A Budget Proposal - Virtual Accounts

[Andrew Beard]

>
> Useful that you referred back to the original way "envelope budgeting"
> worked back when it was physical bills in physical envelopes. Please take
> another look at that PROCESS (what you would have been doing). You will see
> that you DON'T need anything else in gnucash. Or rather, you want these
> "virtual accounts" to play the role magic might have (bills magically
> moving from their envelope to your wallet instead of you having to actually
> touch them).


Thanks for the comments.

I think you're missing the main point of my proposal.  Yes, I can get by
with GNUcash by exactly mimicking the process and creating subaccounts for
each and every envelope.  With a cash asset account, this is particular
easy to do.  But think now of a checking account which I wish to budget out
of.  I can't actually place the money in envelopes and the bank doesn't
support 'sub-accounts' or 'sub-account' transfers based on the whims of my
budget.  As a result, when I try to balance my checkbook and reconcile with
my bank, the bank balance does not reflect my checking account ledger
balance.  This is despite the 'include all subaccounts' option on the
reconcile tool as even then the checking account 'cleared' balance on my
GNUCash ledger will not match the checking account balance at the bank.
This is the major drawback in my opinion.  I want 'cleared' to always show
my actual checking account balance and I don't want to quadruple entry each
budgeted item.

With a virtual account, I'm tracking how* I'd like* to partition that money
but it has absolutely no bearing on the reality of what is in my checking
account.  I could say for instance 'budget $1000 out of the checking
account' even though I may not have $1000 in the account.  No problem, I
over budgeted, my checking account still shows the proper balance, but the
'budgeted' total (or virtual account balance) exceeds my available checking
account amount.  Ditto if I under budget and pull $1000 out of a virtual
account that only had $500 in it.  The virtual account is in the red, but
my parent checking account is still exactly as it would be without any
virtual accounts at all and hence easily balanced.

Or rather, you want these "virtual accounts" to play the role magic might
> have (bills magically moving from their envelope to your wallet instead of
> you having to actually touch them).


Good software features that simplify understanding and ease usage are not
magic.  That's just what good software does.  Virtual file systems do not
reflect reality, but without them computer hard drives would perform like
hell.

Look, this sort of thing (having to enter more of a transaction) is NOT
> limited to budgeting.


I perfectly understand that this sort of thing is not limited to
budgeting.  Budgeting is just my use case.  The concept can be generalized
and hence the term 'virtual' account as opposed to 'budget' account or
'envelope' account.  It's not a real account, but GNUCash is perfectly
capable of tracking it's balance nonetheless.  That's exactly what a budget
is - the 'idea' of how the money should be spent which can be easily
comparable to the 'reality' reflected in non-virtual parent accounts.

    ~Andy



On Thu, Jan 14, 2016 at 9:04 AM, Mike or Penny Novack <mpnovack at mtdata.com>
wrote:

> On 1/14/2016 12:27 AM, Andrew Beard wrote:
>
>
>> My proposal for handling budgets in GNUcash is to elevate the idea of an
>> ‘envelope’ account to a new level.  In particular, I propose the creation
>> of a new ‘virtual’ account type.  By ‘virtual’ account I mean simply an
>> account which calculates balances and maintains totals but the transactions
>> themselves always belong to the ‘real’ parent account (e.g. a bank checking
>> account).
>>
>> Cash envelopes themselves provide a nice case-in-point.  When a person
>> uses actual envelopes to budget their cash, the amount of the asset - cash
>> - is the same regardless of how many envelopes they might have split it
>> into.  However, when somebody spends from an envelope, they have done two
>> things:
>>         1) Decreased their budgeted amount for that envelope category (or
>> budget).
>>         2) Decreased their Cash asset amount.
>> The envelope (or virtual account) balance has decreased, but the actual
>> cash asset has decreased as well.  Said another way, *both* ‘accounts' have
>> decreased, but one asset is real (cash) and the other is ethereal (your
>> idea of where that money should have gone).
>>
>
>
> Useful that you referred back to the original way "envelope budgeting"
> worked back when it was physical bills in physical envelopes. Please take
> another look at that PROCESS (what you would have been doing). You will see
> that you DON'T need anything else in gnucash. Or rather, you want these
> "virtual accounts" to play the role magic might have (bills magically
> moving from their envelope to your wallet instead of you having to actually
> touch them).
>
> In the old days ---- you went shopping and spent $10 out of your wallet to
> buy groceries. When you got home, you took $10 out of the groceries
> envelope and put that into your wallet. OR, perhaps you knew you were going
> to go grocery shopping, so before leaving home you took $10 from the
> envelope and put that in your wallet. OK so far?
>
> Assuming those were real accounts in gnucash, what would those look like?
> Do you really have a problem seeing what those transactions would be? Your
> "virtual accounts" are intended to make the bills "jump" in between your
> wallet and the appropriate envelope so you didn't have to actually enter
> that part of the overall transaction.
>
> Look, this sort of thing (having to enter more of a transaction) is NOT
> limited to budgeting. Since small amounts, I do not have separate bank
> accounts for each restricted fund.  So when an expense is paid that
> qualifies for one of those restricted funds being used, besides cash and
> the expense, also a transfer from restricted to unrestricted (the main part
> of the bank account). When recording a sale of goods, not just sales and
> cash affected but also goods inventory and "cost of goods sold".
>
> So here (envelope budgeting) not just cash (wallet) and particular expense
> account but also wallet and the particular envelope. Nothing virtual
> involved.
>
> Michael D Novack
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