Transfers Between Checking and Savings

[Ian Konen]

On Tue, Mar 19, 2013 at 4:05 AM, Michael Hendry <hendry.michael at gmail.com>wrote:


>
> So I'll have to abandon the Pseudo Income method, and run the budgets with
> a built-in monthly overspend.
>
> Many thanks for your patient corrections to my muddled thinking.
>

Glad I could help.  If you're disappointed there aren't more professional
accountants here I'd wager it's because they're far more likely to use
commercial software.  But they say the the recently converted are
the strongest proselytizers and while I'm pretty new to GnuCash myself,
it's totally opened my eyes to how much less confusing accounting can be
than my previous spreadsheet based hack jobs (generated with no
understanding of what double entry bookkeeping is).


>
> But how can we help the Mark Phillips (the Original Poster) - who wanted
> to present his parents' withdrawals from savings as income?
>

Well John Ralls and I both offered up comments he didn't respond to so I'm
not sure if he does still have a question.  Looking back at the original
question, though I think it comes down to the same confusion thinking of a
budget has to have a fixed income that matches expenses.  It's a reasonable
way to budget when you have a steady paycheck because, while you end up
modifying your behavior on the expense side, it's your income that
determines what your average monthly expense should be set to. Often people
"budget" by watching their checking account and/or credit card statement
throughout the month (made much easier with online banking) and use the
balances to see if they're one pace to match the spending plan.  Add to
that, you can have your employer split your paycheck and direct deposit a
portion into a savings account you don't pay much attention to, so that
your can plan a budget that includes saving money, but look at your
checking account balance to watch your performance.  Budgeting for retiring
and living on savings can work like that in reverse (after you've answered
the question "how many more years should I plan to live?"), and you can
play the same game if you've calculated how much you can spend per month
and then start making regular transfers from savings to checking.

I don't know if that's the only reason Mark is making regular transfers
from savings to checking (another good reason is the better interest rate
in savings) but I would wager heavy odds that's why he wants to think of
the transfer as income.  At the end of the day, it's just a psychological
trick think of it as income and to only pay attention to the checking
balance as a staying true to your budget.  If you want to GnuCash to track
balances correctly (including the savings account that is "thought of" as a
source of income), you just cannot mislabel an transfer between assets as
income and have the balances end up correct.  It's like wanting GnuCash to
tell you that 1+1 = 1 because that second 1 is kind of like a 0.

I guess as an even more general piece of advice, if you're trying to do
something tricky or non-standard it's better to look for ways to do it with
reports and report options.  AFAIK, data flow is one-way from accounts to
reports, so you can generate a report that is not remotely consistent with
standard accounting practices and not screw up the underlying financial
data recorded in the accounts.  Your report might be helpful or downright
misleading, but either way it's easier to undo if decide to change it.


>
> Michael
>
> >
> >
> > --
> > Ian Konen
> > iankonen at gmail.com
> > www.linkedin.com/in/iankonen
> > 978-821-6498
> > _______________________________________________
> > 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.
>
>


-- 
Ian Konen
iankonen at gmail.com
www.linkedin.com/in/iankonen
978-821-6498