Envelope budgeting with credit cards

[Phil Longstaff]

I am not an accountant, but I have worked in a financial office and so have some knowledge of accounting.

What I think would work is to use equity accounts.  Equity:Envelopes:Gas and Equity:Envelopes:Groceries.

Pay:
DB Assets:Bank                                $300
CR  Equity:Envelopes:Groceries                           $100

CR  Equity:Envelopes:Gas                                    $200

Buy some gas:
DB  Equity:Envelopes:Gas                  $30
CR  Liabilities:Credit Card                                     $30

Pay my credit card:
DB  Liabilities:Credit Card                 $30
CR  Assets:Bank                                                   $30

The envelope method works great, but because the balance in an envelope goes up and down, it is harder to answer questions like: how much did I spend on groceries last year - you would need to take finalBalance-initialBalance-12*monthlyBudget to get the answer.
 Phil
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I used to be a hypochondriac AND a kleptomaniac. So I took something for it.




________________________________
From: Mister Ribble <ender27182818 at gmail.com>
To: gnucash-user at gnucash.org
Sent: Thu, February 4, 2010 9:11:58 PM
Subject: Envelope budgeting with credit cards

I'm considering using gnucash for my budgeting. My budgeting is a little unique, but I imagine others have found a satisfactory solution - hopefully they'll chime in.

My finances revolve around a single checking account and a single credit card. Each month I allocate a number of income dollars to various budgets, say 100$ for groceries, 200$ for gas, etc. These allocations roll over each month, so if I spend less than the allocated amount, the next month I'll have 200$ in gas + whatever was left from last month. This way I can build up funds for things like car repairs that happen randomly.

All of my transactions go through my credit card, which I pay off at the end of the month.

I haven't been able to figure out how to move my money around in gnucash. If I move money out of my checking account and in to a 'cash' account for groceries or gas, then whenever I charge something to my credit card that should be groceries or gas, I end up with the allocated amount plus the spent amount, rather than allocated - spent. I've tried fiddling with different account types, but can't figure out how to get the accounts to add up. Any suggestions?

-Eli Ribble
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