Need help understanding the budget.

I
need some help understanding how to use the budget in Quicken 2018 (Windows
10). I switched to Quicken this year after using an envelope-based budgeting
system that automatically allocated your income into its envelopes/categories and forced you to balance your budget. I realize Quicken's budget is different and that's where I'm struggling.

1)  Budget Line Total - When I look at the
Planning tab, Annual View/Details, at the bottom are the totals for the budget
- actual - balance. Since my income varies a little each month, there are some
months that the Budget shows a positive balance and some months that show a
negative balance. I'm assuming that the total under the budget line at the
bottom should always have a zero balance and I should be adjusting my budget
each month so it stays at zero. Is that correct?

o  
I get paid every other week at one job, so there are certain
months that will have three paychecks. The budget line total at the bottom then
shows I’m over by approximately one paycheck. Shouldn’t Quicken already be
budgeting that in or do I have to manually adjust the budget for that month by dividing
up the paycheck into each category?

2)  Actual Line Total - The confusing part comes
when I look at the Actual column totals at the bottom . . . they also do a similar
thing . . . some months there is a positive balance and some months have a
negative balance. How does Quicken come up with that amount? Is it the actual
spent vs. the budget for the  month? Or the actual spent vs. the category
balance? Or something else?

3) Category Balance - When I look at the Balance
for each category (not the total at the bottom but the individual lines), I
have some that are in the red because I’ve had emergencies that weren’t in my
budget so they’re overspent. How do you “fix” that? In my old system, I could
transfer an amount from a category I’d over budgeted in to a category I’d under budgeted.
Is there any way to so something similar in Quicken? I know it doesn’t work
like my old system but is there some way to adjust the balances so they’re not
in the red?

Thank you for your help!

Comments

  • mshigginsmshiggins SuperUser ✭✭✭✭✭
    edited October 2018
    Nina, are you still struggling with understanding Quicken's budgeting?
    Quicken user since Q1999. Currently using QW2017.
    Questions? Check out the  Quicken Windows FAQ list
  • NinaNina Member
    edited October 2018
    Yes I am. Any help would be appreciated!
  • UKRUKR SuperUser ✭✭✭✭✭
    edited October 2018
    Where are our Budget experts, when one really needs them?

    Nina,
    about your item (3), over budget in one month ...
    You cannot enter transactions into any register that allow you to transfer funds from one budget category to another. Sorry.
    What you can do if you have Quicken Deluxe or higher is to work with the Annual budget view (not available in Starter Edition). Here you can edit the budgeted amount in one month in one category and edit another category's budgeted amount to make up for the difference.
    You also have the "Rollover" feature. Here you can set up within a category so that unused or overspent amounts in one month are rolled over to the remaining months of the year. In one of your categories click the BUDGET field. In the left column of the view with the category name 3 icons will popup that show you what you can do

    I'll let someone else discuss the Totals you were concerned about.

    Some of that is also documented in Quicken Help. Press the F1 key from the budget view or anywhere else in Quicken.
  • QPWQPW Member ✭✭✭✭
    edited October 2018
    #1

    When Quicken first creates a budget (or if you add a category for the first time) it looks back over the history and will in fact put in whatever was actually in any given month, so it would have a larger amount for you income on the month's where you get an extra paycheck.

    But after that Quicken imposes no "corrections" for the budget numbers you might put in.  It is up to you to decide if you want to have "exact numbers" or some kind of average or what not.  One size doesn't fit all. For instance my wife is paid weekly, but she is also paid hourly, and the number of hours per week she works varies some.  So there isn't and exact number of her paycheck.  So I tend go with an average, and use rollovers to smooth it out.

    "I'm assuming that the total under the budget line at the bottom should always have a zero balance and I should be adjusting my budget each month so it stays at zero. Is that correct?"

    Not necessarily.  For instance if you are not budgeting your predicted savings, that total could be your savings amount.

    In a perfect world you would know exactly how much you are going to make, and all your expenses, but in reality a budget is prediction and certainly can be wrong.  So yes the balance would be zero if your predictions are perfect (and you budget savings too).  But would you be upset if you found out that in fact you got more money than you expected, or your expenses were less?

    Just as it is possible to have negative numbers, it is possible to have positive ones.  And using the rollover option allows you to follow that positive number into the next month to compensate for a shortfall there.  But if possible yes you would want to put in your best prediction to get them as close to zero as possible.

    #2

    For past month's the calculation is simply the expense categories subtracted from the income categories.

    For the current month and future months if you have the option to use reminders they are added in as if they are "actual amounts".

    Now there is a bit of a problem for in that in the current month you have a mix of real transactions and these reminders.  But even more than that there is the same problem you talked about for #1.  If you have a reminder for your paycheck (or expense) that is say every two weeks, it isn't going to fit nicely into a month.  Quicken prorates these when it runs into that kind of problem.

    Also since reminders are the only way you can get "future actuals" into the budget, you have to have reminders for basically everything in your budget for the current/future months to zero out.

    #3 As UKR pointed out Quicken's budget doesn't allow for transferring amounts between categories.
      As a side note in past versions of Quicken there was this feature called the "Spending Planner", and it did allow it.  It looked very much like the current Graph version of the current budget.  And that isn't a coincidence.  There was the "Spending Planner" and the "budget", and people complained that they had to setup two systems with basically the same information.  So they ask for them to be merged.  That is what the current version is, but in the process they did drop the ability to transfer amounts between categories.

    One SuperUser came up with to my eyes a complicated way to do this, but I never really dug into it.

    But I do have a one thought on it.  People seem to view their budgets as "perfection" and maybe they should instead view it as how it really happened.

    An example of this is the cents option.  You can show cents or not.  That feature wasn't original available in the new budget system, but people complained about it enough and they added it.
    The other part of this is that even though you could change budget numbers in the first cuts of this budget system it wasn't easy to see how to do it, and again the complaints.

    There isn't a person in the world that can budget to the penny.  And a budget is a prediction of what you think you will make/spend, "seeing red" is important information. It tells you how good of a job you are doing at predicting.  And hopefully learn from it for the future.

    If you are going back and changing numbers in the past to reflect what happened, that is just a fantasy.  I guess that is what some people want.

    If you budgeted $200 for dining, and $100 for clothing, and you find that you have spent the $250 on you dining and then decide to spend only $50 clothing when you total the two you come up with zero.

    If you instead move money from the dining budget to the clothing budget you get the same total.

    Now the question what really is the problem?

    And I think the answer is the envelop system was created to make people feel good about their budget with a little white lie.

    "I didn't go over budget" see all the actuals are under my budget numbers.

    Well you can do the same thing by just changing the budget numbers.

    Of course as soon as your do either you have lost the information, that you did in fact have an emergency, and this is how you handled it.

    This is all "mind games", and you need to use whatever works for you.

    Personally I don't really do budgets, except for a yearly one to make sure I have a handle on what my current income/expenses looks about like.  I play with the budget in Quicken more for testing so that I can tell people on here how it works.

    I'm a natural saver, and so is my wife (no kids).  To me transferring money from one budget category to another is "strange", because of one ramification of that line thought.

    Say I budget $300 for dining, and find that I didn't spend that much.  Based on the fact that I can "move money around" it sort seems to imply that I should now take that money are spend it on "something" so that it is "balanced".

    Of course I never do that. What I don't spend goes into savings or investment.
    And on the other side of the coin, if I planned on spending $300 for dining and instead spent $350, as far as I'm concerned I didn't take it from my clothing expenses, I took it from my savings.
  • QPWQPW Member ✭✭✭✭
    edited October 2018
    BTW in writing this up, I realized something I hadn't thought of before.

    If you are "allowed" to move money from one budget category (envelope) to another that that really isn't different than just changing the budget numbers for the two categories/envelope.

    The only differences that you can claim "I didn't change my budget" because the budget numbers didn't change.  But effect is exactly the same.  And it doesn't require any complicated system to try to find a way to transfer transfers from one category to another.
  • NinaNina Member
    edited October 2018

    QPW,

    Thanks so much for the explanations! Moving to Quicken after
    an envelope system is just difficult.  I
    do have Quicken Deluxe and use the rollover for categories. The thing is, my
    envelope system helped me in that every dollar was assigned to a category. So
    all I had to do was look at my categories and plan spending based on their
    balance. When there were emergencies and categories were overdrawn, I could
    move money from one to another to keep everything in the black. Once those were
    adjusted, I had less in some categories than planned, but if everything was in
    the black, I could live by the budget and know exactly how much was available.

    What drives me nuts in Quicken is the overdrawn categories
    that I have no way to fix. Yes, my total expenses are less than the income, but
    when I look at a category that’s in the black, in reality, part of it is making
    up for the other parts that are in the red. So I don’t have a clear picture of
    what I can spend, because what’s in the black isn’t the true picture as long as
    other categories are overdrawn.

    I can adjust the categories in any given month, but that
    doesn’t cover the overdrawn amounts fast enough and by the next time I will
    need to use the category, it will overdraw it again and I’ll have same problem
    with it being in the red most of the year.

    So, I’ve been adjusting the budget monthly but it’s a mess. How
    does Quicken create a budget for next year based on last year’s expenses? Maybe I just have to  muddle through this year and hope it's budget for next year will be more accurate. You also
    mentioned that what you don’t spend goes into savings or investments, but I don’t
    have that option, since I’m on a very tight budget after losing my husband. How
    do you know what you can spend if categories are in the red and some aren’t?

    I really do appreciate your help. I will be rereading your
    answer again, it’s just such a different way of thinking that it’s hard to wrap
    my mind around.

    Thanks again!

  • QPWQPW Member ✭✭✭✭
    edited October 2018
    Nina said:

    QPW,

    Thanks so much for the explanations! Moving to Quicken after
    an envelope system is just difficult.  I
    do have Quicken Deluxe and use the rollover for categories. The thing is, my
    envelope system helped me in that every dollar was assigned to a category. So
    all I had to do was look at my categories and plan spending based on their
    balance. When there were emergencies and categories were overdrawn, I could
    move money from one to another to keep everything in the black. Once those were
    adjusted, I had less in some categories than planned, but if everything was in
    the black, I could live by the budget and know exactly how much was available.

    What drives me nuts in Quicken is the overdrawn categories
    that I have no way to fix. Yes, my total expenses are less than the income, but
    when I look at a category that’s in the black, in reality, part of it is making
    up for the other parts that are in the red. So I don’t have a clear picture of
    what I can spend, because what’s in the black isn’t the true picture as long as
    other categories are overdrawn.

    I can adjust the categories in any given month, but that
    doesn’t cover the overdrawn amounts fast enough and by the next time I will
    need to use the category, it will overdraw it again and I’ll have same problem
    with it being in the red most of the year.

    So, I’ve been adjusting the budget monthly but it’s a mess. How
    does Quicken create a budget for next year based on last year’s expenses? Maybe I just have to  muddle through this year and hope it's budget for next year will be more accurate. You also
    mentioned that what you don’t spend goes into savings or investments, but I don’t
    have that option, since I’m on a very tight budget after losing my husband. How
    do you know what you can spend if categories are in the red and some aren’t?

    I really do appreciate your help. I will be rereading your
    answer again, it’s just such a different way of thinking that it’s hard to wrap
    my mind around.

    Thanks again!

    Anyone that is trying to get the "red out" of their budget when using Quicken's budgets is either "over budgeting" or has a lot of manual work like you are doing to "fix things up".

    There is one feature in Quicken/budgets that might help you a bit.
    It is the category group.

    If you go to the category list, and then select the Options button there is a selection for Assign Category group.

    By default your categories go into the default category groups like Personal Income and Personal Expenses, but you can create your own category groups and put categories into them.

    What his will do is create a grouping of your categories on the budget view.
    For instance I have one called Variable Expenses.


    What is happening here is that all the categories in this category group are added up and there are totals on the Variable Expenses line.

    So if this was say a group of categories that you feel its alright to transfer money from one to another you would just look at the category group total to see if you have money left or not.

    Note that this is a poor example given that my category group balance is negative.
    This is just because of my lack of maintaining this budget, not any thing wrong with Quicken or this idea of how to use it.
  • QPWQPW Member ✭✭✭✭
    edited October 2018
    Nina said:

    QPW,

    Thanks so much for the explanations! Moving to Quicken after
    an envelope system is just difficult.  I
    do have Quicken Deluxe and use the rollover for categories. The thing is, my
    envelope system helped me in that every dollar was assigned to a category. So
    all I had to do was look at my categories and plan spending based on their
    balance. When there were emergencies and categories were overdrawn, I could
    move money from one to another to keep everything in the black. Once those were
    adjusted, I had less in some categories than planned, but if everything was in
    the black, I could live by the budget and know exactly how much was available.

    What drives me nuts in Quicken is the overdrawn categories
    that I have no way to fix. Yes, my total expenses are less than the income, but
    when I look at a category that’s in the black, in reality, part of it is making
    up for the other parts that are in the red. So I don’t have a clear picture of
    what I can spend, because what’s in the black isn’t the true picture as long as
    other categories are overdrawn.

    I can adjust the categories in any given month, but that
    doesn’t cover the overdrawn amounts fast enough and by the next time I will
    need to use the category, it will overdraw it again and I’ll have same problem
    with it being in the red most of the year.

    So, I’ve been adjusting the budget monthly but it’s a mess. How
    does Quicken create a budget for next year based on last year’s expenses? Maybe I just have to  muddle through this year and hope it's budget for next year will be more accurate. You also
    mentioned that what you don’t spend goes into savings or investments, but I don’t
    have that option, since I’m on a very tight budget after losing my husband. How
    do you know what you can spend if categories are in the red and some aren’t?

    I really do appreciate your help. I will be rereading your
    answer again, it’s just such a different way of thinking that it’s hard to wrap
    my mind around.

    Thanks again!

    BTW you asked about how Quicken creates a new year budget.  I don't think it will help you for this because in any given year the "trading between categories" would be different.

    But here are the options:
    image
  • QPWQPW Member ✭✭✭✭
    edited October 2018
    Nina said:

    QPW,

    Thanks so much for the explanations! Moving to Quicken after
    an envelope system is just difficult.  I
    do have Quicken Deluxe and use the rollover for categories. The thing is, my
    envelope system helped me in that every dollar was assigned to a category. So
    all I had to do was look at my categories and plan spending based on their
    balance. When there were emergencies and categories were overdrawn, I could
    move money from one to another to keep everything in the black. Once those were
    adjusted, I had less in some categories than planned, but if everything was in
    the black, I could live by the budget and know exactly how much was available.

    What drives me nuts in Quicken is the overdrawn categories
    that I have no way to fix. Yes, my total expenses are less than the income, but
    when I look at a category that’s in the black, in reality, part of it is making
    up for the other parts that are in the red. So I don’t have a clear picture of
    what I can spend, because what’s in the black isn’t the true picture as long as
    other categories are overdrawn.

    I can adjust the categories in any given month, but that
    doesn’t cover the overdrawn amounts fast enough and by the next time I will
    need to use the category, it will overdraw it again and I’ll have same problem
    with it being in the red most of the year.

    So, I’ve been adjusting the budget monthly but it’s a mess. How
    does Quicken create a budget for next year based on last year’s expenses? Maybe I just have to  muddle through this year and hope it's budget for next year will be more accurate. You also
    mentioned that what you don’t spend goes into savings or investments, but I don’t
    have that option, since I’m on a very tight budget after losing my husband. How
    do you know what you can spend if categories are in the red and some aren’t?

    I really do appreciate your help. I will be rereading your
    answer again, it’s just such a different way of thinking that it’s hard to wrap
    my mind around.

    Thanks again!

    I was also looking at my example and notice some "strange" positive values.
    Like these:
    image

    They seem like they should have a zero balance.

    The reason they don't is they have rollover amounts from the month before.

    Also they are strange in that if there wasn't any rollover they would be zero.
    That could certainly happen for say my Internet bill, but it would never happen for a variable bill like Dining.

    That makes me believe that I created (more likely extended it) this budget in the middle of the year, and Quicken just filled in the budget amounts from the actual amounts spent.
  • QPWQPW Member ✭✭✭✭
    edited October 2018
    Nina said:

    QPW,

    Thanks so much for the explanations! Moving to Quicken after
    an envelope system is just difficult.  I
    do have Quicken Deluxe and use the rollover for categories. The thing is, my
    envelope system helped me in that every dollar was assigned to a category. So
    all I had to do was look at my categories and plan spending based on their
    balance. When there were emergencies and categories were overdrawn, I could
    move money from one to another to keep everything in the black. Once those were
    adjusted, I had less in some categories than planned, but if everything was in
    the black, I could live by the budget and know exactly how much was available.

    What drives me nuts in Quicken is the overdrawn categories
    that I have no way to fix. Yes, my total expenses are less than the income, but
    when I look at a category that’s in the black, in reality, part of it is making
    up for the other parts that are in the red. So I don’t have a clear picture of
    what I can spend, because what’s in the black isn’t the true picture as long as
    other categories are overdrawn.

    I can adjust the categories in any given month, but that
    doesn’t cover the overdrawn amounts fast enough and by the next time I will
    need to use the category, it will overdraw it again and I’ll have same problem
    with it being in the red most of the year.

    So, I’ve been adjusting the budget monthly but it’s a mess. How
    does Quicken create a budget for next year based on last year’s expenses? Maybe I just have to  muddle through this year and hope it's budget for next year will be more accurate. You also
    mentioned that what you don’t spend goes into savings or investments, but I don’t
    have that option, since I’m on a very tight budget after losing my husband. How
    do you know what you can spend if categories are in the red and some aren’t?

    I really do appreciate your help. I will be rereading your
    answer again, it’s just such a different way of thinking that it’s hard to wrap
    my mind around.

    Thanks again!

    I dug up the post by the SuperUser that has a system to do envelope budgeting in Quicken.  It seems like a lot of work to me, but maybe it might make sense for you:
    https://getsatisfaction.com/quickencommunity/topics/report-to-show-the-amount-of-money-in-a-category
  • NinaNina Member
    edited October 2018
    Nina said:

    QPW,

    Thanks so much for the explanations! Moving to Quicken after
    an envelope system is just difficult.  I
    do have Quicken Deluxe and use the rollover for categories. The thing is, my
    envelope system helped me in that every dollar was assigned to a category. So
    all I had to do was look at my categories and plan spending based on their
    balance. When there were emergencies and categories were overdrawn, I could
    move money from one to another to keep everything in the black. Once those were
    adjusted, I had less in some categories than planned, but if everything was in
    the black, I could live by the budget and know exactly how much was available.

    What drives me nuts in Quicken is the overdrawn categories
    that I have no way to fix. Yes, my total expenses are less than the income, but
    when I look at a category that’s in the black, in reality, part of it is making
    up for the other parts that are in the red. So I don’t have a clear picture of
    what I can spend, because what’s in the black isn’t the true picture as long as
    other categories are overdrawn.

    I can adjust the categories in any given month, but that
    doesn’t cover the overdrawn amounts fast enough and by the next time I will
    need to use the category, it will overdraw it again and I’ll have same problem
    with it being in the red most of the year.

    So, I’ve been adjusting the budget monthly but it’s a mess. How
    does Quicken create a budget for next year based on last year’s expenses? Maybe I just have to  muddle through this year and hope it's budget for next year will be more accurate. You also
    mentioned that what you don’t spend goes into savings or investments, but I don’t
    have that option, since I’m on a very tight budget after losing my husband. How
    do you know what you can spend if categories are in the red and some aren’t?

    I really do appreciate your help. I will be rereading your
    answer again, it’s just such a different way of thinking that it’s hard to wrap
    my mind around.

    Thanks again!

    Thanks so much for the extra effort! I looked at the article about envelope budgeting and will study that. I've also seen a video from someone who did that within Quicken using a spending plan, but the video was from 2004. . . it would work except I don't think what they used in their 2004 version of Quicken is no longer there, but basically you're entering everything twice which I was hoping to avoid.

    What I did discover was that Quicken had an article that says you can edit the rollover balances if you're overspent in an area.  So I can edit a balance that's too high and lower it and then edit a balance that's too low by adding in whatever I subtracted from the one that was too high. I'm pretty sure that will accomplish what I need it to do, so I will try that through the rest of the year. That will give me some time to check into the link you gave me about envelope budgeting. I did look into a lot of programs before choosing Quicken and what I found was that none of them really worked like the one i had (not even the envelope budgeting ones). There are so many things I do like about Quicken.

    Thanks again for all your help. I really appreciate it! And for telling me about the spammers. I got several of those but ignored them. It's good to know I should do that.
  • QPWQPW Member ✭✭✭✭
    edited October 2018
    Nina said:

    QPW,

    Thanks so much for the explanations! Moving to Quicken after
    an envelope system is just difficult.  I
    do have Quicken Deluxe and use the rollover for categories. The thing is, my
    envelope system helped me in that every dollar was assigned to a category. So
    all I had to do was look at my categories and plan spending based on their
    balance. When there were emergencies and categories were overdrawn, I could
    move money from one to another to keep everything in the black. Once those were
    adjusted, I had less in some categories than planned, but if everything was in
    the black, I could live by the budget and know exactly how much was available.

    What drives me nuts in Quicken is the overdrawn categories
    that I have no way to fix. Yes, my total expenses are less than the income, but
    when I look at a category that’s in the black, in reality, part of it is making
    up for the other parts that are in the red. So I don’t have a clear picture of
    what I can spend, because what’s in the black isn’t the true picture as long as
    other categories are overdrawn.

    I can adjust the categories in any given month, but that
    doesn’t cover the overdrawn amounts fast enough and by the next time I will
    need to use the category, it will overdraw it again and I’ll have same problem
    with it being in the red most of the year.

    So, I’ve been adjusting the budget monthly but it’s a mess. How
    does Quicken create a budget for next year based on last year’s expenses? Maybe I just have to  muddle through this year and hope it's budget for next year will be more accurate. You also
    mentioned that what you don’t spend goes into savings or investments, but I don’t
    have that option, since I’m on a very tight budget after losing my husband. How
    do you know what you can spend if categories are in the red and some aren’t?

    I really do appreciate your help. I will be rereading your
    answer again, it’s just such a different way of thinking that it’s hard to wrap
    my mind around.

    Thanks again!

    On the video from 2004, you are right that won't do you any good.  They totally revamped the budget in 2012, and it doesn't look like it did in 2004.
  • GiveAnAccountGiveAnAccount Member
    edited December 2018
    Nina, how is this going for you? What did you end up with? I help a couple with their financial management and they came from envelope based budgeting - they too have a very diffiucult time rearranging their brain to fit they way Quicken works. I've been a Q user for 20 years, and it took me a good while to understand their enveloope perspective. Once I did, I was like - yeah - Quicken isn't designed for that.
This discussion has been closed.