How difficult is it (really) to reorganize a Chart-of-Accounts after the fact?
Mike or Penny Novack
stepbystepfarm at mtdata.com
Sat Jan 3 14:27:39 EST 2015
>> At this point, I think it's time for me to get some amount of
>> accounting education and to use more common financial practices,
>> instead of inventing my own practices, with my own terminology and
>> having a community-of-one (myself) with whom I can discuss any issues
>> I have.
>
> the buckets are OK for spendthrift financial management households but
> get less used as you do well and find something left at the end of the
> month and think, "what will we do with that?"
>
Well I think there is a "transition mode" for people starting out
needing that structure (hand to mouth existence). Once they saw leftover
amounts becoming frequent (actually, a GOOD thing) they could add
"reserve" accounts to their expense tree. Of course, for some buckets
expenses are seasonal and so should build up. Clothing so there will be
enough for clothes for the kids at back to school time, vacation, gifts
(for seasonal giving), etc. But what to do when the internal reserve
amount becomes too large? (I think this is what was referred to). Well
you could add another account, call it "reserve". Then any excess could
be transferred there. Initially that could be used to transfer back into
any bucket that fell short. Later, when finances had improved even more,
an overly large reserve could be reduced by transferring some to "income
saved".
Hopefully at some point finances might improve to the point that could
revert to standard bookkeeping where the budget is a PLAN (not enforced)
because you have time and enough cash flow to make adjustments to
behavior of actuals (the books) don't match planned (the budget).
Michael D Novack
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