Large, unplanned expense distorts budget

dougj17

I am just starting to use quicken and setup a budget. My question is in regards to a large, one-time expense. I paid for it with a credit card and then transferred money from savings to pay the credit card bill. Now, I am way over budget for that month.

Is there a way to make the transfer from savings look like income or something so that I am still within budget? Any other good tricks that anyone uses?

Jon

There's no way to make a single individual transfer from savings look like income that I know of. You can edit your budget to include all transfers from that savings account in your budget.

But I'm not sure that's a good idea. The fact is, you spent the money. Unless you have been including your deposits to savings as a budgeted expense (which you can also do in your budget), trying to hide the expense now has the effect of taking it completely off the books, which distorts your picture of how much you're actually spending. Either you spent the money in the past while you were saving up for this large expense, or you spent the money now - it has to be one or the other.

dougj17

Thanks, @Jon. I'm not trying to "hide" the expense. I'm trying to offset it with "income" to keep my budget in the green. I would expect that both my income and expenses would be higher than normal when I make such a purchase and pay it off from another real-life account that is also managed in quicken.

I see that if I use a FROM<account>, that it shows in the income section of the budget. That may be what I'm looking for. Thanks.

bmciance

I think you are missing the point of the budget.  If this purchase IS unplanned then you ARE over budget. It sounds to me like you are confusing a budget with a cash flow report.  The cash flow may have come from savings to cover the expense but the fact still remains that it was unplanned and caused you to be over budget. A budget doesn't have to "balance"  

Chris_QPW

bmciance said:

 A budget doesn't have to "balance"  

I think this statement is a really important thing that a lot of people seem to fail to grasp.

You don't get "extra points" for "balancing a budget" and in fact you are doing yourself a disservice, you are "hiding" very important information.

A budget is a prediction of what you think is going to happen.
As you go through the year, you find out how close you came to that prediction by looking at your budget vs your actual spending.

With that information you can hopefully do a better job setting up next year's budget.
For instance, given you "unexpected expense", should you put in a category for unexpected expenses, and fund it with a certain amount?  Or was this really a one-off event that you don't think will happen again?

Note that determining what to do about these kinds of "unexpected expenses" let you know if you are properly planning for the future as far as "do I have enough savings to cover unexpected expenses in the future?" kind of questions.

If you "balance/make your budget green", did you learn to what you needed for the future, or just are happy have a "balanced budget"?

Note even though I talked about it for the year, one might "learn" and fix the rest of the year.  As in learn in the first three months you have underfunded something and change your budget for the rest of the year.  But you aren't trying to "balance the first three months" to make the "problem go away".

Now as @bmciance pointed out cash flow is quite a different subject.  I might have $100,000 in some account, but only $100 in my checking account when a bill comes in for $105.  They aren't going to care about your $100,000 in the other account they are going to bounce the check and charge you a service fee.

Making sure you have the right amount of money in the right accounts at the right time is cashflow.  And that is best done in the projected balance graphs or a cashflow report.

Barbara O'Keeffe

If Doug has the money in Savings, he is planning on the occasional larger than normal expense. That's why he has a Savings Account. What he should be doing is showing those amounts in the Budget as a planned expense when it is moved into Savings (assume it is some every month or so) and a miscellaneous income when it comes back to cover that large expense.

I just run with it as a larger expense one month that will be covered with smaller than normal expenses some other month. The problem is the absolutely poor design of the 1 month budget. Big bars of red or green are less than helpful. Especially when the budgeted amount is in light grey that anyone who is over the age when cataracts start will eventually have problem seeing.

Chris_QPW

Barbara O'Keeffe said:

I just run with it as a larger expense one month that will be covered with smaller than normal expenses some other month. The problem is the absolutely poor design of the 1 month budget. Big bars of red or green are less than helpful. Especially when the budgeted amount is in light grey that anyone who is over the age when cataracts start will eventually have problem seeing.

Being a Windows user I don't know exactly what the Quicken Mac 1 month budget looks like, but I guess it is similar to the "Graph View" of Quicken Windows, and I personally find that view pretty useless.  I always use the annual view.

dougj17

Thanks for your feedback. I may not have explicitly stated this well. Rather than 'balance', I will attempt to setup one budget with my 'base' budget - my normal income and my obligatory, monthly expenses. I was trying to 'neutralize' the discretionary transactions but I will just exclude them from this 'base' budget. That should, hopefully, accomplish what I am trying to do. I really want to see the remainder or discretionary balance each month.

From there, I can create another budget with everything.

Thanks.