Withdrawal from escrow account shows as insurance expense for the month of January 2024 [Edited]

dtgardner

Withdrawal from escrow account shows as insurance expense for the month of January 2024. which has negative impact on monthly expenses on the budget. How do I correct?

jacobs

So you have a supra escrow account for your mortgage, and when the insurance payment was withdrawn from the account in January, the withdrawal transaction uses the category for insurance — is that what you're seeing? Well, that sounds correct! If your insurance was paid for the year in January then that's when you incurred that expense.

Is your problem that you want to see the insurance expense spread out over 12 months? You have a couple options.

One is to make your budget conform to what happened in the real world, so budget for the entire insurance expense in January and have zero budgeted expense in the other months. In this way you will be on budget in January and subsequent months.

If you really want to spread the expense out over 12 months, even though it was paid in one lump sum, the way to do that would be to create another asset accounts called Prepaid Expenses or something like that. Change the insurance payment transaction in your escrow account to instead have no lcategory and instead a transfer to the Prepaid Expenses account. Then, in the Prepaid Expenses account, create a scheduled monthly transaction to reduce the account balance for 1/12th the total amount, using the insurance category. This way, you'll get 1/12th the insurance amount as an expense each month.