How to Track Expenses for a Relative?
We pay a lot of the living expenses for a relative. I see two solutions for tracking these expenses:
SOLUTION 1: I created a Category "Relative Support" so I can flag all these expenses. I can report on those expenses and not intermingle them with our living expenses. They show up as a line item in our expenses.
SOLUTION 2: Create a new Account "Relative Expenses." With this solution I think I would need to create two transactions every time I pay a Relative's bill: 1) move money from the main Checking Account to the Relative Account, then 2) enter the expense transaction in the Relative Account.
Pros & Cons.
Solution 1 is fast and easy. It just requires setting the Category.
Solution 2 requires an extra step to move money from our Checking account to the Relative Support account for each expense. The Relative Support expenses are isolated in a single account. We pay the Relative expenses as we go; we do not move a lump sum to a real Relative Account to cover all expenses. So every time we pay a relative's expense I would need to move that amount to the Relative Account and set the Category to "Auto," "Health Care," "Prescriptions" etc. I could create separate reports on the Relative Account.
What do you experts think is the best approach?
Comments
-
Another option would be to use tags - tag every relative support expense with the "Relative Support" tag. You can create reports that only include transactions with specific tags. This way you could still keep track of what type of expenses you're paying for them since your categories would be unaffected, and you wouldn't have the overhead of a separate account.
0 -
Thanks, Jon. Yes, that's a good third approach. I forgot to mention that I HAVE used Tags for this purpose. I've tagged about 80% as you suggest, but I tapered off using Tags when I started using a dedicated Category more frequently.
0 -
It's definitely not an account that you want to create. And, the problem with tags is that you can't easily assign different tax line items. I'd be a bigger fan of using categories and this is something that I did when I had a rental unit. I created separate categories and appended - Rental to the category name. I could now assign a different tax line item to all transactions in those categories.
Relative Support as a singular category might be too general depending on your finances and reporting concerns. I would be a little more granular…i.e., Housing Expense - Relative, Medical Expense - Relative, Grocery Expense - Relative, Clothing Expense - Relative, etc.
1 -
Thanks, Ralph. I don't need a lot of granularity at this point, so one top-level category is sufficient for now. I could retrofit the granularity in the future if needed. I've added a Note to each line item that tells me what it was for, so reassigning to new sub-categories would go pretty quickly.
0
