Helpful Info: Coming from envelope budgeting and how to do Zero Based budgeting in QWIN

Envelope Budgeting is a great tool for beginners who have no idea about starting a budget. And, I'll say the QWIN is a great tool for those who graduate into using more tools in a finance software. So with that, I hope what I share here is helpful.

I've seen a few threads(closed) where questions were asked about how to do certain things in QWIN in regard to envelope budgeting, rollovers, zero-based budgeting, and how to balance overspent categories. I hope to answer these here.

To set up Envelope/Zero based budgeting, you will need to set all of your categories to rollover. This ensures your envelopes aka categories stay in-sync with your dollars. When you create your budget in Quicken, it is crucial that your budgeted Income Amount matches your Expenses the penny.

The important and crucial piece that is alluded to is the total dollars for spending in the budget MUST MATCH the total dollars available for spending. It doesn't help to have a budget with envelope amounts if the dollars aren't there to spend. Thus, every dollar needs to be accounted for.

While there is a more in-depth set-up for kicking this off in Quicken, I will share how to ensure you are balanced....Available Dollars matching the dollars to spend in your budget.

I have a bank account and a couple of credit cards I use for cash back. All 3 of these are connected to the budget. I created an excel sheet to note:

Bank Balance Total MINUS credit card totals...leaves the Net of Month available.
In Planning(Budget), you have the top Spending bar. The amount Left needs to match the Net of Month difference between credit cards and bank. If you don't have or use credit cards, then what you have in the Bank should match Net of Month.

When you overspend in a category, you have two choices. You can leave it for the next month to balance out. Not ideal but it works. To balance in the current month, you will need to move money from another category. You can do this two ways:
1. Create a split transaction in the Bank account. In the entry, add a negative sign to the category you are moving the money FROM. Add the category you are moving it to and don't add a negative sign. The transaction must net a $0 dollar amount as this is simply an adjustment. Mark it as CLEARED so it reconciles at statement closing. Since it is a $0 transaction, it won't impact reconciliation amounts. This helps to make a record in the register to adjust the budget so if this consistently occurs, you might need to consider adjusting your budget.
2. In Planning screen, edit the overspent category's "Allocated" budget to increase funds by the amount overspent. Then immediately choose a category with adequate fund and edit its "Allocated" budget to reduce it by the same amount that was overspent. This creates a balance. Rest assured, this doesn't change the budgeted amount for the months remaining in the year...just for the current month.

If you have money come in that wasn't planned for, simply enter it in QWIN and tag the category you plan to spend it from instead of tagging it as addition income. This is the shortest way to implement the funds and allocate it to the budget.
This discussion has been closed.