[moneydance] Envelope Budgeting/Category Balances...

[Stephan Cox]

I implement the envelope method using sub-accounts. Here is an example folder structure 

Checking
--> Credit Cards
----> Visa
----> Discover
----> American Express
--> Automobile
----> Fuel
----> Service
--> Misc
----> Gifts
----> Dining
----> Entertainment

My net paycheck gets deposited into the parent Checking account, and then I have another scheduled transaction (that uses splits) called "Stuff Envelopes"; that moves the money from the top Checking account into the different sub checking accounts.
(ie Checking->Automobile->Fuel would get $60.00 deposited into it)

If I use the debit card, I enter the transaction in the appropriate account. 
(ie. If I buy gas, I enter a $33.00 payment in the Checking->Automobile->Fuel account and select the category Discretionary->Automobile->Fuel)

If I need to transfer money from one account to another, I start at the one I'm transferring from, and select the one I'm transferring to as the Category. (ie. If I have need some more gas money, I'll just not go to the movies by going into Checking->Misc->Entertainment and paying $44.00 to Checking->Automobile->Fuel)

For credit cards, I transfer money from whatever account the charge applies to (at the same time I record the credit card transaction), and then pay the credit card from there.
So, here would be a sample scenario:
Purchases on Discover
Checking->Automobile->Fuel   $22.00 on 4/2  to Checking->Credit Cards->Discover
Checking->Misc->Dining $55.00 on 4/4 to Checking->Credit Cards->Discover
Checking->Misc->Gifts $77.00 on 4/6 to Checking->Credit Cards->Discover
Payment to Discover
Checking->Credit Cards->Discover  $154.00 on 4/18 to Discover (set up as a credit card account)

Any transfer of monies from one sub checking account to another I set the Check# field to "Internal", so that when I'm reconciling, I know that it won't be on the bank statement.

I like this way, because I can instantly see on my home page what my available balance is for all envelopes.

----- Original Message ----
From: Robert Kuropkat <robert at kuropkat.com>
To: General discussion related to Moneydance <moneydance-info at moneydance.com>
Sent: Wednesday, April 9, 2008 2:47:14 PM
Subject: Re: [moneydance] Envelope Budgeting/Category Balances...

*This message was transferred with a trial version of CommuniGate(tm) Pro*

Graham,

Thanks for your response (and the initial web page).  What you say is
about what I expected.

I would like to hear what you derived for the credit card repayment.  I
had guessed I could continue to use categories (perhaps switching them
from expense to income or vice versa) so the transfers work right.

I was thinking about your using income categories and was thinking if I
left them as expense categories (at the expense of them reading negative
when I have money to spend as you pointed out) but then thought
**maybe** the reports and graphs would still work.  I agree it would be
nice if we could display a category summary on the main page as you suggest.

I'm thinking I'm going to try your idea, but use the categories as
designed.  Since I can transfer between categories (even if it is
slightly non-intuitive which way it goes) I may be able to live with the
sign change since my goal is to always make it go to zero anyway.  Plus,
I think some of my own confusion stems from not understanding **real**
accounting so if I manage to get my mind around that, it will feel
better.  After all increasing an Expense account is increasing your Debt
which IS a negative number.  So a negative expense IS cash available.
Hurts to think about I'll grant, it's like making something MUCH smaller :-)

I'll share back my experience and we can compare.  For now, I need to go
pay up since I am sure I'm going to stick with it.  Intuit has angered
me for the last time so today I switch! (and this coming from someone
who has used Quicken since version 4 for DOS!)

Robert Kuropkat


Graham Borland wrote:
> *This message was transferred with a trial version of CommuniGate(tm) Pro*
> Robert Kuropkat wrote:
>> Just downloaded MoneyDance and looking to crowbar the Envelope Budgeting
>> System into it.  I found a discussion on the forums for this with this
>> mention in particular:
>>
>> http://moneydance.com/trac/wiki/Envelope_Budgeting
>>
>> which outlines basically what I had come to work out myself when I saw
>> that Categories have a "balance."  My question on the forum and here
>> [apologies for the cross-post] is what breaks by doing this?
> 
> I wrote the Wiki page you mentioned, although I haven't really updated 
> it since my initial attempt. I have been using the technique very 
> successfully, though, and avoiding MD's built-in budget manager completely.
> 
> The main problems are:
> 
> 1. To get the categories showing with positive balances when they have 
> balance available to spend, they have to be Income categories. This is 
> unfortunate because then Income/Expense type reports and graphs become 
> useless. For me personally, this isn't a big deal; all the information I 
> need for my day-to-day budgeting is contained in the category balances 
> and transaction history. Some people might find the lack of useul 
> reporting and graphing capability a deal-breaker though.
> 
> A solution to this would be to add a new category type, which behaves 
> like Expense from a graphing/reporting point of view, but like Income 
> from a balance-accumulation point of view.
> 
> Or, just keep all the categories as Expense categories, as long as you 
> don't mind them displaying a *negative* number when you've money 
> available, and a *positive* balance when you've overspent. For me, that 
> would be too confusing.
> 
> 2. Following on from point 1, transferring money between categories is 
> tricky. For example, you might want to transfer money from your 
> "Emergency fund" category to your "Car maintenance" category to pay for 
> some unexpected repairs. To get the money moving in the right direction, 
> the amount has to go in the opposite column (in the transaction entry 
> field) from the one you'd intuitively expect, i.e. Deposit rather than 
> Payment (or vice versa, I can't remember which).
> 
> 3. The only way to get an overview of category balances is the Edit 
> Categories window (ctrl-shift-C). This is not particularly easy to use 
> nor nice to look at. It would be far nicer if categories could be 
> displayed on the home page, parallel to the real bank accounts.
> 
> Incidentally, I have also found a neat way to manage repayment of 
> existing long-term debt. Maybe I'll get around to updating the Wiki page 
> sometime soon.
> 
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