Budgeting Summary 1 - first draft

[Rick Ziegler]

On Mon, 2003-09-08 at 21:20, Matthew Vanecek wrote:

> > The non-obvious component to using this method is the question of
> > non-accounts ( ie: saving for a truck ).  
> > In this case, one could create categories under an asset account in the
> > budget hierarchy.  This is similar to the way people currently use
> > gnucash accounts do a budget.
> > 
> 
> I'm wondering if being able to tie multiple budget categories to a
> single account would help here.  If I have 3 savings goals, and all the
> money for those goals resides in Assets:Savings, then each savings goal
> budget category will want to tie to Asset:Savings.

Indeed, I believe tying multiple categories to a single account would
help here.  What I went on to propose was a way to implement this within
the proposed framework. 

Here it is again, a little more fleshed out this time:
  
One could create categories ( implemented like sub-accounts in the
alternate hierarchy ) _under_ the asset account where the funds are
being held.  This is similar to the way people currently use gnucash
accounts do a budget, however instead of creating false transactions to
fund these categories, we instead associate 'funding rules' with them.

Two such rules to compute the current category balance might be:

1)   Distribute a percentage of the asset account deltas to each
category.  For instance: if there is one $1000 deposit in the A:savings
during the period, 20% is put into the truck category, and 80% to the
retirement category.

2)   A priority system: 100% of the deltas in the asset account go
towards my highest priority ( truck ), until the goal for the period is
reached.  Then the 2nd priority category is funded, and so on.

The Asset account would need to have the following information
associated with it:

a) Which mode it is in: priority funding, or percentage distribution.
b) If the former, then it needs to know the priorities of the
categories.
c) If the latter, it needs to know the percentages.

The categories, ( or 'virtual accounts' ) need their target delta
associated with them.

>   The sum of the
> budgeted amounts should equal the total delta in Asset:Savings for the
> given period. 

This will be guaranteed based on the two possible rules I could think
of, and outlined above.

>  There are possible breakdowns, of course (e.g., if you
> are short, how do you know in which category the shortage takes place?).

You will know which is short based on your priorities.  It really is a
zero sum game here, as none of these accounts are really expenses.

> Perhaps it'd just be better to use Asset:Savings:Goal{1, 2, 3}
> instead...

That is what I proposed.  :) However, instead of calling Goal{1,2,3}
accounts, I called them categories.  They live solely in the alternate
account hierarchy, and instead of transactions they are funded by rule
sets.

> This is just a brainstorm thought--maybe good, maybe bad.
-- 
Rick Ziegler <rick at zieglernet.org>