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How do I set up a budget that balances?

I use a budgeting tool online to set up a budget based on my income. I'm on a salary, so my paychecks are always the same. The online budget takes my income and subtracts the monthly category totals until I get to $0 left. I then plug those budget numbers into my budget categories in Quicken (2019, Version R22.12, Windows 10).

I use the annual view with details and under the Budget column, I put in my income and my expenses for each month based on the other budget I filled in online. When I do that, at the very bottom under Totals there is always an excess of money (amounts are different each month) that shows up, like I still have that much to budget when I know I don't.

Why do I have excess money showing up when I know it isn't really there? I've used Quicken for over a year now, read everything in the budget section and this baffles me.

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Answers

  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭
    " The online budget takes my income and subtracts the monthly category totals until I get to $0 left."

    How in the world does it do that?  Subtracting one number that's the same as your income is easy enough, but I can't see how it can use any "Categories" for spending.  How does it know, for example, that you've scheduled you car for major service in January such that the "Auto::Service" Category/Subcategory needs to be pumped up?
    And, why would you want to have a budget that has you spending every last dime of your income every single month?
    But away from that, computers are pretty good at math and Quicken, being an accounting program, should do that very well.  I speculate that there's something about that "online budget" that you're not disclosing.  Even if the online program could come up with some sort of detail budget, and with realistic numbers, if it always makes "expenditures" equal to "income" then I'd guess there's a "plug" number that makes that happen: something like "transfer to savings" or "transfer from savings."
    Have you tried putting both the online budget and Quicken budget into Excel and having Excel do the math? 
  • Hi, thanks for answering. Ok, I come to Quicken after using a computer-based envelope budgeting system. They no longer make or update it so I had to find something else and there was really nothing else out there quite like it.

    The old program took my income, set up a budget with categories. I calculated what amount went into each category to cover my expenses and savings until the amount I designated for all the categories matched my income and it balanced. Same amount of $$$ in and same amount of $$$ designated to categories. All I had to do was look at the balance in the category and I could see if I had enough to make an expenditure, or if I didn't, I had to transfer money from one category with an overage to the category I needed it in. I loved it. It was easy to manage and I always knew where I was at.

    I'm not trying to make expenditures equal income, I'm trying to make category amounts budgeted equal income, and that's where Quicken confuses me. I have used an online budget . . . plug in your income, plug in your monthly amounts for each category until what I've budgeted for categories, including savings, equals my income. And I've used my old program which is still working in that area and I come up with the same numbers. When I put those numbers in Quicken it still says I have money left at the bottom. I shouldn't. I will try putting those in Excel . . . That's a great idea and thanks for suggesting it! But I don't understand why Quicken thinks I have money left over when I don't and it shouldn't think that I do.

    Unless there's some area I've used or hidden that's throwing things off. I had trouble with the category for savings last year and I also have trouble with how it shows my paychecks. Those, it shows the net amount in the budget column, the gross amount in the actual column and includes the taxes, which always show up as a negative and I've never, ever been able to get the green check mark at the top of Quicken's budget. My line always says I've overspent in like 9 categories which it won't tell me and when I look there aren't 9 that are off. And, sorry, I got off onto another subject.

    Any help is appreciated. I really appreciate your reply ;)
  • David Christopher
    David Christopher Member ✭✭✭✭
    It is possible to set up your budget as you wish. I have been working on my budgets for about three weeks now and after reading you post with my goal the same as yours I have figured it out. 

    The main thing you want is to zero out the difference between Income and Expenses so that there is a 0 difference.  To start, open the annual view of your budget and just look at the 'Budget Only'. Get your income entered, then your expenses and, if you have them, savings goals, and a line for 'Transfer to Savings'.  Budget your expenses and put what is left into Transfer to Savings. Then as the month progress work your budget as you described, robbing from one categories budget and placing into another categories Budget. If you need extra, you are going to have to take it out of Transfer to savings just like you do the rest of your adjustments to keep a zero at the bottom.

    At the end of a perfect month, you will have a 0 in all three columns at the bottom of the Details version of the Annual View. 

    Here is an example of one of my Budgets, so you get the idea of what the three Totals columns will look at during the month.

  • Thank you! I had been trying to do that, but still was showing money left over when I didn't think there should be any left over. Discovered that the savings category had been zeroed out which was part of the problem, and when I switched jobs earlier in the year there were some errors in the income in the budget column and I think that accounts for most of it.

    I am still having trouble with the taxes that are paid from each check. My net pay shows up in the budgeted column, my gross pay shows up in the actual column and the taxes taken out of my check also show up in the actual column. I get that the gross pay minus the taxes even each other out, but the taxes show up as a negative, over-budget amount and is showing up in my over budget categories. What do you do so they don't show up as over budget? Hide them? Even if I hide them they show up as over-budget amounts which they really aren't unless I make my pay in the budget column my gross pay. Not really sure what to do there.

    Thanks again. I really appreciate your reply, it got me thinking about where to check and was so helpful!
  • Thank you so much!
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