Budgeting - Let's decide what we want!

[Matthew Vanecek]

On Sat, 2003-08-30 at 11:32, Jack McKinney wrote:
> Big Brother tells me that Stewart V. Wright wrote:
> > 
> > In summary VAs are a imaginary asset/liability/expense 
> > source that are used to divide income and expenses as 
> > defined by the user. The major difference from regular 
> > Accounts is that a leaf VA will mirror all expenses to 
> > the first (real) Account that sits above it. VAs will 
> > not contribute to the calculation of assets, 
> > liabilities or expenses of the Accounts under which 
> > they are leaves.
> 
>     I wrote an accounting system that accomplishes this without the
> special accounts, which might be useful here.  It is a web based
> accounting system... perhaps I'll set it up on my external web server
> and post a u/p here.  I have completely switched to GnuCash at this
> point, but I miss my budgeting.
>     What I did was this: subaccounts work exactly like gnucash subaccounts.
> Even for reconciliation: you have to enter a subaccount to mark an entry
> has having cleared.
>     What is different is twofold:  Firstly, I allow the user to enter the
> date that it cleared the bank instead of just yes/no.  Secondly, there is
> a link called "register" that brings up all uncleared transactions for an
> account and all subaccounts in a single window.  An uncleared transaction
> is one that has a nonzero change outside the parent's hierarchy.  So, of
> the tree transactions below, "Salary" and "Rent" would show up in the
> register for Cash in Checking, but "Budget" would not:
> 
> 2003/09/01 Salary
>      Income.GnuCash Inc                           -$1000.00
>      Assets.Cash In Checking.Main                  $1000.00
> 
> 2003/09/01 Budget
>      Assets.Cash In Checking.Main                 -$1000.00
>      Assets.Cash In Checking.Required               $500.00
>      Assets.Cash In Checking.Living                 $200.00
>      Assets.Cash In Checking.Fun                    $200.00
>      Assets.Cash In Checking.Savings                $100.00
> 
> 2003/09/01 Rent
>      Assets.Cash In Checking.Required              -$300.00
>      Expense.BLFH Properties                        $300.00
> 
> 
>    To clear the Rent transaction, I could either go to the "Required"
> account, or click on the register button for Cash In Checking. The
> Budget account has a net change in Assets.Cash In Checking of 0, so
> it would not show up on the register page.
>    The only other significant difference between gnucash and my system
> (as far as clearing transactions goes), is that you do not have cleared
> fields on EVERY account.  Any account that can have cleared transactions
> has to be marked as a "register" account.  Thus, my Assets.Cash In Checking
> and Liabilities.Credit Cards Payable.GnuCash One  accounts would have the
> register turned on.  This means that any display of the register accounts
> or their subaccounts would have a cleared column, and the top account would
> have a register button on the chart of accounts (and ONLY the top account).
>    

I don't get it.  You're using the register to reconcile your budget to
the actual cash flow?  I don't fully understand how the above relates to
budgeting vs. reconciling with a bank/CC statement...however, feel free
to read on.

I think too many people are trying to tie a budget too closely to
existing Gnucash accounts.  That's a mistake.  Budgets categories and
Accounts really have very little in common.  You don't use a Budget to
reconcile transactions; you use it to verify if you are spending too
much or too little on a particular expense or asset, or to see if you
income exceeds expectations or if you have less cash coming in than
planned.  You can also use the budget to map out various paths for you
future finances: Do you want to spend more or less money on food?  What
happens if I start putting x dollars in savings, or stocks?  A budget is
a tool to help you plan where you want to go.  Accounts are tools to
track where you've been.  You don't want or need budget editing built
into accounts--that would be a grave mistake and highly unscalable.  Not
to mention it mixes two completely different sets of data.

Your budget is going to tell you that for the month of August, you need
to put $200 in savings for unforeseen auto repairs.  Your accounts will
tell you that you have only put in $100.  The difference is reported on
a report.  There is no transaction clearing involvement or anything of
that sort with this concept.

In short, budgets are planning and compliance tools.  Accounts are
tracking tools.  You don't need accounts to create a budget; conversely,
you don't need a budget to use accounts.  When you have both available,
and can compare your actual to your planned (reports), you can really
take control of your finances.  However, they *are* separate.

Now, for display purposes in the register, I'm sure there are ways to
make it all nice and pretty so that you can see at a glance your
performance against your budget.  That, however, is GUI related, and
separate from the data implementation.  The GUI should never, ever drive
how you store your data.  Separate the view of the data from the storage
of the data, and then you can create a really kickass system. :)

-- 
Matthew Vanecek
perl -e 'print $i=pack(c5,(41*2),sqrt(7056),(unpack(c,H)-2),oct(115),10);'
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For 93 million miles, there is nothing between the sun and my shadow except me.
I'm always getting in the way of something...