Escrow account w/transfers, but still need monthly spending

lellis1936

I have a self-managed escrow account at a bank savings account. This account is also in Quicken, as are all my bank accounts.

On a monthly basis, I transfer a fixed amount from my checking account to the escrow account. Since I want to track my accrued real estate liability, and to avoid having the escrow dollars included in my net worth, I created a liability account for the real estate tax which tracks the escrow balance.

All well and good and working fine.

But one of my main objectives in going through this process was to track my cashflow better. I wanted to amortize the twice-yearly tax payments into monthly expenses. Where this fails is that the monthly transfers do not show up as money spent because they are transfers. I could create a report that includes transfers but this would have other adverse effects.

I am considering eliminating the transfer column from the money moving between the checking and escrow account but this is an imperfect solution too. Is this my best option? Are there any other approaches I should consider?

chitownhockey

The money set aside and transferred to your escrow account is just a zero cash flow event...so I wouldn't track it.

Or, you can track the outflow from checking AND the inflow into the liability account, which will still give you a zero cash flow.  But you'll see the income and expenses in different areas in the report.  And I'm guessing you DO want to see the expense portion of the transfer.

Pretty sure either method will get you what you need and either will meet your needs.  Just depends on how you want to view the event.  

There are many times I need to track a transfer in Cash Flow...such as transfers out of a non-retirement account to my checking account.  This is a zero cash flow non-taxable event...but I still want to see what's "coming into" my checking account.  I know that it's not "real" income...but I still need to see the amount and have it added to other income sources in order to make sure that my total "in" amount is more than my spending "out" amount for the month/year.  

I WOULD certainly track the actual real estate tax payment twice a year and include those payments in your reports.  

Tom Young

"But one of my main objectives in going through this process was to track my cashflow better."

The set up your cash flow report to show the cash flow:

(Ignore all the other numbers, this is just a test file.)

The transfer is real money out, I assume you can't willy-nilly just pull money out of the escrow and back into your checking account.

"I wanted to amortize the twice-yearly tax payments into monthly expenses."

I'm not understanding this, really.  Since you're making entries to an Escrow Liability Account I'd think the other side of the entry would be a Property Tax Expense Category, a monthly "expense."  I understand that until you get the property tax bill entries made before that time would be estimates, but once you have the bill your subsequent transfer would adjust accordingly, as would your entry to the liability Account.

lellis1936

Thanks to chitownhockey and Tom Young. Your comments have been very helpful.

Tom, your graphic was especially useful because I think it gives me an approach that will work with some caveats: a) I will need to create a custom report, and b) it must only only the checking account. Thus it will show transfer-outs as you have shown (of course the report would have to enable inclusion of transfers).

I had hoped to be able to use the built-in spending report since that has been my go-to for analyzing spending; but that report is not customizable as far as I can see and will not include transfers.

Let me know if I've misunderstood anything.

lellis1936

UPDATE: My latest obstacle is the cashflow reports will include all my transfers or none. I have a number of accounts, so there are many transfers between checking and other accounts which do not map to "spending", and those transfers appear on my report and muddy the numbers.

The built-in spending report gets me closest to where i'd like to be. What I want is for it to show "actual expenses" + "transfers to my escrow account". I realize this is not truly money spent so my hope was that the cash flow reports could be configured easily to give me what I want, but that does not appear to be the case.

It would be nice to be able to include a category WITH a separate transfer designation. Pretty sure I could make that work.

Tom Young

"UPDATE: My latest obstacle is the cashflow reports will include all my transfers or none. I have a number of accounts, so there are many transfers between checking and other accounts which do not map to "spending", and those transfers appear on my report and muddy the numbers"

Simply customize the report to include only the transfers you deem relevant.  The default cash flow report includes all "Banking" Account as the Accounts "feeding" information to the report, as you can see when you select the Accounts tab under Customization.  You can select whatever Accounts you wish to "feed" information to the report.  If you want to include some transfers, e.g., to the Escrow asset Account, tick those Accounts as included in the report under Categories.  If you want to exclude other transfers, e.g., from checking to savings, untick those Accounts under Categories.

"The built-in spending report gets me closest to where i'd like to be. What I want is for it to show "actual expenses" + "transfers to my escrow account". I realize this is not truly money spent so my hope was that the cash flow reports could be configured easily to give me what I want, but that does not appear to be the case."

This report is absolutely customizable to do exactly what you want.  Tick the Escrow Account under Categories, deselect all other Accounts where you don't want to see transfers TO or FROM.

chitownhockey

As Tom has pointed out, the key here is to NOT select the non-cash flow account such as the escrow account in the ACCOUNTS section...but select it at the bottom of the CATEGORY list.

There's a distinct difference between using them from the category level vs the account level.  I've been a user for over 30 years and I still haven't completely figured it out yet...but by trial and error I eventually get the report results I need.

And of course, make sure you SAVE the customized report when you obtain the results you want to see.  Once setup and saved, it's easy peasy to use.  And you can also add the saved report to the Quicken toolbar for easy retrieval. 

lellis1936

Tom/chitownhocky,

Thanks! I have it now. With some trial and error I find I can do exactly what I want. I can't use the spending report on the spending tab but I can live with that since this is not truly a spending report.

The magic combination for me seems to be to include ALL accounts except for the escrow account, but to exclude all transfers except for the escrow account. When the tax is paid, it will be paid directly out of the escrow account (not a transfer), so that will avoid any duplication.

This turns out to have been a lot of work to keep the advantage of using transfer categories for cashflows between the checking and escrow account. I'm still pondering whether it is worth the hassle.

Either way, this has been well worthwhile because my understanding of the reporting is much improved. And I am a multi-decade user as well so that is a milestone.

Thanks again to you both.

Tom Young

@lellis1936

Modifying reports is pretty trivial once you understand what you're doing. 

"Accounts" feed reports.  That is, the transactions inside an Account selected under the "Account" tab for the report can be incorporated into the Categories selected under the "Categories" tab for that report.  And, an Account can appear as a "Category" in a report if it's selected as such under the Categories tab.  That's all there is to it.  And, this works for most all reports. 

Generally, you wouldn't have an Account be used as both an Account that feeds a report and as a Category that's included in the report.

In my own Spending reports I've always excluded all my Retirement Accounts under the Account tab; I look at those Accounts in other ways.  But I've included those Accounts as Categories for the report since distributions from the Retirement Accounts represent a form of "income" and contributions to these Retirement Accounts represent a form of "expense".  It's a bit of a "fruit salad" as far as true "spending" goes, but it's useful to me.