Tracking Money in Savings Account

Wayne Bird wrbird at hotmail.com
Fri Dec 17 17:09:38 EST 2010


Michael,

> You would create a sub account under savings and into this account you 
> would deposit funds on some regular or irregular basis.

Understood.

> Intended as an aid for those who find it difficult to stick to a "paper" 
> budget.

This is the second time you made this statement -- I let it go last time, but must disagree with you this time.  In my case, I don't have a problem at all sticking to a "paper" budget.  The issue is how one views the money he has.

> So called "envelope budgeting" is another matter where you pretend that 
> the envelopes are physical envelopes from which you take physical 
> dollars to spend for THAT purpose (and can't if they "aren't there"). 

I wish our government followed this philosophy -- "take physical dollars to spend for THAT purpose (and can't if they "aren't there")."  If they did, we wouldn't be in the situation we are in now.  As a matter of fact, this goes for individuals and corporations.  I just read the average consumer credit card debt in the U.S. is over $15,000, and what's the government's debt?  So, please don't say the envelope system is for those who find it difficult to stick to a "paper" budget.

And again, let's not make this thread a debate about what system is better.

Wayne




> Date: Fri, 17 Dec 2010 16:47:53 -0500
> From: stepbystepfarm at mtdata.com
> To: wrbird at hotmail.com
> CC: brakhane at googlemail.com; warlord at mit.edu; derek at ihtfp.com; gnucash-user at gnucash.org
> Subject: Re: Tracking Money in Savings Account
> 
> Wayne Bird wrote:
> 
> > Michael,
> >
> > > Bookkeeping is about ACTUAL transactions, not transactions that 
> > might or
> > > might not occur. For projected transactions (planning) we use a 
> > "budget".
> >
> > So, it sounds like you do not create subaccounts for future 
> > transactions (i.e. saving for a car), but use a budget.  I haven't 
> > used the budget feature in GnuCash, does it work well?
> >
> Not necessarily. You might indeed want to have (within savings) a number 
> of dedicated sub accounts. But that wouldn't be related to the original 
> question about ACTIVE "envelope" sub accounts. I did describe accounting 
> for "funds" as would normally be done and your example would fit that 
> category.
> 
> You would create a sub account under savings and into this account you 
> would deposit funds on some regular or irregular basis. For example, 
> when you made a deposit to your savings account you might decide this 
> should be split, so much of that deposit into "general savings" and so 
> much into "car fund". You TOTAL for the "savings account" parent account 
> would should match the statements you get from the bank. But see, you 
> would NOT in the ordinary course of things be making withdrawals from 
> this fund and certainly not frequently (there might be an emergency 
> situation where you had to accept a setback in car savings to pay some 
> emergency bill -- so you credit that transfer from the savings account 
> to the checking account from the "car savings  rather than the "general 
> savings").
> 
> In my example the fund was money contributed toward a certain class of 
> expenses. The point I was making is that the expenses would actually be 
> paid form the checking account (like any others) but no attempt to 
> adjust on the fly but just once a quarter (or in my specific case, once 
> a year for the 3rd quarter report as expenses of this class would be 
> seasonal). Thus in the treasurer's report to the board the amount 
> remaining in the fund would be correct because there was ONE transfer 
> from this restricted fund to unrestricted funds (for the total of that 
> class of expense). See, nothing prevents us from spending MORE than what 
> is available in that (restricted) fund. We just shouldn't be using THAT 
> money for something else, it's restriction applies until we have 
> expenses that qualify for its use. But money is considered "fungible" so 
> doesn't matter which  account the actual dollars came from.
> 
> So called "envelope budgeting" is another matter where you pretend that 
> the envelopes are physical envelopes from which you take physical 
> dollars to spend for THAT purpose (and can't if they "aren't there"). 
> Intended as an aid for those who find it difficult to stick to a "paper" 
> budget.
> 
> Michael D Novack
 		 	   		  


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