Thanks Chris, This is a neat way to do it too. I like that it reflects net worth accurately (reducing asset artificially should work out same as reducing equity artificially).
I think my only concern is the expense account doesn't reflect reality. Also cash flow (delta of asset accounts) will be incorrect. Man, it feels like I'm just finding fault with everything, but I don't mean to. Your method of Asset and Expense pair I think I prefer over the Asset and Liability pair and the Child Asset account as it reports correct net worth and doesn't affect reconciliation using electronic bank statements (I almost exclusively reconcile by importing statements from CSV or OFX). Because no one asked for it I shall rank the approaches here, mainly for my benefit: *Lower numbers are "better" in my opinion* Rank 10) Equity and Liability pair + Liability Advanced memo account (my current method I developed since asking this question) - I explain in excruciating detail here: https://lists.gnucash.org/pipermail/gnucash-user/2024-August/112596.html PROS * Net worth artificially reduced as I set aside money (desired outcome) without falsely reporting my assets. * Liabilities are falsely reported (ie, I don't owe a 3rd party), but this is also desired as I see the fund as a liability until it's spent * Accounts reconcile fine CONS * I have to remember to add a reversing split transaction when expensing a fund * The split is (a little bit) tricky if I overspend a fund temporarily * If a fund is overspent by a lot (purchasing flights well in advance), then I have to adjust my scheduled transactions which represent setting aside money numerous times Rank 15) Asset and Expense pair (expense up-front) PROS * Net worth artificially reduced as I set aside money (desired outcome) * Overspending is very intuitive * No reversing transaction is required when real expense is made CONS * Assets and Cashflow falsely reported (acceptable in my case but not ideal) * Profit and loss is falsely reported until real expense is made * Expenses are falsely reported until real expense is made Rank 20) Asset Child accounts PROS * Easy to account for unless overspending * Only adds one account per fund unless overspending CONS * Reconciling is harder (yes, accounts tab has roll up - but also includes future transactions if any) * I have to remember to add a reversing split transaction when expensing a fund Rank 30) Asset and Liability pair, or Asset and Asset pair PROS * Easy to account for * Only adds two accounts per fund * Reconciling is easy * Overspending doesn't alter the transactions CONS * I have to remember to add a reversing split transaction when expensing a fund * Net worth is not affected (arguably correct, but not what I want for making financial decisions) * Assets and Liabalities artificailly inflated, but net zero effect on net worth (I'd prefer liability inflated without affecting asset) Rank 90) Trading account and Liability pair (the old way I did it - not recommended!) PROS * Profit and loss reflects the fact money has been set aside due to the trading accounts CONS * Hard to account for * Each transactions has 2 extra splits * I have to remember to add a reversing split transaction when expensing a fund * Each reversing transaction has 2 extra splits * Net worth is not affected (arguably correct, but not what I want for making financial decisions) * Assets and Liabalities are artificailly inflated, but net zero effect on net worth (I'd prefer liability inflated without affecting assets) The main difference in each method seems to me to be how assets and liabilities are reported *before* the fund is spent. I'm pretty sure I can manage the overspending in all scenarios in the same way. It requires just the addition of a memo account to reflect the advanced portion and zero out the other side: * Asset-or-Liability-or-Equity:Fund: - $300 * Asset-or-Liability-or-Equity:Fund:Advanced: $300 * Asset-or-Liability:Checking-or-Credit: $300 - $300 = $0 This way, I don't magically gain assets (or reduce liabilities) if overspending. *So far, it seems like the critical characteristics a solution requires are:* *One of following:* * Account pair must have one account within Asset/Liability and one account within Expense/Income/Equity *OR* * Child account of asset (single account) *And if it's possible to overspend, also the following:* * A memo account to hold the reversing transaction when the reversing transaction take the fund -ve Rank 15) Asset/Expense pair is pretty good fit for me as it introduces only one account (uses existing expense account) and correctly affects my net worth. I think this is the simplest approach so far, and is quite attractive. I wonder if I could expense into a single parent expense account Expenses:Fund:Pending, then the main account can debit the real expense account and I can add a reversing transaction from Expenses:Fund:Pending into the Asset:Checking:Fund account. I can handle the overspending in the same way I mention previously. Thanks all for your responses, I'm learning a lot! Cheers, Daniel -- In the beginning Kibo created the Internet. Now the Internet was formless, and empty. Randomness was upon the face of computing, and the Spirit of ARPA moved upon the face of the computers. Then Kibo said, "Let there be data": and there was data. Kibo saw the data, and it was good, so Kibo divided the data from the randomness, and Kibo named the data Information, and the randomness Clueless. And the Information and the Clueless were the first Network. On Wed, Aug 7, 2024 at 10:39 AM Chris Skudder <cskud...@earthlink.net> wrote: > Hi Daniel, > As Treasurer of our church, I do something very similar. > This is how it works: > - A parent asset acct 1120 is called "Checking acct after reserves" > - a child acct 1121 is called "Checking acct" > - another child acct 1122 called "Reserve for property tax" > - another child acct 1123 called "Reserve for elevator maintenance" > In the church's case, the reserves are for: > - property tax on the parsonage, which is due every 6 months > - big elevator maintenance work required every 5 years > The acct codes (1120, 1121, etc) help a LOT to keep this clear in the > chart of accts. I'd suggest using acct codes for all accts. See for > example: > double-entry-bookkeeping.com/coa/chart-of-accounts-numbering-system/ > ... or search on "typical chart of accounts numbering system" > > Then I take the property tax amount divided by 6 months, and > the estimated elevator maintenance bill divided by 60 months ie 5 years - > ... and set up monthly Scheduled Transactions, which: > - CREDIT the "Reserve for something" acct > - DEBIT the appropriate expense acct > ... for the amount needed monthly, to have money available to > pay these bills when they come up. > > So the "Reserve for something" accounts -which are asset accts- usually > have a negative (credit) balance. This is the amount which has been "set > aside" towards the known upcoming expense. > The expense actually shows up monthly, instead of a big lump at 6 months > for property tax, or at 5 years for the elevator maintenance. > > When the "big lump" bill comes due and I pay it, the transaction is: > - CREDIT the checking acct, from which I write the check to pay it, > - DEBIT "Reserve for something" ... which brings the "Reserve" acct > balance back to zero (or pretty close). > Note that this debit does NOT go into the expense acct - because the > expense has already been booked monthly. > > So looking at these acct balances in a typical month, it might look like > this: > 1120 "Checking acct after reserves" = $6,000 (PARENT) > - 1121 child acct "Checking acct" = $7,250 > - 1122 child acct "Reserve for elevator" = -$1000 (Negative balance) > - 1123 child acct "Resv for property tax" = -$250(Negative balance) > > What this means: > - 1120 the PARENT "Checking after reserves" is that portion of the > checking acct available for everything else ... AFTER what's been set > aside for the next 5-year elevator maintenance and the next 6-month > property tax payment. > -- 1121 child "Ckg acct" is the ACTUAL amount in the checking acct. > ... This is the acct into which I book all deposits and checks > written; and which I reconcile with the bank's statement each month. > -- 1122+1123 "Reserve for XXX" acct's are the amounts "saved up > for" the upcoming big-lump payments, which show up as a negative number. > > I coded 1120 "Checking after reserves" as a "placeholder" acct, so it > does NOT show up as a choice when I'm entering transactions. I will not > ever normally enter a transaction directly into this acct. > Everything goes into the actual checking acct 1121, or the reserve > acct's 1122 + 1123. > > Hope that helps and God bless! > Chris > > ------------------------------------------------------------------------ > > On 8/5/24 12:00, gnucash-user-requ...@gnucash.org wrote: > > Message: 3 Date: Mon, 5 Aug 2024 13:27:22 +1200 From: Daniel Sheffield > > <d.j.yo...@gmail.com> To: gnucash-user@gnucash.org Subject: [GNC] Fund > > management without an actual account Message-ID: > > <CAGBFyFUc8nZAFzAbyTWcUWc3QmgRNvJEeBp=hsjz-7a6_y+...@mail.gmail.com> > > Content-Type: text/plain; charset="UTF-8" Hi, I'm using gnucash to > > manage my personal finances. ... BUT I'm trying to keep track of > > savings towards a goal, but without opening an actual account or > > making any real world transactions to achieve it. ... Cheers, Daniel S > _______________________________________________ > gnucash-user mailing list > gnucash-user@gnucash.org > To update your subscription preferences or to unsubscribe: > https://lists.gnucash.org/mailman/listinfo/gnucash-user > ----- > Please remember to CC this list on all your replies. > You can do this by using Reply-To-List or Reply-All. > _______________________________________________ gnucash-user mailing list gnucash-user@gnucash.org To update your subscription preferences or to unsubscribe: https://lists.gnucash.org/mailman/listinfo/gnucash-user ----- Please remember to CC this list on all your replies. You can do this by using Reply-To-List or Reply-All.
