How do I categorize credit card payment in a budget? (Q Mac)

Fred R

I've set up a budget. One of the expenses I'd like to show on my budget is credit card payment to one of my cards with a balance. In this case the payment is not for full balance. I assume I can do this via a category but I don't see any category I can use for this from the list of categories. 

TIA,
FR

John_in_NC

At this time, you will not be able to track a CC payment in your budget for Quicken for Mac.

You can categorize the transfer (payment) as anything you want, but that is irrelevant. CC payments are transfers, and the budget won't see those. (Both sides of the transfer cancel out for $0 spending or income, so the budget won't see it.) 

John_in_NC

At this time, you will not be able to track a CC payment in your budget for Quicken for Mac.

You can categorize the transfer (payment) as anything you want, but that is irrelevant. CC payments are transfers, and the budget won't see those. (Both sides of the transfer cancel out for $0 spending or income, so the budget won't see it.) 

Fred R

Thank you for answering my question. This seems unfortunate and a shortcoming of the product.  

KMos

I agree with Fred R, it makes no sense that a Mac user can not budget for CC payments.  Is this an enhancement that is under consideration?

jacobs

@KMos: yes. The Mac product manager has said they're working on a method of allowing users to selectively include fund transfers in budgets.

It's worth understanding why this is not as simple an issue as it might seem. Let's say you pay your cable bill each month via credit card. That cable bill expense in your credit card account is in your budget each month, right? When you pay your credit card bill each month from your checking account, if you put the payment of the credit card in your budget, you'd be double-counting the cable expense. It's tricky for budgets to track cash flow for transfers -- like your credit card bill, mortgages principle payments, putting money aside for savings -- without making it seem like you're way in the red because these might also be expenses already accounted for. 

NotACPA

KMos said:

I agree with Fred R, it makes no sense that a Mac user can not budget for CC payments.  Is this an enhancement that is under consideration?

Budgets are supposed to cover Income and Expense items ... that is, CATEGORIES in Q.

Transfers are neither an Income or Expense item.  That you can "budget" for them in QWin is an aberration and an abomination.

The card purchases are the expense.  To be able to budget the transfers also would mean that an card expense gets counted once when charged and again when paid.

bayoyong

If you track both the cc payment and each indiv. cc transaction in your budget, aren't you going to get double? I don't track cc payments in my budget. BTW...I found out recently that you can still categorize transfers. If you right click in any register, it will give you the option to view the Transfer column. From there, you can "label" any transaction a transfer...along with now being able to categorize the transaction. When you fill in the Transfer field for a transaction (Quicken will autofill matching accounts as you type), Quicken does a pretty good job of asking, "Hey, I see this transaction in the other transfer account, do you want me to match it?"

Not sure why they hide something as important as a Transfer column. But it helped me a lot last night once I figured it out.

jacobs

The credit card payment is actually a transfer of funds, from your checking account (asset) to your credit card account (liability), so in accounting terms, there is no expense there. Of course, from a cash flow perspective, people think of paying the credit card bill as the expense, because that's when the money disappears from your bank account -- but in reality, you incurred the expense when you made the credit card purchase.

This is why it's more complicated than it might appear for Quicken developers to allow people to include transfers in their budgets. If Quicken counted the credit card payment in the budget, then you're correct that it would be double-counting the expenses. 

wisebyte

Unable to budget credit card payments and mortgages and car payments is a SERIOUS flaw of the budget tool in my view. [removed] can do this just fine.

jacobs

@wisebyte Yes, it's a shortcoming in Quicken Mac. Most people who use the budget know it, and the developers know it. The product manager has acknowledged the need, and promised they will be working on it this year.

In terms of your credit card expenses, though, I'd note that the actual expenses are already in your budget. It's not the payment to the credit card company, it's the individual charges and the categories they're assigned to which appear in your budget. While it might feel like the monthly payment should be in your budget, that would double-count your expenses. Ultimately, you and Quicken will have to agree to count things on an accrued accounting basis (counting the actual categorized expenses) or on a cash flow basis (counting the payment to the credit card company), because you can't have both at the same time.

Loans are a little different. The portion of the loan payment that is interest is counted in your budget, but the principal payment is not, since it is -- accounting-wise -- a transfer from an asset to a liability, and not an expense. But in terms of a personal budget, it's the cash flow that people want to track, so Quicken needs a way to count one side of a transfer without the other to do that. (Budgeting for savings has the same issue.)

Some users might be happy to have simple budgeting on a cash flow basis, just to show how much money is left at the end of the month, but many users will want to budget for their actual expenses, so a more nuanced process in Quicken is needed.

John Griffith

If I was using this to manage a business I would want it to follow accounting rules; however, if I am using it to manage home finances and cash flow I need to see where my cash went to better control spending.  Tracking ones mortgage payments, car payments and credit card payments is important from a budget standpoint.  Income and expense is important from an accounting standpoint.  Why not offer the cash flow from a budget view and Income & expense as an accounting view?

John Griffith

I forgot to mention that income and expense view is important from a tax at end of year perspective but the budget view is what we use daily.  They can and should be different.  Budget view is more closely related to a sources and uses statement.

jacobs

John, the number one user request in the budget are of Quicken Mac is allowing users to include transfers in their budgets, and the product manager has both acknowledged this and said it's something they're working on. It apparently requires some significant under-the-hood architectural changes to the code, which is why it hasn't been tackled previously.

Some of the complexity comes from needing to provide appropriate user choices about what to include or not include. As you're aware, if the budget tracks individual categorized expenses paid in a credit card account, and includes the credit card payment, that would double-count credit card expenses. Yes, you want to be able to budget for that lump-sum payment each month -- but then what should Quicken do with all the individual transactions in the credit card account? Ignore them? But some users would want to know how much they're spending on dining out, groceries, and other things they charge on their credit card. So you can see how creating a user interface to manage those competing needs -- which some users might want to manage differently than others -- is part of what makes this tricky to solve. Could they make it so there's a toggle between income & expense view and cash flow view? Perhaps. Add to this that some users might want their transfer for some of their accounts to be reflected in the budget (say a loan payment or a savings goal) but want other accounts (like a credit card) to reflect actual spending. so there are several tricky issues with the user interface on this, aside from whatever changes they need to make in the structure of the database to accommodate views and reports being able to do these things.

Again, this is something they're working on, but we have no idea when new functionality in this area will be released.

NotACPA

@John Griffith You, apparently, mis-understand the difference between "Income & Expense" vs. "Cash Flow"

When you use your card to make a purchase, that the expense.  NOT when you pay the card bill.

Paying the card bill is a TRANSFER, not an expense.  You are neither richer nor poorer after this transfer.

You need to look into Cash Flow reports to manage  your spending.