budgeting

[Conrad Canterford]

nigel_gnucash-devel@unos.net wrote:

> On  1 Oct, Daniel Hagerty wrote:
>>I think part of the problem in this discussion is that people are
>>coming from completely different angles and the nomenclature is
>>extremely confusing.


Especially when we start to talk about "categories" which also get used 
by other popular accounting programs. However, I think the nomenclature 
should wait until we know the full set of what we are describing. 
Otherwise we risk inventing names for things which will be inappropriate 
in their final use but which will "stick" because they have been used 
for so long in this discussion. People just need to be clear with what 
they mean.

> What do the rest of you think?  Why does a casual user use a budget?


Me as casual user: I don't use gnucash for my personal finances at the 
moment. However, my budgeting consists of:
- I have a rough idea how much per year I spend on various things. I 
divide that number by 26 (I get paid fortnightly). I then allocate that 
much per pay to each of those things.
- My groupings are fairly high-level: I have a "car" grouping ("auto" 
for the Americans) which includes sub-categories of "repairs", 
"insurance", "registration", and "fuel". I rely on the costs being 
spread out over a year to make all this balance and to reduce the number 
of times I have to "borrow" from another grouping.
- If I were to gnucashise this, I would want to know how much money is 
in each grouping. This could mean negative numbers (money borrowed from 
another unspecified grouping). Having some way to automate/monitor the 
budget vs. reality to ensure that my rough ideas were correct would also 
be really usefull.


> Why does a business user use a budget?

Well, I must confess that I don't. Our income is too variable to make a 
budget practical in any useful detail. Australia has started to use the 
term "microbusiness" for businesses like use, because the things that 
affect us a very different from the things that affect the upper end 
small bussiness (we do ~$150,000 per year turn-over, some small 
businesses do up to $1.5M turn-over). When we are turning over $1.5M, I 
possibly will be able to say "We will spend $x this year on advertising, 
$y on stock, $z on...". I cannot do that at the moment, because it is 
almost completely dependent on what mix of products we sell, and when we 
sell them.

Having said that, it would be really useful to be able to say "I spend 
2.5% of my income on rent, %n on credit card fees, %x on ...", (most of 
these are reasonably fixed percentages) and at the end of it all, have 
some figure showing how much money is left over.

Whether this can be done within the budgeting framework or not, I don't 
know.

Conrad.
-- 
Conrad Canterford  (conrad@mail.watersprite.com.au)
Water Sprite Pty Ltd   |  Watersprite Pty Ltd:
GPO Box 355,           |  - Australian Tour and Event Management (ATEM)
Canberra, ACT 2601     |  - Ticketing Division.
Mobile: +61 402 697054 |  - Catering Services Division.