Future allocated money vs Budgets

[Edward Bridges]

I understand your concern, but I don't think that would be the
case here.
They may be included in the net worth but because all entries net to
zero they are balanced and they have no net effect on net worth.
The issue I've seen with previous proposals both here and in the
mentioned blog post is that income allocated to envelopes is treated as
an asset -- which it really shouldn't be.  By treating it as a liability
you can balance that allocated income to expenses as they get allocated.

On Sun, Feb 4, 2018, at 1:21 AM, Christopher Lam wrote:
> Looks nice. My main concern with these "shadow accounts" is that they
> will, by default, be counted in the Net worth reports, income reports,
> etc, and must be manually deselected every time.> 
> In my view budget allocations are technically "outside the books" and
> must therefore ideally be recorded in ways that don't affect the
> everyday data and reports.> 
> On 4 Feb 2018 8:43 AM, "ebridges" <ebridges at eqbridges.com> wrote:
>> Sorry for the delayed response, just managing to catch up on this
>> thread.>> 
>>  I've been looking at how to do envelope-style budgeting for my
>>  personal>>  finances using GnuCash for about 6-7 months.  Like you, this began
>>  with this>>  article from 2008 "[Better Budgeting with
>>  GnuCash"]
>>  (http://allmybrain.com/2008/12/15/better-budgeting-with-gnucash/).>> 
>>  After toying around with that approach, I decided there were two
>>  drawbacks>>  to it:
>> 
>>  1. It was tedious.  Manually creating a split for every expense to
>>     draw down>>  budget accounts ("envelopes") that were allocated previously,
>>  was super>>  boring and error prone.  In addition, because of the detailed
>>  nature of>>  doing this work, one would be discouraged from allocating all of
>>  your income>>  to different "envelopes".
>>  2. It was fragile.  By treating "Budgeted Cash" as an asset made
>>     allocated>>  money difficult to reconcile to money that was drawn out of your
>>  budget>>  accounts.  A useful insight in that article is to consider a budget
>>  account>>  as a liability.  However, it categorizes budgeted cash as an Asset,
>>  when it>>  is more useful to consider it also as a liability.  Doing so allows
>>  you to>>  reconcile allocated money to monies spent out of the "envelopes".
>> 
>>  For the past month, I've been able to apply an approach to my
>>  existing>>  reconciliation process that I believe will prove to be a very
>>  useful and>>  easy to manage approach to envelope budgeting for personal finance.>> 
>>  To simplify allocating income and expenses to envelopes I use two
>>  tools:>> 
>>  * [QifQif](https://github.com/Kraymer/qifqif) which makes it easy to
>>    quickly>>  insert categories into a QIF file;
>>  * [qif-split](https://github.com/ebridges/qif-split), a tool that I
>>    wrote,>>  which adds splits to QIF files according to some rules defined in
>>  a file.>> 
>>  After downloading transactions for my credit card & bank accounts
>>  in QIF>>  format, I first process the file with QifQif to match up every
>>  transaction>>  to one of my accounts from GnuCash.  QifQif supports using wild
>>  cards and>>  regexes for matching payees to accounts, and then adds the
>>  account as a>>  category to the QIF transaction.
>> 
>>  After categorization of the transactions, the files can be
>>  processed by>>  `qif-split`, and split according to predefined rules.
>> 
>>  I have been using `QifQif` for about a year, and have found it to
>>  be very>>  reliable and easy to work with.  In the past month, I began using
>>  `qif-split` to allocate income and expenses to budget accounts.
>> 
>>  The `qif-split` configuration rules splitting the incoming
>>  transactions are>>  twofold
>> 
>>  1. Allocating income as credits to various envelopes, or
>>  2. Allocating expenses as debits to those same envelopes.
>> 
>>  These allocations are balanced with corresponding debits or
>>  credits to a>>  "Budgeted Cash" account.  Because of these balanced entries, the
>>  toplevel>>  "Budgets" account will always self-reconcile (i.e. its balance will
>>  always>>  be 0).  When the balance of a given budget subaccount
>>  ("envelopes") is>>  negative, then you've overspent that category.
>> 
>>  By using `qif-split` to automatically generate split transactions,
>>  and by>>  altering my chart of accounts to roll up budgeted cash alongside the>>  budgeted expenses it makes envelope-style budgeting very
>>  straightforward in>>  GnuCash.
>> 
>> 
>> 
>> 
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