I was following the budget discussion, and I decided to split my comment
into a different thread. I'm not responding to any particular comment, and
this isn't quite germane to budgeting.
But I want to clear up a few misunderstandings I'm seeing folks express
about reconciling with sub-accounts. Subaccounts work very well, but they
do take a little maintenance.
WHEN TO USE SUBACCOUNTS
You can use subaccounts for several purposes, including budgeting, holding
onto money that isn't "yours" (a bond you're holding from a contractor for
successful completion of a project, for instance), identifying earmarked
funds, OR (as in the example below) simply stopping yourself from spending
down the account more than you'd like.
(If folks have additional suggested uses for subaccounts, bring em on!)
EXAMPLE: MINIMUM BALANCE VIEW
Here's a real-world (well it's real in MY world) example -- avoiding
"minimum balance" fees. The bank name has been changed to protect the
bookkeeper. ;-)
I have a checking account at BigBank.
Assets:Current Assets:BigBank Checking
The terms on that bank account say it doesn't cost me anything UNLESS the
balance drops below $2500, at which point I have to pay $8.50/month. (There
are some other miscellaneous fees, all higher when the balance goes low.)
SO to help avoid the $8.50/month expense, I created a sub account:
Assets:Current Assets:BigBank Checking:Minimum Balance
Then I created a transaction dated 2/15/2015, transferring $2500 from the
account to its subaccount:
(This is a representation of the BigBank Checking two-line auto-split
register. Items in the right column are "cr" and items in the left column
are "dr".)
2/15/2015 min Minimum Balance 2500.00cr
Assets:Current Assets:BigBank Checking:Minimum Balance $2500.00dr
Assets:Current Assets:BigBank Checking $2500.00cr
When I reconciled my account the first time after creating this
transaction, I made sure to tick the "Include Subaccounts" checkbox on the
Reconcile Information dialog. I (as always) verified the ENDING balance
information exactly as it was shown on the bank's statement.
Also that first time I reconciled, I noticed TWO items to clear that
weren't actually on the bank statement -- $2500 in the funds in side and
$2500 in the funds out side of the reconcile window. I marked them BOTH as
"cleared."
>From now on, I notice a few things have changed from before --
o - My default balance when I reconcile AND the running balance in the
BigBank Checking register will always show $2500 lower than I actually
have.
o - When I reconcile I always have to remember to override the default and
enter the ENDING balance as it is shown on BigBank's statement.
o - When I reconcile the "Include Subaccounts" checkbox is ticked and it
needs to stay ticked. (It seems to "remember" the setting from session to
session, as you would hope.)
o - I also notice when I'm reconciling that when I "jump" to a transaction
by double-clicking on an item in the funds in / funds out lists, the
transaction opens into a different kind of "general ledger" style register
that includes ALL transactions in the account and subaccounts. It exactly
resembles the kind of register that appears when you search for
transactions. It has a "plus" (+) mark in its tab and looks different from
the "ordinary" register.
Obviously at any time I can "overspend" and the primary account balance
will go negative, with either dire or negligible real-world repercussions.
But if I ignore the red (negative) balance numbers and keep the balances in
the red, I've eliminated the reason for having the subaccount in the first
place.
I can raise or lower the minumum balance at any time by creating another
transaction between the account and subaccount.
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