Future allocated money, aka Envelope Budgeting

[Christopher Lam]

Hi Matt- I thought this should move to the devel list, because of 
technical details, and this discussion will be very speculative.

I had a thought about how envelope budgeting could work: "divide your 
paycheck into separate envelopes for different purposes".

A solution: *Create another type of transaction.*

There's already u(n)reconciled, (c)leared, (y)reconciled, (v)oid 
transactions. And (f)rozen I believe is unused. Let's create a new type 
- (b)udget. But the balances are handled differently.

It would require some UI and calculations changes --

1. The account budget balance is always maintained similarly to 
Running/Reconciled/Cleared Balances. But it would count all previous 
split-values *and* the (b)udget split amounts. However the budget 
running balance is not shown in the default register. This means, 
existing balances/register are unchanged.

     Let's say we're in a bank account register

     1/1    Opening $10000 Running Balance=$10000, Cleared/Reconciled 
Balance= $0, Budget=$10000
     2/1    Income +$1000  Running Balance=$11000, Cleared/Reconciled 
Balance= $0, Budget=$11000
     3/1    Food -$50            Running Balance=$10950, 
Cleared/Reconciled Balance= $0, Budget=$10950
     4/1  <--- today              Running Balance=$10950, 
Cleared/Reconciled Balance= $0, Budget=$10950

2. We create another Register Action: "Allocate Budget".
"Allocate Budget" means we create a (b)udget transaction with 
multisplits from assets to expense accounts. By default we allocate the 
whole $10950. The $10950 in an asset account means "the amount remaining 
to allocate".

     4/1 Budget Transaction type "b"
            Asset:Bank -$10950
            Expense:Food $200
            Expense:Gas $200
            Expense:Taxes $300
            Imbalance $10250

Now the state of the Bank register is:

     5/1 Running Balance=$10050, Cleared/Reconciled Balance=$0, Budget 
Balance= $0

And the Food register is:

     3/1 Food $50      Running Balance=$50 Cleared/Reconciled=$0 Budget=$50
     4/1 Budget $200 Running Balance=$50 Cleared/Reconciled=$0 Budget=$250
     5/1 <--- today    Running Balance=$50 Cleared/Reconciled=$0 Budget=$250

3. We can allow the imbalance account to collect unbudgeted/spare 
monies. Or we can decide to allocate an amount smaller than $10950, 
leaving the 'budget' balance in the bank register a positive value.

4. Now the Food account has several balances accessible via API

     Running Balance $50 - as usual counts all split-values from "n" "y" 
"c" including future splits.
     Unreconciled $50 - counts splits-values from "n"
     Cleared $0 - counts splits-values from "n" "c"
     Reconciled $0 - counts splits-values from "n" "y" c"
     Budget $250 - counts all split-values from "n" "y" "c" "b"

5. A Budget report could be created, comparing the various expenses' 
running balances vs the budget balance. The difference is the amount 
left to spend in this category. For the food account it's 250-50 = $200 
left to spend.

6. Anytime the user wishes to allocate more budget to food, they can 
simply create (b)udget transaction from Bank or Imbalance account to the 
Food account.

7. This means, in the account register, we'll see regular transactions 
which can be reconciled with the bank statement. We'll also see budget 
transactions, not reconcilable with the bank statement. Perhaps they 
should be a different color/background. But this is ok, because their 
amounts do not affect the account running balance. The Reconcile window 
can also filter them out. The existing reports are unaffected. The query 
mechanism should ignore them by default.

What do we think of this?

The budget balance for an asset account represents "money remaining to 
allocate", and the budget balance for an expense account effectively 
represents "the upper limit that I'll allow this account to be". The 
budget balance, minus running balance represents "money left in 
envelope". I can increase envelope contents by transferring budget money 
from asset to the expense accounts.

I wouldn't know how to handle credit card nor loan interest.

I think it's an interesting thought experiment. The devil will be in the 
details.

The advantage will be that the underlying code can handle this augmented 
functionality without major difficulty (famous last words.)

Chris

On 31/01/18 15:59, David T. via gnucash-user wrote:
> Matt,
> I have to admit that I misread the tally; I did not see that the first $500 (AllocatedCash) was balancing the others. My apologies.
> I'll let you and Adrien work this out, since I don't have a lot of background in this.
> David
>
>   
>   
>    On Wed, Jan 31, 2018 at 8:58, Matt Graham<matt_graham2001 at hotmail.com> wrote:   #yiv0595440679 #yiv0595440679 -- _filtered #yiv0595440679 {panose-1:2 4 5 3 5 4 6 3 2 4;} _filtered #yiv0595440679 {font-family:Calibri;panose-1:2 15 5 2 2 2 4 3 2 4;}#yiv0595440679 #yiv0595440679 p.yiv0595440679MsoNormal, #yiv0595440679 li.yiv0595440679MsoNormal, #yiv0595440679 div.yiv0595440679MsoNormal {margin:0cm;margin-bottom:.0001pt;font-size:11.0pt;}#yiv0595440679 a:link, #yiv0595440679 span.yiv0595440679MsoHyperlink {color:blue;text-decoration:underline;}#yiv0595440679 a:visited, #yiv0595440679 span.yiv0595440679MsoHyperlinkFollowed {color:#954F72;text-decoration:underline;}#yiv0595440679 .yiv0595440679MsoChpDefault {} _filtered #yiv0595440679 {margin:72.0pt 72.0pt 72.0pt 72.0pt;}#yiv0595440679 div.yiv0595440679WordSection1 {}#yiv0595440679
> Hi Dave!
>
>    
>   
> Yep, that is pretty much the conclusion I’ve come to. Not sure what you are asking about in “where are you balancing the funds”. The Cr and Dr are balanced in the example. Maybe you are asking the location in the hierarchy for the accounts? It all goes up to the root account “Assets”. For this idea, I had Current Assets, Fixed assets, and Allocated Assets. All the little allocation accounts were stored in the Allocated Assets branch.
>
> They were balanced by a single account under current assets called “AllocatedCash” (as per the example below). This is the weird one – a negative asset account that reflects how much I SHOULDN’T spend out of current assets unless I am spending on my allocated causes.
>
>    
>   
> As per Adrian’s discussions, if you are spending out of the account that you have put your sub-account into, then there are less splits and it is far easier to understand. Using Adrien’s idea, at WORST you have a couple of transactions that are just as complex as every transaction the other way – but this is only in the rare event that you spend out of a different account from that which your sub-account is in.
>
>    
>   
> I still haven’t fully wrapped my head around Adrien’s most recent email, so that could create some more “Aha!” moments too.
>
>    
>   
> Thanks and regards,
>
> Matt
>
>    
>   
> From: David T.
> Sent: Wednesday, 31 January 2018 2:31 PM
> To: matt_graham2001 at hotmail.com;Adrien Monteleone; gnucash-user at gnucash.org
> Subject: RE: Subaccounts [WAS Re: Future allocated money vs Budgets]
>
>    
>   
> Matt,
>   
>    
>   
> I see one huge problem: where are you balancing the funds for the allocated accounts? They need balancing, and once you add something to balance them, you might as well male them Subaccounts of checking anyway.
>   
>    
>   
> Cheers,
>   
> David
>   
>    
>   
>
> On Wed, Jan 31, 2018 at 4:06, Matt Graham
>   
> <matt_graham2001 at hotmail.com>
>   
>    
>   
> [Snip]
>   
>
> If, rather than a sub-account, I use a separate asset account then there is no balancing Cr to an asset to increase the allocation. In your example, you had a balancing Cr on the parent when you allocated the money. So, we receive a $1000 pay check, and want to allocate $500 to the four accounts:
> Cr Income: Salary $1000
> Dr Asset:Current:Checking $1000
> Cr Asset:Current:AllocatedCash $500
> Dr. Assets:Allocated:Vacation    $250
> Dr. Assets:Allocated:Insurance  $150
> Dr. Assets:Allocated:Dining      $ 50
> Dr. Assets:Allocated:Coffee&Tea  $ 50
>   
>    
>     
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