Budgeting - Let's decide what we want!

Matthew Vanecek mevanecek at yahoo.com
Sat Aug 30 20:44:06 CDT 2003


On Sat, 2003-08-30 at 18:46, Jack McKinney wrote:
> Big Brother tells me that Jon Lapham wrote:
> > Yeah, what Matthew said.  I agree 100%.
> > 
> > *If* there is budgetting in GnuCash, I think (for what it is worth) it 
> > absolutely needs to be something completely separate from the existing 
> > functional system (I mean both in terms of code base and UI).
> 
>     I have seen this POV mentioned several times, and I just don't grok
> it.  What it seems to come down to is, spend the money, then check the
> budgets afterwards to see if you screwed up. 
>     In other words, you can budget one of two ways: before the fact or
> after the fact.  The "envelope" system of having subaccounts of the
> main account is the before method.  If your mortgage payment is $800,
> and you are paid twice a month, then you can budget $400 into your
> housing subaccount every paycheck, and thus know that you will have
> enough for the mortgage payment on the 1st.
>     This is even better when you have to pay $900 for your car insurance
> every six months.  By putting $75 into your car budget every paycheck,
> then you'll have your $900 after six months.
> 
>     With after the fact budgeting, you mark each transaction in some
> way and then do reports to see how you are doing.  What I don't grok
> in this method is how to see how much I have available to spend.  My
> account may say that I have $900 in it, but I don't know that $800 of
> it is "reserved" for the upcoming mortgage payment.  If I want to buy
> that new DVD burner for $150, GnuCash tells me I have it, but in reality
> I don't.  I have to run reports to try and figure it out.
> 

With budgeting, you don't mark transactions at all.  Why would you?  All
you need is the sum of splits in Account A for <from date> to <to
date>.  If your budget plan accurately reflects your income, and you
have not budgeted more cash outflow than inflow, you can see at a glance
how you are doing on your budget and be confident in the figures.

And budgeting 'after the fact' is not budgeting--it's getting a
transaction report of cash flow report, it seems to me.  What use is
creating a budget after you've spent the money to guide you in how you
were *supposed* to spend?  Wouldn't it make more sense to create a
budget beforehand?  It is useful, of course, to use past history in
setting up a budget--governments and corporations do that quite well. 
Sometimes to a fault! ;)

No, both methods discussed here allow for similar results: seeing how
well you are keeping to your budget, and seeing where extra cash may
exist.  Keeping the budget separate, however, is cleaner and more
extensible, and easier to implement (I believe) and maintain.

-- 
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...



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