Budgeting - Let's decide what we want!

[Andrew L. Gould]

On Monday 01 September 2003 10:01 am, Matthew Vanecek wrote:
> On Mon, 2003-09-01 at 09:06, Stewart V. Wright wrote:
> > > amounts, etc.  Not the only way to do it, of course, just a suggestion
> > > and what I thought would be easiest to implement.  I certainly am
> > > interested in seeing what you have, though, and I'm *certain* we'll all
> > > appreciate any working implementation!! ;)
> > >
> > > I know I will!
> > > (Thank God someone is actually going to spew forth code on this)
> >
> > I don't want to put a dampener on this, but I think a clearer focus on
> > what is to be done is a better approach than for someone to go out and
> > start coding what they would like to see.
> >
> > Code is a "Good Thing(TM)" but there are still two different camps at
> > least.  Those who want to plan for 'X' dollars to buy a new truck and
> > those who want to be able to say "OK, 10% of this months income goes
> > into the Truck Purchasing section of my budget".  I put myself in the
> > last category.  Then of course there is the "I get 'Y' dollars per
> > year so I am going to plan my budget for 12 months" camp (which is a
> > splinter of the last group).
>
> I fail to understand the difference.  In each case, you are planning to
> spend X dollars on a future puchase.  Darin's direction allows you to go
> into a budget period and change the amount you are allocating to that
> future expense for that period.  That gives you what you want, I think.
>
> Me, I get Y dollars per year, divided into 26 disbursements.  I spend
> money based on individual disbursements, not based on my yearly salary
> (like I really should). I allocate my lunch and gasoline money on a
> paycheck-by-paycheck method.  Each paycheck, $same goes to lunch and
> gas.  (The rare) Excess gets moved to savings at the end of the pay
> period (when I get my next check).  Darin's method doesn't prevent me
> from budgeting that--it actually makes it a bit easier.  I know during
> the next 12 months my lunch and gas needs will remain relatively stable.
>
> And in the end, don't you want to plan a specific amount to pay for a
> major purchase?  Consider a new house.  I know I need a $30,000 down
> payment for the type of house I want.  I know my wife has a two year
> timeline for buying that new house.  Therefore, I know how much money I
> have to accumulate between now and then ($30,000--I know how much, but
> now how!!), so I can effectively divide that into monthly savings goals
> that fit nicely into a budget.  Darin's method would, of course, allow
> me to adjust the periodic goals as needed (say, if I worked hourly and
> couldn't put in the same amount each paycheck, his table lets me change
> the amount for a given paycheck/period--this, I think, may help with
> your percentages requirement--perhaps a field could be
> percentage-calculated based on planned income for the period).
>
> I just don't see the differences in our end goals--I still plan
> weekly/bi-weekly expenses based on my paycheck, and I still plan
> long-term goals based on how much I need to meet them.  Same as you want
> to do, I think.  I think the direction Darin seems to be taking is the
> best of both worlds.  A clean separation of budget vs. accounts,
> editable amounts for budgetary periods, cumulative periods for an
> overall timeframe, definitive relationships between budget categories
> and accounts...all we'll need is someone to revive the SWIG bindings to
> write some Perl reports (no bias there at all, certainly not, not like
> Perl is the greatest scripting language around--even if it is! ;-P)...
>
> In any case, since he's the only one stepping up to the plate to do the
> grunt work, we should give him the benefit of the doubt and see what he
> has to offer.  It's not stone tablets we're talking here--it's
> electronic signals and magnetic bits that are very malleable...
>
> BTW, the % of income per period would be a nice feature, I agree, but
> most cash flows won't be based on percentages.  My $#!#% electric bill
> doesn't care how much my paycheck is!!!
>
> In thinking about this, it seems what you are looking for is something
> to tell you on a paycheck-by-paycheck basis what you have available to
> spend on X items, after you get your paycheck (i.e., you get your
> paycheck, you divide it into various cash flow paths, 10% to savings,
> $100 to electric, etc.), perhaps because you don't get the same amount
> each payday.  I'm not sure why there couldn't be room for both, but I
> think Darin's method could satisfy even this requirement w/o affecting
> the rest of the codebase.  Just change the budget amounts in the table
> each paycheck...
>
> Hmm, well, seem to have spewed forth enough dialog.  I think both the
> main ideas proposed are very useful, but I think the separate budget
> idea should be able to handle the needs of both camps.  Just depends on
> how cleanly it is implemented.

I still think we're talking about 2 different tasks, which could be handled in 
separate "modules".  (I mentioned this in a separate sub-thread of this email 
topic.)  Currently, I earmark funds by removing funds from my checkbook and 
allocating them to specific purposes in a spreadsheet.  (I'm still planning 
the conversion to Gnucash.)  This is similar to the cash management described 
above and to encumberance accounting used in governmental accounting (yuk!).  
The amount left in my checkbook is like petty cash, which is used for food, 
fun, etc.  This method affects my day-to-day, week-to-week activities.  This 
may be all that's necessary for personal financial management; but a small 
business should also use a separate budget process that is more strategic in 
nature.  A budget is something you would put in a Business Plan.

Andrew