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Ticket #1198 (new enhancement)

Opened 1 year ago

Last modified 2 months ago

Add second category system for envelope budgeting, etc.

Reported by: cokoli Assigned to: sreilly
Priority: major Milestone: Moneydance 2008
Component: general Version:
Keywords: categories, budgeting, envelopes, tags Cc:

Description

I am trying out MoneyDance. I'm a new Linux user, and am trying to ditch Microsoft Money (which I still use on a Parallels virtual machine). Money is excellent, and does everything that I need.

One key item for me for a financial software is envelope budgeting. Of course, MS Money doesn't support it natively, but I have tweaked a simple way to implement it. MS Money supports, in addition to its normal category system, two user-defined category systems. Note: "category systems". By this, I mean that users can create up to two completely distinct hierarchies of accounts. In additional to the traditional default category system, I use one user-defined system to implement my envelope budgeting system, and I use the other to implement MoneyDance-style tags. (While tags are great, they are not as extensive as a full-blown category system.)

For example, perhaps I go to a restaurant with friends. In the traditional category system, this would be under Expenses: Food: Dining Out. Under my user-defined envelope system, I would also categorize this as Personal: Allowance. (That is my $100-a-month envelope with which I can do whatever I like, as distinct from my Living:Groceries envelope). In addition, depending on the case, I might choose to tag the same transaction with the tag "Mike's visit" to track how much I spent when my friend came to town.

At first blush, this might look like something that could be implemented with tags, but it is not. Tags are optional and somewhat arbitrary; my user-defined categories (envelopes in my case) are required for every single transaction. (Required by me, not by MS Money; but I regularly check reports that ensure that every single transaction, or split of a transaction, that is, every single dollar, is assigned an envelope.)

In summary, does MoneyDance have a similar user-defined category system that co-exists alongside the standard category system, but without conflicting with it? Envelopes are a practical application of this system, but no doubt other users would be able to find other uses. If you do add this feature, I would strongly recommend that you permit the user to implement multiple simultaneous systems, if they so choose, rather than limiting it to just two, as in MS Money.

If my description of this system is not clear, then I'll be glad to further explain it in follow-up postings. Of course, you might need to actually look at MS Money to fully understand it. I don't know if Quicken has this feature; one of the reasons that I have never used Quicken is that I could not find such a feature when I looked (but perhaps it exists under another name).

Change History

02/05/08 13:25:29 changed by machead

MoneyWell? has an excellent user interface for envelopes: http://nothirst.com/moneywell/

05/08/08 12:38:58 changed by setiraz

another detailed idea (additional account type): #1703

07/22/08 17:00:22 changed by mikenevans

I too would like to see an "envelope" style budgeting tool added to MoneyDance. I've tried the other systems (Quicken, Mvelopes, MoneyWell?) and they are either buggy or slow--and we all know MoneyDance rocks, so why not stick with what works!

I read the wiki on how to get MoneyDance to "emulate" the envelope system, but I think it might actually be easier than that. When it comes right down to it, the envelope system is the same as the budgeting tool, but instead of tracking how much you've spent after-the-fact, you simply set aside amounts as you get get paid, and then monitor how far into those amounts you've dipped. The biggest difference for me is that with envelope budgeting, the amount you didn't spend rolls over to the next month. I think we could use all the same category functions that MoneyDance currently has, but instead of simply allocating amounts and hoping you stay under it, we "fund" the budget ahead of time and that money stays there. For example, with the current budgeting, you indicate you want to spend $300 a month for "Dining out". At the end of each month you can see if you were under or over budget. Let's say we examine a 3 month period and you spent $280, $150, and $400--uh oh, you went over budget last month, right? Not really, because overall you were under budget for the 3 month period ($830 out of $900). However, you have to run a 3 month report to see that. If instead we make it so that as we enter income it goes into our cash pool and we divvy it amongst our categories/envelopes _ahead of time_, we can at any time see how much we have left to spend, which includes credits from prior months. We would know _before_ we went out to eat in the last month that we still had plenty to spend, and wouldn't feel bad because we spent the $400. You also get a better understanding of how your decisions affect your budget, because if you really want to go out to eat but don't have anything left in that budget, you get to see that your choice to eat out will have to come from another envelope--perhaps you cut back on your shopping (by taking money from your shopping envelope _before_ you've spent the money), or you get to see that your choice will have to directly affect your vacation savings.

Envelope budgeting is also great for the periodic expenses which are hard to budget, like vehicle registrations which only occur once a year. With normally budgeting you see that you are under budget all year long--because you spend $0 until the day it's due, but you never know until it comes up if you've properly saved the money for it. Again, by pre-funding the envelope each month, you get to see the amount you've set aside grow until the payment it due, and when you make the payment you already know you have the money for it. Or again, if you did your math wrong and didn't set aside enough each month--which envelope will you take the money from: less eating out, or cut into your vacation fund?

So basically, I was just thinking that if the budgeting feature could be modified to allow putting money "into" the budget ahead of time and have the totals roll over from month to month, and a simple view for seeing how much is left in each category, we'd have the envelope system we're all asking for.