Can I assign a payment to a different month's budget?

virpio

Hi,

I have a couple of monthly payments that I have budgeted. But sometimes some of the companies that I have set up autopay with take the money a day earlier or a day later. That can result in a payment slipping to a different month. E.g. my car payment is sometimes taken on the last day of the month or sometimes on the first day of the next month. That obviously completely messes up the budget plan.

Is there a way to fix that without changing the payment date of the transaction?

Tom Young

Here's the "accounting" answer to your question.

Set up an asset Account called some like "Prepaid Expenses" or some such.

If the payment date is "early" and results in a double up of the cost in a particular month, then go to that payment and reclassify it to the prepaids Account.  (In the Windows version of Quicken you'd enter "[Prepaid Expenses]" in the Category box for that transaction.  I assume "Mac" versions allow something similar.)

Go to the Prepaid Expenses Account and enter a new transaction with a date (it might only be a day later than the actual payment date) expensing that cost to whatever Category the cost typically uses.  That zeros out the Prepaid Expenses Account and moves the cost into the correct month.  It also means that the cash flow associated with the payment remains in the correct (prior) month.

Jon

I don't see any other way you could fix that in Quicken other than to alter your budget when that happens. Could you move the autopay date a couple of days earlier or later to get it away from the first/last day of the month?

jacobs

You'd have to either move the payment date by a day or two, or adjust your budget to have a double amount in some months and no amount in others.

Or don't get hung up that the budget line is off from time to time. In the end, you should still have 12 monthly payments per year. 

JayBugs

I'd like to point out that "don't get hung up that the anything is off from time to time" is a real fail for finance software. Really the answer is that the budget needs to rollover from month-to-month (and year-to-year) so that the running total is always correct. Once that is implemented then it is fine to 'not get hung up' on a single month's totals when there is a true and correct current status including proper roll-over and prorating of budget for the month...like Quicken Windows does. Now I'll go back to patiently waiting for the Quicken Mac programmers to get rollover in place.

jacobs

Jay, I'll disagree. When you say the budget needs rollover, in an instance like this, it essentially exists. If there are two payments in one month and zero in the next, the year-to-date budget versus actual is correct. I'm not disagreeing with the desirability of budget rollover functionality; I'm only saying that since most people might have one, maybe two, material payments like this, it's pretty easy to be aware of the categories where this can be an issue.

If I were focused on the budget, then I would move the date of the payment by a day or two. This will keep the actual versus budget in line. Then, when doing reconciliation, simply make the ending date the first of the next month instead of the last day of the prior month, so the transaction can be checked off during the reconciliation.

One can certainly argue that such workarounds shouldn't be necessary, but I'm just noting that these are issues which can be worked around, and without a huge amount of inconvenience.  

Tom Young

Here's the "accounting" answer to your question.

Set up an asset Account called some like "Prepaid Expenses" or some such.

If the payment date is "early" and results in a double up of the cost in a particular month, then go to that payment and reclassify it to the prepaids Account.  (In the Windows version of Quicken you'd enter "[Prepaid Expenses]" in the Category box for that transaction.  I assume "Mac" versions allow something similar.)

Go to the Prepaid Expenses Account and enter a new transaction with a date (it might only be a day later than the actual payment date) expensing that cost to whatever Category the cost typically uses.  That zeros out the Prepaid Expenses Account and moves the cost into the correct month.  It also means that the cash flow associated with the payment remains in the correct (prior) month.

UKR

virpio said:

Hi,

I have a couple of monthly payments that I have budgeted. But sometimes some of the companies that I have set up autopay with take the money a day earlier or a day later. That can result in a payment slipping to a different month. E.g. my car payment is sometimes taken on the last day of the month or sometimes on the first day of the next month. That obviously completely messes up the budget plan.

Is there a way to fix that without changing the payment date of the transaction?

Sorry, I may be a little late to the party, but ...

IMHO, what counts in Quicken is the date you record the transaction with. That associates the transaction with the budget month. If the date the transaction actually gets posted to your bank account differs by one or more days, that's really not important. You do not need to adjust transaction dates to when they actually happened. So just record the transaction on the Due Date, when it's supposed to happen and don't sweat the small stuff. Actual payment dates vary all the time, due to weekends or holidays. Close is good enough.

jacobs

Thanks @Tom Young -- and this approach works equally well on Quicken Mac. Most people don't want to be bothered with a separate holding account and reversing transaction, but this is exactly the way it would be done when keeping the books for a business, and it can be easily done in Quicken Mac as Tom explains.

Note that the Prepaid Expenses account is simply an Asset account in Quicken. (It could be a Liability account if you prefer; it works exactly the same either way. But if you're normally shifting expense to a future month -- e.g. Prepaid Expenses -- than an Asset account is technically more correct.) The "early" payment of the bill gets recorded in your checking account as a Transfer to the Prepaid Expenses account; then on the first of the next month, in the Prepaid Expenses account you enter a transaction with the category of the expense. This results in a zero balance in the asset account, and the expense being counted in the proper month.

I have an Asset account I call "Exchange"; accountants might call it "Suspense". It's simply a "holding tank" for income or expenses which you want to move to another time period. Shifting an expense from one month to the next, as is needed in this case, is a perfect use for such an account. I also use it for money owed to me. For instance, if I buy tickets to an event for us and friends, and the friends pay me back later, my purchase transaction is a split of Entertainment expense for the cost of the tickets for us and a Transfer to my Exchange account for the cost of the friends' tickets. When the friends pay me back, the deposit to my checking account is recorded as a Transfer to the Exchange account, which zeros out the Exchange account and completes the handling of the transaction is neither expense nor income at any point. 

virpio

Thanks @"Tom Young" that's exactly what I was looking for. Now, would you usually have a single account like this and only put in the transactions that end up in the wrong month, or would you instead set up one account per 'asset'? E.g. would I set up an account for 'Car Payments' or something and then make all transactions transfer transactions to that and have a recurring monthly transaction in there?

jacobs

@virpio It's really up to you. As I mentioned above, if this is just something that happens some months and not others, and only for one or perhaps two payments, I'd probably keep it simple with one account for these time-shift exchanges. If you have a lot of prepayments like this you're trying to time-shift, you could have dedicated asset accounts for each one if that would help you make sure each one is properly zeroed out each month. But I think one Prepaid Expenses asset account would keep things simpler in your list of accounts than having multiple accounts.