Tracking Money in Savings Account

Wayne Bird wrbird at hotmail.com
Thu Dec 16 02:06:11 EST 2010


Anthony,

Thanks for your time and explanation.  I'm slowly understanding.  I'm just now setting up accounts.  I have some money in a savings account that has to be saved for retirement.  What is your suggestion of setting this up.  A couple of people already stated that it should be a subaccount of the savings account.  So I would have some thing like this: Assets:Bank:Savings and Assets:Bank:Savings:Retirement.  Would you concur?  Would I have the same thing for something else that I want to save for?

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 19:23:42 -0500
> From: adardis at gmail.com
> 
> (1) (without envelopes)
> 
> (a) incur the debt with the dentist:
> 	increase Expenses:dental by $bbb, by increasing the Liabilities:Dentist  
> by $bbb
> 	
> (b) receive the money from the inheritance:
> 	increase assets:savings by $aaa, by increasing Income:Inheritance by $aaa
> 
> (c) make a payment to the dentist:
> 	decrease savings by $ccc, increase checking by $ccc  [that's the transfer  
> you arrange for your bank to make]
> 	decrease dentist liability by $ccc, decrease checking by $ccc  [that's  
> the check you write to the dentist]
> 
> [apologies for the "increase/decrease" language; if I were an accountant,  
> I'd use the debit/credit language, but since GnuCash gives the nice labels  
> for these things, you should be able to see how any given transaction  
> affects two different accounts (usually in the opposite directions, but it  
> depends on what kind of account you are using -- for example, the (a) and  
> (b) transactions increase both accounts).]
> 
> (2) (with envelopes)
> 
> (a) incur the debt with the dentist:
> 	increase dental expense by $bbb, by increasing the dentist liability by  
> $bbb
> 
> (b) receive the money from the inheritance:
> 	increase assets:savings:Medical Envelope by $aaa, by increasing Income by  
> $aaa
> 	(or else split it, so some of it goes to the Medical envelope, some goes  
> to other envelopes, some just goes into savings)
> 
> (c) make a payment to the dentist:
> 	decrease assets:savings:Medical Envelope by $ccc, increase checking by  
> $ccc
> 	decreast dentist liability by $ccc$, decrease checking by $ccc
> 
> 
> 
> 
> 
> 
> On Wed, 15 Dec 2010 19:06:09 -0500, Wayne Bird <wrbird at hotmail.com> wrote:
> 
> >
> > 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.
> >> >> >> >
> >> >> >> >
> >> >> >> >
> >> >> >>
> >> >> >
> >> >>
> >> >  		 	   		
> >> > _______________________________________________
> >> > 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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