[moneydance] Envelope budgeting

[Graham Borland]

Brett Russ wrote:
> I'll admit I'm a bit confused at this model.  I understand the
> concept...putting money into virtual envelopes which are available for
> certain expenses.  But why can't we do this with the MD budget
> manager?

The MD budget manager treats the budget as a transient report over a 
given time period. It takes no account of the *history* of spending in 
each category.

If you overspent by £100 in your Dining category last month, MD's 
monthly budget report will still quite happily start off with your full 
budget amount available *this* month, *unless* you explicitly generate a 
report over a longer time period. The only way I could get any sense out 
of this model was to have memorized reports starting from the date I 
started my budget. And I'd have to update the memorized reports with a 
new date range every month.

What would be more useful is a model where the budget figures are 
cumulative rather than transient. If you overspent last month, then you 
have less available this month. This is exactly what the Envelope model 
gives you.

If you want to know how much you can spend on Dining, you just look at 
the balance of your Dining envelope. If you want to spend it all this 
month, or save it up for a couple of really expensive meals next month, 
it's entirely up to you. The envelope model copes simply and elegantly 
with this situation.

If you've been saving up £50 a month for 10 months into your Holiday 
envelope, you can tell at a glance that you have £500 available for 
spending on holidays. You don't need to mess around working out the date 
range you need for your budget report.

-- 
Graham Borland
graham at moonbog.net