Budgeting - Let's decide what we want!

[Phil]

On Sat, 30 Aug 2003 18:46:30 -0500, Jack McKinney <jackmc- 
gnucash at lorentz.com> 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.

You seem to be describing payables, not budgeting.  Every month (or payday) 
you incur an expense, but instead of crediting cash you credit accounts 
payable.

>
> 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.
>
> It seems that there ought to be room for both methods...
>

By using payables, you can compare your actual revenue and expense account 
activity with your budget.  Then, you can tell whether you're in the black 
or red.  You're right - you can't tell by looking at your cash account 
balance whether you have money to spend or not.

Phil


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