Personal Finance

Doug Smith · Guest

Hello,

I'm looking for suggestions on the best way to handle the following
situation:

I have 6 budget items that are paid yearly. I set aside money every month,
transfer this amount from my chequing account to my savings account. Then
when the time comes for me to pay the required bill, I pay from the savings
account.

Currently my budget shows these expenses as having a monthly expense. I
then have my transfer transaction showing as a split category. So for
example, my car insurance is $1200/year. My budget shows an expense of
$100/month. When I transfer my chunk of money from chequing to savings,
part of the split has $100 allocated to car insurance. But when I go to
actually pay the car insurance next year, I can't categorize the $1200
payment because that will be allocated the money twice.

This isn't a super important or critical issue, but I'd like to hear what
other people do.

thanks

Steve J. · Joined: 10 Nov 2005 Posts: 3

When you make your transfer from checking to savings why are you showing a category transaction or payment? You aren't paying it or anything. You are simply moving money from one spot to another.

Using your example above, simply transfer from checking to savings without any split transactions. Only show the insurance payment when you pay it. You don't pay insurance to your savings account.

A budget is a seperate record. The only relation of it to all your account balances is to check that the budget should be in balance with what money you actually have. You can check this with a customized memorized report.

An insurance payment happens once. Your innacuracy occurs because you record it innacurately.

Todd Becker · Guest

Doug,

I set up additional accounts to accumulate the monthly "expense" into -
it would be an asset account. When you then write the annual check, you
can first do a transfer from the Car Insurance account to the Checking
account and allocate the actual check to the proper expense.

Todd

Doug Smith wrote:

Steve J. · Joined: 10 Nov 2005 Posts: 3

Todd, I do same with loans to my children and items I do not want to budget for. Its a good clear way but seems to me like extra work and extra posting to remember if you are also categorizing your expenses.

For instance, making insurance a simple category gets tracked everytime you pay insurance. Very clear cut. Budget for it and run a budget report and note the difference between budgeted amount and actual expenditures at any specific date. Less extra posting for same info.

Margaret Wilson · Guest

Look into Savings Goals. They may do what you want w/o an extra account.

Regards,

Margaret

"Doug Smith" <sluggo_sales@telus.net> wrote in message
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