put $100/mo
> towards A if interest is going to be made on the previous allocations... and
> then, after the Savings Goal cap is reached, there is further income from
> interest associated with that savings, which should be handled in some way.
<snip>

At this point I should probably note that for the purposes of the
"bucket system" I consider interest to be income, but that income
probably skips the normal bucket progression and lands directly in the
bucket that makes most sense.  So, I spend $500/month on groceries, but
that $500 is actually sitting in my savings account until the bill is
due, so my grocery bucket generates $0.x of interest, which I will
probably apply to the "savings" bucket.  I don't see a reason to re-assign
that special income to the "grocery" bucket.

Have a good one,

Nato