Transfer funds between budget categories

JerWin

I was trying to find out how this is possible and found a lot about transferring between "accounts". But what I want to be able to do is transfer between "categories" within the "Planning" section of budgeting. This discussion came closest: https://community.quicken.com/discussion/7857899/budgeting-moving-rollover-amounts-between-categories (don't know how to make that a hyperlink).
Basically it looks like there is not a means of "transferring" funds between categories.
I wanted to reply to the above discussion, but it was closed, so I thought I would start a new one. And I hope it is helpful.
Scenario - I overspent in one category A by 100, but underspent in another category B by 100. How do I move the extra funds from B to A?
The workaround for me is to go to the "Planning" tab and manually adjust the "Allocated Budget" to subtract 100 from B and add 100 to A. So if A is normally 3oo, then this adjustment makes it 400, while if B is normally 200, I would change that to 100. In essence you have just taken funds from B and moved them to A. You can do this for the month that shows the lesser rollover amount, or go to the previous month, where the overage occurred, and adjust A and B there. Doing this manually for a given month does not seem to affect carrying the usual budget amounts to subsequent months of the year.

JerWin

PS, you can also use this if you have a "savings" type category and want to move some of that to a category from which you want to spend it. Example: Savings has 3000 and Auto Repair has 1000, but you need 2000 in Auto Repair. If you are normally allocating 1oo/month to savings and 100/month to Auto Repair, in the Allocated Budget column for Savings you would put a [negative] -900, while in the Auto Repair category you would put1000 (the usual 100/month plus 900 = 1000). This 1000 will add to the 1000 that is there already to make 2000 available for the repair. The Savings will then drop to 2100 (since you did not include the usual 100/month). This example limps a little but gives the basic picture.

Sherlock

A budget is plan.  If you're not following the plan, the plan is not going to work.  If you have a tight budget and find that you're spending more than the amount you've allocated for a category, you have only two choices: reduce the spending on the category or reduce the spending on other categories.   If you think the $100 overspending on category A was a one-off and you'll be spending $100 less going forward in the year, I wouldn't change the budget at all.  Over time, you should approach the amount you budgeted for category A for the year.  

Note: Your workaround is to reduce spending in other categories.

Chris_QPW

You are describing what is called envelope budgeting.  Quicken doesn't support that.  Some people have come up with schemes to work around that, but I have always found their explanations on how they do it very confusing.

Personally, I don't believe in this kind of budgeting.  To me a budget is a prediction of what you think you are going to spend on a given category.  No one is perfect at this, so to expect that can "balance" it defeats what I think is the major reason for doing a budget like this in the first place.

The budget teaches you how good you are about predicting such things, and hopefully you will learn how to do it better in the future.  By moving things around when you didn't get it right you are removing the "learning" that you might have got from it.

Note that not only is this a learning experience about can you predict the amounts you are going to spend in a given category, it is also a learning experience about if you have pick the right categories in the first place.  If there is some spending that always seem to "popup" or surprise you, then maybe the actual category should be something like "Unexpected Expenses".

Sherlock

Chris_QPW said:

You are describing what is called envelope budgeting.  Quicken doesn't support that.  Some people have come up with schemes to work around that, but I have always found their explanations on how they do it very confusing.

Personally, I don't believe in this kind of budgeting.  To me a budget is a prediction of what you think you are going to spend on a given category.  No one is perfect at this, so to expect that can "balance" it defeats what I think is the major reason for doing a budget like this in the first place.

The budget teaches you how good you are about predicting such things, and hopefully you will learn how to do it better in the future.  By moving things around when you didn't get it right you are removing the "learning" that you might have got from it.

Note that not only is this a learning experience about can you predict the amounts you are going to spend in a given category, it is also a learning experience about if you have pick the right categories in the first place.  If there is some spending that always seem to "popup" or surprise you, then maybe the actual category should be something like "Unexpected Expenses".

I would not call any of this envelope budgeting.  Envelope budgeting more like saving goals where the budgeted amount is removed from the payment account and placed in a virtual category account in advance so that it is not seen and so should not be spent on something else.  You may still over spend in a category and think it's desirable to reallocate funds to pretend you didn't miss the spending plans you had set.

Chris_QPW

@Sherlock you are correct I looked up the definition, and true envelop budgeting doesn't allow you to transfer between categories.  I was going by what some of the people that have mentioned it on here called it.

So, I'm not sure what to call it.  To me it looks like a psychological trick for people so curb their spending.
It isn't surprising that Savings Goals have been mentioned to try to get this to work in Quicken, which is another psychological trick to keep people from spending money they want for another purpose.

Sherlock

Chris_QPW said:

@Sherlock you are correct I looked up the definition, and true envelop budgeting doesn't allow you to transfer between categories.  I was going by what some of the people that have mentioned it on here called it.

So, I'm not sure what to call it.  To me it looks like a psychological trick for people so curb their spending.
It isn't surprising that Savings Goals have been mentioned to try to get this to work in Quicken, which is another psychological trick to keep people from spending money they want for another purpose.

To me, this is a question of what you do when things aren't going exactly to plan.  There is no benefit to retroactively changing plans but it may be beneficial to correct future plans based upon what has actually happened. 

Chris_QPW

I think the problem how all this is supposed to work comes from the fact that there are at least three different opinions on what "a budget" means.

• The standard term (and the one Quicken and I use) is a plan for your spending.  When things don't go as planned you use the information provided to make adjustments for the future.  There isn't any way to change the past, and changing it in Quicken is just a way to cover up the fact that you are human and aren't perfect at predicting the future, but it makes people feel better.
• Some people think it is a cash flow system.
• And some people think it is a way to inform people about their spending and guide them to do better with their spending.  As in a way to get them to control their out of control spending.

The last one is like the "Snowball" approach to paying off your debits.
Mathematically one should pay off the loan with the highest interest first, but the Snowball approach says that they should pay off the smallest one first.  The reason is if you are paying off the largest one it will seem to move more slowly towards being paid off than if you are paying off the smallest.  The point is to "reward" the good behavior as much as possible.  And this does work.

Being able to move money around in budget categories really only has benefit psychologically.

It also makes one wonder about what the true purpose of the budget is.
If you give a contractor a $20,000 budget to renovate a kitchen, than other checking to make sure that they aren't purposely over charging on some items, you really don't care if they move the money around in the different categories.

So, if this was being done in Quicken the only numbers you would really care about are the totals.

Ultimately it really depends on what the goal is for the budget.

I personally have never budgeted.  I have never had a use for them.