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How Transfers Between Accounts Work in Regard to Categories

I am a recent convert to Quicken (Windows) - from Banktivity (Mac) - in which I used to use an envelope budgeting system - it's the way my brain works and has done for literally years. So now - with Quicken - I'm taking a deep breath and trying to learn the 'correct' way to use budgets - not envelopes - and frankly it's terrifying - but I'm making steady progress.

So please understand the fundamental principle behind the mindset I've been in for the last 25 years - I have essentially lived in a world of 'pots' - my salary fills pots (you divide every penny of your salary to a dedicated pot - nothing left afterwards), you then spend from a pot, possibly roll over unspent values to the next month, and when money runs out you can't spend from that pot until you fill it up with money from your next paycheck - and so on.

So part of that mind set involves shunting saved up or accumulated (unspent) funds from one Category across from my Checking account into my Savings account for safe keeping/rainy day into a secondary dedicated Category with a different name (to separate the funds) - ultimately the aim was to move it out of my regular daily spending account to somewhere safe.

To do so in reality I clearly just carry out an online bank transfer of funds (Wells Fargo) - job done - funds moved. But to record that move in Banktivity what I would do is/was create a Debit out of my Checking Account from say my 'Car Fund' Category for $500, then create a Deposit entry into the Savings Account into a 'Savings Car Fund' Category of $500 - that way (in my mind) I'm saying to myself the Car Fund has had $500 deducted from it - leaving $x available to spend - and that I consequently have an emergency Savings Car Fund of $500 to fall back on when I need it.

I know in my heart of hearts this is not the right way to do this - in Quicken and 'budget' terms - so I'm looking for some hand holding/guidance on how I should actually be doing this - in a way that still makes me feel I'm in control of the value of my various 'pots' - whether they are in my Checking account (daily/operational spend) or have been transferred across into my Savings account (geared more to savings/emergency funds) ...? The default 'Transfer' category in Quicken does nothing but terrify and confuse me - because it doesn't allow me to deduct funds from one pot and add them to another - so how the heck can I track what I've got where ...? Grateful to you ... I've rambled but clearly need help.

Answers

  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    Categories, in Q, refer to Income and Expense items.  Using Income makes you richer and using Expense makes you poorer.
    A transfer does neither.  It just moves money from one pocket to another.
    Your Checking account is an Account, not a Category. You Saving account is, likewise, an account not a category.  So, moving money between then doesn't involve either an Income or an Expense.
    You probably need to look at the Cash Flow reports to see where your money is going.  That'll show the transfers.
    Q user since DOS version 5
    Now running Quicken Windows Subscription,  Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • SCM1959
    SCM1959 Member
    Respectfully - I still don't see how that method allows me to keep track of the value and location of the funds within my Categories/Pots?

    If my Car Fund is valued at $800, and I transfer $500 of that fund from my Checking Account across to my Savings Account for safe keeping - effectively leaving $300 of 'Car Fund' in my Checking account - and then incur an expense of $600 for a service on the car, which I pay for on my Debit card (which draws from my Checking Account), creating an entry in my Checking Account Register accordingly for a $600 debit against category Car Fund - surely I'm taking money out of an account/category that doesn't exist - as mentioned above there's only $300 (Car Fund) left in my Checking account, yet I've just spent $600 of the Car Fund category from the Checking Account - $300 of which is actually in my Savings account ...

    So how do I keep track of what funds are where (vis a vis account), and in which category - without becoming utterly confused ...?
  • volvogirl
    volvogirl SuperUser ✭✭✭✭
    You might want to look into Savings Goals
    How to set up Savings Goals

    How to work with Savings Goals

  • volvogirl
    volvogirl SuperUser ✭✭✭✭
  • SCM1959
    SCM1959 Member
    If I transfer excess funds funds across to my Savings Account and set up Goals accordingly to track those funds, how do I reflect that reduction in positive/rollover Category/Budget balances to ensure I'm not going to spend those funds in my Checking Account?

    For example, if I move $500 that has accumulated as roll over value in my Car Fund over to my Savings Account and create a Goal to track that value, how do I reduce the value of the Car Fund category to ensure I don't inadvertently spend it in the future ...?
  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    You REALLY need to let loose of the "envelope budget" system, and go to a REAL budget system.
    Q Help can assist you in setting that up.
    Q user since DOS version 5
    Now running Quicken Windows Subscription,  Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
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