Tracking Money in Savings Account
Wayne Bird
wrbird at hotmail.com
Wed Dec 15 19:06:09 EST 2010
Anthony,
> (1) Think of your dentist debt as initially coming FROM the dentist
> (Liabilities:Dentist) and going TO Expenses:Healthcare:Dental. Then you
> pay the dentist by a transaction FROM Assets:Current:Checking TO
> Liabilities:Dentist. (You don't need to set up an opening balance.)
Yes, I understand.
> (2) Your account structure looks like it's (way?) too complicated. You
> need an account for checking and one for savings (Assets:Current:Checking
> and Assets:Current:Savings). You need Expenses:Healthcare:Dental. You need
> Liabilities:Dentist. You need something like Income:Inheritance. I think
> that's it, for this transaction.
This is where I'm getting really confused. I thought I was following the subaccount structure that Derek talked about and I confirmed in a previous e-mail:
So your saying that basically there are two accounts with the same name
(I understand that this doesn't mean they're the exact same account),
one will be an asset account (subaccount of bank) and one will be an
expense account. When my paycheck (income) is deposited into my bank
account (asset), I will transfer some of it into the subaccount (asset),
say movies. Then when I spend on movies I will transfer from my asset
account, movies to my expense account, movies. Is that correct?
Yes.
With your structure, how do you keep track the money that you have in your checking or savings account. This entire thread started with my following e-mail:
I'm just beginning to learn GnuCash. My previous finance/budget method
has been the envelope system -- categorizing all monies in my various
checking and savings accounts and either depositing money or withdrawing
money from these categories. Now that I'm using Gnucash, I've created
asset, income, expense accounts, etc. Currently all my expense accounts
are zero since I've just set them up. My asset accounts, i.e.,
checking and savings, have my current balances in them. However, some
of those monies have to be allocated to a retirement account. How do I
set up a retirement account that shows how much I have in that account,
but the money is actually in my savings account? A similar question
would be how to set up an account for saving for a car or some other
large purchased item?
So how do you handle the above situation?
Wayne
> To: derek at ihtfp.com; wrbird at hotmail.com
> CC: gnucash-user at gnucash.org
> Subject: Re: Tracking Money in Savings Account
> Date: Wed, 15 Dec 2010 18:33:35 -0500
> From: adardis at gmail.com
>
> A couple of thoughts:
>
> (1) Think of your dentist debt as initially coming FROM the dentist
> (Liabilities:Dentist) and going TO Expenses:Healthcare:Dental. Then you
> pay the dentist by a transaction FROM Assets:Current:Checking TO
> Liabilities:Dentist. (You don't need to set up an opening balance.)
>
> (2) Your account structure looks like it's (way?) too complicated. You
> need an account for checking and one for savings (Assets:Current:Checking
> and Assets:Current:Savings). You need Expenses:Healthcare:Dental. You need
> Liabilities:Dentist. You need something like Income:Inheritance. I think
> that's it, for this transaction.
>
> (You REALLY don't want the Income account as an asset: it's Income.)
>
> If you haven't already, you might have a walk through the Concepts guide
> at gnucash.org: it's a kind of tutorial that gets you to enter sample
> transactions for a lot of situations.
>
> Hope that helps
>
>
>
>
> On Wed, 15 Dec 2010 17:58:04 -0500, Wayne Bird <wrbird at hotmail.com> wrote:
>
> >
> > OK, another scenario, same situation:
> >
> > This is what actually happens:
> > I receive an inheritance check for $aaa.Deposit the inheritance check
> > into savings.Owe dentist $bbb.Need to make $ccc monthly payments from
> > checking acct until debt is paid off.I'm using the inheritance money
> > that's in the savings acct, therefore I need to first transfer the money
> > from my savings acct to my checking acct. Then I write a check to the
> > dentist.
> > This is what I do in GnuCash:
> > Accounts to set up:
> >
> > Assets:Bank:CheckingAssets:Bank:Checking:Healthcare:Dental
> >
> > Assets:Bank:SavingsAssets:Bank:Savings:InheritanceIncome:Inheritance
> > Expenses:Healthcare:DentalLiabilities:Dentist
> >
> >
> > Enter $aaa deposit in the Assets:Bank:Savings register to transfer from
> > Income:Inheritance to Asset:Bank:Savings:Inheritance (I can enter this
> > transaction using either the Income:Inheritance register or the
> > Asset:Bank:Savings register)Enter $bbb in Equity:Opening Balances
> > register to transfer $bbb from Equity:Opening Balances to
> > Liabilities:Dentist. This creates the account to show how much I owe
> > the dentist.
> > Enter $ccc withdrawal in the Assets:Bank:Savings register to transfer
> > from Assets:Bank:Savings:Inheritance to
> > Assets:Bank:Checking:Healthcare:Dental (this action will decrease my
> > savings acct balance by $ccc and increase my checking acct balance by
> > $ccc)Enter check withdrawal of the amount of $ccc from
> > Assets:Bank:Checking to transfer $ccc from
> > Assets:Bank:Checking:Healthcare:Dental to Expenses:Healthcare:DentalNow
> > I'm stuck with how to decrease Liabilities:Dentist account. Where did I
> > go wrong?
> > Thanks for your help!
> >
> > Wayne
> >
> >
> >> Date: Wed, 15 Dec 2010 14:40:01 -0500
> >> Subject: RE: Tracking Money in Savings Account
> >> From: derek at ihtfp.com
> >> To: wrbird at hotmail.com
> >> CC: derek at ihtfp.com; gnucash-user at gnucash.org
> >>
> >> Hi,
> >>
> >> Please remember to CC the list on all replies..
> >>
> >> On Wed, December 15, 2010 2:35 pm, Wayne Bird wrote:
> >> >
> >> > OK Derek,
> >> >
> >> > Given the correction of no "Add paycheck to Income:Paycheck" and only
> >> > Expense:Movies, this is what I understand:
> >> > Enter split transaction in Asset:Bank for my paycheck. Part of the
> >> split
> >> > will consist of a transfer from Income:Paycheck to Asset:Bank:Movies.
> >> > When I buy a movie, I will transfer from Asset:Bank:Movies to
> >> > Expense:Movies.
> >> >
> >> > Now if I wanted to see how much accumulated money I've spent on
> >> movies,
> >> > all I would need to do is look at the balance of Expense:Movies. If I
> >> > wanted to know how much money I have to spend on movies, then I just
> >> need
> >> > to look at the balance of Asset:Bank:Movies.
> >> >
> >> > Are the two above paragraphs correct?
> >>
> >> Yes.
> >>
> >> > Wayne
> >>
> >> -derek
> >>
> >> >> Date: Wed, 15 Dec 2010 13:14:50 -0500
> >> >> Subject: RE: Tracking Money in Savings Account
> >> >> From: derek at ihtfp.com
> >> >> To: wrbird at hotmail.com
> >> >> CC: daniel3ub at gmail.com; warlord at mit.edu; gnucash-user at gnucash.org
> >> >>
> >> >> Hi,
> >> >>
> >> >> On Wed, December 15, 2010 1:00 pm, Wayne Bird wrote:
> >> >> >
> >> >> > Hello Daniel,
> >> >> >
> >> >> > Ah, this seems to be a bit different then what Derek was saying.
> >> If I
> >> >> > understood Derek correctly (the big "if"), he has two accounts for
> >> the
> >> >> > same item; Asset:Bank:Movies and Liability:Expense:Movies. So
> >> >> > transactions would go something like this: Add paycheck to
> >> >> > Income:Paycheck; transfer Income:Paycheck to Asset:Bank:Movies.
> >> >> Purchase
> >> >> > movie, transfer Asset:Bank:Movies to Liability:Expense:Movies
> >> >>
> >> >> Not quite. For one thing there's no such thing as "Add paycheck to
> >> >> Income:Paycheck". The first step is purely "Transfer from
> >> >> Income:Paycheck
> >> >> to Assets:Bank". Also, there is no such account as
> >> >> "Liability:Expense:Movies". It's purely "Expense:Movies".
> >> >>
> >> >> > If I understand what you're saying, there is only one account,
> >> >> > Liability:Expense:Movies. So transactions would be as follows: Add
> >> >> > paycheck to Income:Paycheck; transfer Income:Paycheck to
> >> >> > Liability:Expense:Movies. Now when I purchase a movie what do I
> >> do?
> >> >> I
> >> >> > can't transfer from Liability:Expense:Movies to
> >> >> Liability:Expense:Movies.
> >> >> > I'm sorry if am a bit dense (or a lot), please hang with me and
> >> I'll
> >> >> get
> >> >> > it. And I've read a lot of the documentation before I started this
> >> >> > thread. So I guess that proves how dense I am:(
> >> >>
> >> >> This is absolutely the WRONG way to do it. There is no Liability
> >> here.
> >> >>
> >> >> > Wayne
> >> >>
> >> >> -derek
> >> >>
> >> >> > From: daniel3ub at gmail.com
> >> >> > Date: Wed, 15 Dec 2010 14:43:43 -0200
> >> >> > Subject: Re: Tracking Money in Savings Account
> >> >> > To: wrbird at hotmail.com
> >> >> > CC: warlord at mit.edu; gnucash-user at gnucash.org
> >> >> >
> >> >> > Hi, Wayne.
> >> >> >
> >> >> > Actually, you are working with Income and Expenses accounts, but
> >> you
> >> >> > didn´t know it :)
> >> >> >
> >> >> > What I´d do:
> >> >> > Create a Liability account for every category you have. These will
> >> be
> >> >> your
> >> >> > envelopes.
> >> >> > In your paycheck transaction, create a split for each category you
> >> >> have,
> >> >> > pointing towards the corresponding Liability account.
> >> >> >
> >> >> >
> >> >> >
> >> >> > Every time you expend some money, create a transaction in the
> >> >> > corresponding liability account, with the split pointing towards
> >> the
> >> >> > corresponding Expense account.
> >> >> >
> >> >> > Also, reading the docs Derek suggested is aways a good idea ;)
> >> >> >
> >> >> >
> >> >> >
> >> >> > Good Luck!=====
> >> >> > Daniel Trezub
> >> >> > http://www.gameblogs.com.br
> >> >> >
> >> >> >
> >> >> >
> >> >> > On 15 December 2010 14:07, Wayne Bird <wrbird at hotmail.com> wrote:
> >> >> >
> >> >> >
> >> >> >
> >> >> >
> >> >> > Thanks Derek for your reply!
> >> >> >
> >> >> >
> >> >> >
> >> >> > Yes, define "standard accounting method" -- good question:)
> >> Granted,
> >> >> > everyone has their own way of doing things, however it appears the
> >> >> most
> >> >> > common method is tracking assets, income, expense, etc. where
> >> income
> >> >> is
> >> >> > viewed separately from expenses. For example, my paycheck would
> >> just
> >> >> go
> >> >> > into an income account and that's it. Then I would track all my
> >> >> expenses
> >> >> > through various expense accounts. On the other hand, I have
> >> always
> >> >> used
> >> >> > the envelope system, divvying out my paycheck into these various
> >> >> > categories. So these categories (or accounts) can be seen as both
> >> >> income
> >> >> > (because I'm splitting my paycheck/income into these categories)
> >> and
> >> >> > expense (because I'm purchasing items from these categories).
> >> This is
> >> >> > what makes the most sense to my little brain:) and that's why I'm
> >> >> having
> >> >> > difficulty with "standard" accounting methods because they have to
> >> be
> >> >> > separate.
> >> >> >
> >> >> >
> >> >> >
> >> >> >
> >> >> >
> >> >> > I'm sure I'm making this more difficult than it should be, so if
> >> you
> >> >> > please continue to with me I'll use the suggestion of subaccounts
> >> that
> >> >> > each of you made and go from there. I haven't had a chance yet to
> >> >> look
> >> >> > into this, but I will soon. So as Derek, as John Mason stated, is
> >> >> your
> >> >> > checking account just a placeholder for all the subaccounts? What
> >> >> John
> >> >> > stated made sense to me and this is what I'll try first.
> >> >> >
> >> >> >
> >> >> >
> >> >> >
> >> >> >
> >> >> > Again, thanks all of you for holding my hand through this!! I
> >> greatly
> >> >> > appreciate your help. As I continue down this road I'm sure I'll
> >> have
> >> >> > more questions.
> >> >> >
> >> >> >
> >> >> >
> >> >> > Wayne
> >> >> >
> >> >> >
> >> >> >
> >> >> >
> >> >> >
> >> >> >> From: warlord at MIT.EDU
> >> >> >
> >> >> >> To: wrbird at hotmail.com
> >> >> >
> >> >> >> CC: adardis at gmail.com; jmason at masondrywall.com;
> >> >> gnucash-user at gnucash.org
> >> >> >
> >> >> >> Subject: Re: Tracking Money in Savings Account
> >> >> >
> >> >> >> Date: Wed, 15 Dec 2010 10:09:24 -0500
> >> >> >
> >> >> >>
> >> >> >
> >> >> >> Wayne Bird <wrbird at hotmail.com> writes:
> >> >> >
> >> >> >>
> >> >> >
> >> >> >> > Thanks so much for your help! I will continue to play around,
> >> and
> >> >> I'm
> >> >> >> sure I'll be back with more questions.
> >> >> >
> >> >> >> >
> >> >> >
> >> >> >> > Though I used the envelope system in the past, it seems that's
> >> not
> >> >> the
> >> >> >
> >> >> >> > standard accounting method. I tweaked MSMoney for years in
> >> order
> >> >> to
> >> >> >
> >> >> >> > make it "act" like an envelope system and I don't want to tweak
> >> >> >
> >> >> >> > GnuCash to do this, I'd rather just learn how GnuCash is
> >> designed
> >> >> to
> >> >> >
> >> >> >> > be used and use it accordingly.
> >> >> >
> >> >> >>
> >> >> >
> >> >> >> Define "standard accounting method"? It's certainly one way that
> >> >> many
> >> >> >
> >> >> >> people do it. GnuCash doesn't need to be tweaked to do this. In
> >> >> fact
> >> >> >
> >> >> >> it's somewhat designed to support this! See, for example, the
> >> "Open
> >> >> >
> >> >> >> Subaccounts" option on the reconcile dialog. This lets you
> >> reconcile
> >> >> >
> >> >> >> a Bank Account with subaccounts.
> >> >> >
> >> >> >>
> >> >> >
> >> >> >> You can also look at the Budget features of GnuCash, but I've
> >> never
> >> >> used
> >> >> >
> >> >> >> them myself so I cannot comment on them.
> >> >> >
> >> >> >>
> >> >> >
> >> >> >> > Please remember to CC this list on all your replies.
> >> >> >
> >> >> >> > You can do this by using Reply-To-List or Reply-All.
> >> >> >
> >> >> >>
> >> >> >
> >> >> >> -derek
> >> >> >
> >> >> >>
> >> >> >
> >> >> >> --
> >> >> >
> >> >> >> 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
> >> >> >
> >> >> >
> >> >> >
> >> >> > _______________________________________________
> >> >> >
> >> >> > gnucash-user mailing list
> >> >> >
> >> >> > gnucash-user at gnucash.org
> >> >> >
> >> >> > https://lists.gnucash.org/mailman/listinfo/gnucash-user
> >> >> >
> >> >> > -----
> >> >> >
> >> >> > Please remember to CC this list on all your replies.
> >> >> >
> >> >> > You can do this by using Reply-To-List or Reply-All.
> >> >> >
> >> >> >
> >> >> >
> >> >>
> >> >
> >>
> >
> > _______________________________________________
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