Tracking Money in Savings Account

Derek Atkins warlord at MIT.EDU
Thu Dec 16 09:23:57 EST 2010


Hi,

Wayne Bird <wrbird at hotmail.com> writes:

> OK, another scenario, same situation:
>
> This is what actually happens:
>
>  1. I receive an inheritance check for $aaa.
>  2. Deposit the inheritance check into savings.
>  3. Owe dentist $bbb.
>  4. Need to make $ccc monthly payments from checking acct until debt is paid
>     off.
>  5. 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:Checking
>   * Assets:Bank:Checking:Healthcare:Dental

You don't need this account unless you're budgeting for Dental expenses.

>   * Assets:Bank:Savings
>   * Assets:Bank:Savings:Inheritance

You don't need this account unless you're trying to track how much of
your Inheritance you have left.

>   * Income:Inheritance
>   * Expenses:Healthcare:Dental
>   * Liabilities:Dentist
>
>  1. 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)

This can just be I:Inheritance -> A:B:Savings (unless you're trying to
track your inheritance balance).

>  2. 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.

This is wrong.  You should never use an Opening Balance unless the
balance existed prior to your starting to use GnuCash.  Once you start,
you should never use the Opening Balance account ever again.  This
should be a transfer from L:Dentist -> Ex:H:Dental

>  3. 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)

Again, no need for the subaccounts here.  You can just do directly from
A:B:Savings -> A:B:Checking.  In particular, unless you are specifically
budgeting for future Dental expenses there is no need for the subaccount.

>  4. Enter check withdrawal of the amount of $ccc from Assets:Bank:Checking to
>     transfer $ccc from Assets:Bank:Checking:Healthcare:Dental to
>     Expenses:Healthcare:Dental

This is completely wrong.  At this point you are paying down the
Liability that you incurred in step 2 (when you went to the dentist).
So it's just a transfer from A:B:Checking -> L:Dentist.

>  5. Now I'm stuck with how to decrease Liabilities:Dentist account.  Where did
>     I go wrong?

See above.

> Thanks for your help!
>
> Wayne

-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


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