Budget Double Accounting for Credit Card Transactions [edited]

robvin

My question is around monthly budgets. For instance, I spend $200 on groceries on my credit card and categorize it as such. Then I pay off my credit card balance and end up with a double accounting. One for the groceries and one for the transfer to credit card to pay it off. My expense is then $400. Any suggestions?

Chris_QPW

Paying off your credit card is "budget neutral", as in it shouldn't be in your budget.  It is a transfer from one account to another.  You incurred the expense as soon as you charged it to your credit card.

You should be budgeting the categories no matter if they are paid by credit card or some other way like cash or a check.

If one was to take the approach to budget the payment of the credit card then they would have to give up the ability to budget the individual categories.  You can't have it both ways.

Chris_QPW

Paying off your credit card is "budget neutral", as in it shouldn't be in your budget.  It is a transfer from one account to another.  You incurred the expense as soon as you charged it to your credit card.

You should be budgeting the categories no matter if they are paid by credit card or some other way like cash or a check.

If one was to take the approach to budget the payment of the credit card then they would have to give up the ability to budget the individual categories.  You can't have it both ways.

Chris_QPW

P.S. Note that budgeting isn't "cash flow".  You budget to spend $300 a month on food.  You make sure that you have $500 in you checking account to pay the credit card bill (cash flow).

I use the Projected Balances graph for cash flow.