Budgeting prototype

[Phil]

On 07 Sep 2003 17:12:31 -0400, Derek Atkins <warlord at MIT.EDU> wrote:

> I think what we're really saying here is that we're talking about
> budgeting the _delta_ within a budget period.  For example, if I
> budget $250 for food, what I'm really saying is that "the sum of all
> 'food' accounts would increase by $250 over the budget period".
> Similarly, if I budget $1250 for my mortgage, what I'm really saying
> is that "the sum of my mortgage liability, tax-expense, and escrow
> accounts are going to change by $1250 over that period".
>
> So, I see no reason to really look at Income/Expense and
> Asset/Liability accounts any differently if you consider budgeting in
> the form of deltas (change over time).
>
> Is this an accurate summary?
>
> -derek

Maybe it doesn't matter - but just incase here's my 2 bits:

I budget my income and expenses.  I don't budget my balance sheet accounts. 
 If I make or better my budget, the asset and liability accounts will take 
care of themselves.  If I'll be able to do that with what's being discussed 
then I won't add anymore unnecessary babble and I'll keep quiet :)

It's just that I keep picturing someone budgeting $2000 for cash and $2000 
for salary and then expecting to see $4000 by month end ;-)

Phil


>
> Rick Ziegler <rick at zieglernet.org> writes:
>
>> On the other hand, my mortgage payment is a significant outflow of cash,
>> and must be taken into account in my budget.
>>
>> In addition, whenever I contribute to a non-liquid asset, like a 401k,
>> that is also something I want to factor into my budget.
>>
>> For these asset and liability accounts, it may make sense to budget a
>> target account balance.
>>
>> regards-
>>
>> On Fri, 2003-09-05 at 17:02, phil_longstaff at comcast.net wrote:
>> > I agree.  This is why you would tie your budget to income and expense 
>> accounts,
>> > not assets and liabilities.
>> > > Phil
>> > > I'm not convinced of this.  When I budget "$250 for food" I
>> > > don't really care whether it's being paid for by cash, check,
>> > > credit card...  All I care amount is that I'm spending $250
>> > > on food.
>> > > > > -derek
>> > > > > Dale Alspach <alspach at math.okstate.edu> writes:
>> > > > > > Incrementing a liability or asset account as it appears 
>> bothers me. > > > > > > >Actually, the $200 budgeted for the credit card 
>> in this example is not for
>> > > > >a single bill but rather the amount that this account should 
>> change over > > > >the designated period (monthly in this case).  The 
>> intent is to show that at
>> > > > >the end of the month I want my credit card balance to go down by 
>> $200.00.  > > > > > > >Say I started out with $1000.00 balance on my 
>> visa.  In my budget I want to
>> > > > >show that each month I am going to decrease that amount by 
>> $200.00  It may > > > >be that I spend $100.00 for a (posh) dinner out 
>> and use my visa to
>> > > > >pay for it but I would expect to pay that bill at the end of the 
>> month > > > >and tack on $200.00 to decrease the outstanding balance and 
>> meet my budget.
>> > > > > > > It seems to me that a budget has to have some double entry 
>> consistency.
>> > > > That $200 has to come from somewhere: income, asset conversion or
>> > > > borrowing. If the budget is going to make sense from a liability, 
>> asset,
>> > > > equity point of view, I should be able to dump in my financial 
>> position at the
>> > > > beginning of the budget period and then run a balance sheet for 
>> six months
>> > > > into the budget year to get my expected position. That balance 
>> sheet is > > worthless if I am able to
>> > > > create or destroy assets and liabilities out of nothing. > > > > > 
>> > To make this work the budget system has to either require offsetting
>> > > > entries for adjustments to assets and liabilities or there will 
>> need to be > > some
>> > > > automatically created "slop" entries. Looking at the January 
>> column in the > > > prototype shows the inconsistency.
>> > > > > > > 100 is being added to a savings account, 200 is being used 
>> to pay down a > > > debt, 200 goes for rent, 200 for food, and another 
>> 100 is is being added > > > to assets for a holiday. It looks to me like 
>> 800 has been allocated so the > > > total ( net )
>> > > > should be 1200 if the total means unallocated income. The real 
>> problem is > > > that the bottom summary does not make sense once 
>> liability and asset > > > adjustment is in the budget. As listed only 
>> two entries were actually > > > expenses, rent and food, so expenses 
>> should have been 400, dreaming (slop) > > 400, > > > income 2000.
>> > > > > > > Perhaps someone with more accounting experience/knowledge 
>> could comment on
>> > > > this.
>> > > > > > > Dale Alspach
>> > > > > > > > > > _______________________________________________
>> > > > gnucash-user mailing list
>> > > > gnucash-user at lists.gnucash.org
>> > > > https://lists.gnucash.org/mailman/listinfo/gnucash-user
>> > > > > -- > >        Derek Atkins, SB '93 MIT EE, SM '95 MIT Media 
>> Laboratory
>> > >        Member, MIT Student Information Processing Board  (SIPB)
>> > >        URL: http://web.mit.edu/warlord/    PP-ASEL-IA     N1NWH
>> > >        warlord at MIT.EDU                        PGP key available
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>



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