Transfers Between Checking and Savings

Tue Mar 19 18:45:02 EDT 2013

Thanks for the great ideas. It is hard not to think about income sheet
losses as something bad. ;)

I am going to leave everything as is and wait to see if my siblings and my
parents' trust attorney have issues understanding the accounting aspects of
my parents' reports.

The balance sheet report is not really very helpful because I don't have
their mortgages as liabilities or their investments as assets in gnucash. I
just picked up this task as trustee of their living trust, so one step at a
time.

Thanks again!

Mark

On Tue, Mar 19, 2013 at 2:44 PM, Ian Konen <iankonen at gmail.com> wrote:

> On Tue, Mar 19, 2013 at 1:49 PM, Mark Phillips
> <mark at phillipsmarketing.biz>wrote:
>
> > To quote Monty Python...."I's not dead, yet!"  ;)
> >
> > I have been following this post with interest. Also, thanks to all for
> > their suggestions, which I incorporated in my reports. (My mom went into
> > hospice last week and I was called for jury duty, so have not been online
> > much except to read posts...I hate typing replies on my android phone).
> >
> > Anyway, this is what I am currently doing. However, it is not exactly
> what
> > I wanted to do. BTW, my original question was not about budgeting, but
> > about income/expense reports...apologies if I mistyped something.
> >
> >
> No, I brought up budgeting because Michael was asking about, but also even
> if you're not using GnuCash's budget tools, I still suspect your desire to
> call it "income from savings" comes from thinking about living within a
> fixed budget based on how much savings they have.  It's a reasonable way to
> think of your parents' budget casually but it's not proper accounting
> procedure.
>
>
> > 1. Generate a monthly income/expense report for my parents' checking
> > account and a transaction report.
> > 2. Save the reports as html files
> > 3. Run a small python script to make the links from the income/expense
> > report point to the appropriate section of the transaction report.
> > 4. Upload the two pages to a web site that my siblings can access
> >
> > I added the checking account and savings account to the transaction
> report
> > so my siblings can see the draws from the savings account and reconciled
> > transactions in the checking account.
> >
> > What I don't like about these reports is that the income/expense report
> > shows a loss each month. The loss is covered by draws from their savings
> > account. I would like to have an income line item call "Income from
> > Savings" to show these draws. I think of it as no different than getting
> a
> > check in the mail from their investment account, which I enter as Income
> > from Investments (I do not have an asset account for their investments) -
> > we just look at the monthly report from the investment company. We are
> not
> > taking draws from these yet). My siblings can see from the transaction
> > report that money is going out of the savings account, but it is not
> > readily apparent from the income/expense report. I think of the
> > income/expense report as a management tool, and the transaction report a
> > way to provide transparency to their monthly activity as the transaction
> > report is a direct link to the monthly bank statement.
> >
> > Anyway, that is a summary of what I am doing based on the input I have so
> > far. I would still like to have an account "income from savings", but I
> am
> > not sure how to create the transactions for that account.
> >
> >
> Well I cringe at suggesting this, but it strikes me that all you need to do
> is reclassify the savings account as an income account.  Go to the accounts
> tab, select the savings account, then do Edit->Edit account.  Switch the
> parent account to income and then the account type to income.  Your profit
> and loss statements will now count transfers from savings as income.
>  GnuCash will treat the account as if it doesn't belong to your parents
> (the negative balance that normally accumulates on an income account
> represents somebody else transferring money out of their assets to you, so
> that balance represents part of somebody else's net worth), and any reports
> involving asset totals or net worth will be wrong (or right, under the
> premise that the savings account is holding somebody else's money).
>
> I think it'll do what you want, but I still wouldn't really recommend it.
>  As David point out, it's not a mistake that the correct treatment shows a
> loss.  Don't let the fact that a for-profit company showing a continuous
> losses actually is generally a "bad" result with the idea that your
> finances shouldn't show a loss when you're retired and living off savings.
> A loss on your parents' report does not mean you're doing a bad job
> managing their finances.  I'd also be surprised if there weren't other
> consequences to mis-classifying an asset as an income that I haven't
> thought of, and I'm sure it violates standard accounting practices but
> there's no law against that unless you're using GnuCash to meet some legal
> obligation to keep track of your parents' finances (and if you were you'd
> probably be including all their investments as well, and you'd also hire a
> pro and let them generate reports for everybody).
>
>
> Thanks,
> >
> > Mark
> >
> > On Tue, Mar 19, 2013 at 10:05 AM, Ian Konen <iankonen at gmail.com> wrote:
> >
> >> 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
> >> > > _______________________________________________
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> >> >
> >>
> >>
> >> --
> >> Ian Konen
> >> iankonen at gmail.com
> >> www.linkedin.com/in/iankonen
> >> 978-821-6498
> >> _______________________________________________
> >> gnucash-user mailing list
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> >> https://lists.gnucash.org/mailman/listinfo/gnucash-user
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> >
> >
>
>
> --
> Ian Konen
> iankonen at gmail.com
> www.linkedin.com/in/iankonen
> 978-821-6498
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