Savings Goals reduce portfolio--any way to change this?



Brand new user here (Quicken for Windows). I tried setting up Savings Goals, but if I fund them with an investment account, they reduce the balance of that account. This seems to be by design—the idea is to "hide money" so you don't spend it, I guess—but it completely breaks the ability to track net worth and investments, which was one of my reasons for choosing Quicken. Now I have totally wrong amounts listed in my investment portfolio, including the performance charts (e.g., if I assign $10,000 to a savings goal, it looks like my investments just lost $10,000).

Is there any way to use Savings Goals that doesn't affect your portfolio balances?

If not, do people have other strategies for keeping track of how much they have saved for various long-term goals (e.g., new house, new car, retirement)?



  • Chris_QPW
    Chris_QPW Member ✭✭✭✭
    edited May 24

    I'm sort of amazed that you were able to use an investment account for funding a Savings Goal, but would consider that a "they didn't think of it, or they would have blocked it", kind of problem.

    I can see that there is a lot of possible can of worms out there now that you mention this. For instance, maybe someone has the idea of using a credit card for funding a Savings Goal.

    The investment accounts are very different from the checking and savings accounts. And they have the features to support funding Savings Goals, investment accounts don't.

    For retirement and maybe for some of the other long-time goals the standard tool to use would be the Lifetime Planner. It is on the Planning tab.

    The thing that is definitely different about Savings Goals over any other kind of system like the Lifetime Planner is that the Savings Goals "hide money".

    Another thing people would use for short term savings like for the year is use the budget, which is also on the Planning tab.

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  • Tom Young
    Tom Young SuperUser ✭✭✭✭✭

    I suppose if you want to use Savings Goals with funding from an Investment Account you might be able to use some sort of hybrid model whereby the cash is moved to the Savings Goal Account from the Investment Account, but then immediately replenished using a self-referential "Cash Transferred into Account" action in the same amount.

    A "self-referential" entry in this case is where you increase cash in the Account using the Cash Transferred into Account action but use the same Account into which you're depositing the money as the "From" Account. This bit of trickery will increase the cash in the Account but not affect any other Account in the file. It's how Quicken creates an "Opening Balance" in a new Account you create in Quicken that already has a balance in it at the time of creation.

    Of course when you actually withdraw the money from the Investment Account you'll need to delete the self-referential entries you've created along the line to reaching the goal, but typically that shouldn't be too difficult.

  • blessyou
    blessyou Member ✭✭

    Thanks for the reply and advice! I'll look into the Lifetime Planner tool.

    I think using the budget could make sense for larger expenses that occur somewhat regularly but not monthly, such as annual insurance payment, car repairs, etc. I'm wondering how that interacts with your savings accounts—say you've rolled over a total of $1500 in your insurance budget category and now you want to move it to a savings account until it's time to pay the bill, does Quicken keep track of all that? Will it still show the $1500 in the insurance category?

    I'm coming from an envelope system/YNAB mindset so I'm still working on getting my head around this way of doing accounting. The nice part of that system is that you can move money between accounts without affecting your budget categories, and you don't have to redo the math every time you take out, say $5,000 for an unexpected expense, to check that you still have enough saved up for the other things you'll know you'll need to pay for. You always know how the "pie" of your savings is divided up among your various goals/needs.

  • Chris_QPW
    Chris_QPW Member ✭✭✭✭

    There have been several requests to have Quicken's budgets to support envelope budgeting and some people have even come up with systems (that seem complicated to me) to do that kind of thing in Quicken.

    Here is an idea for that people can vote on by clicking on the triangle below the number.

    Savings Goals still might be what you want, but unfortunately due to the differences of investment accounts, maybe the funding account should be a savings or checking account. Note that for @Tom Young 's suggestion you enter the category as the same as the account you are in surrounded by square brackets. Like if you are in "This Account" then the category would be [This Account]. This syntax tells Quicken to add/remove money as if it comes from somewhere outside of Quicken. In other words, adjust the balance without changing any category or other account's balance.

    Savings Goals are the only way I know of in Quicken to "hide money". Both the budget and the Lifetime Planners show "what it will be if you follow that plan", but never of them actually "store/hide" any amounts.

    One way to look at it is that Quicken tends to mirror the real-world a bit too much for the things like this. In other words, back when I was young, I remember "Christmas accounts". People would literally have a separate account at the bank for that purpose. If that was done, then that would flow into Quicken "unchanged". You would reconcile the accounts separately.

    The problem of course with doing the same thing "manually" as in have a separate offline account and just transfer what you want to save into it, is that when you go to reconcile the original account it will show that money as missing because it doesn't line up with what it actually happening in the real world.

    Savings Goals are actually "Virtual Accounts" where the money is hidden in the account balance but is still in there for the reconcile.

    A budget works differently and needs a different mindset/self-discipline. Note that it is category based, you can include different accounts, but the main system is "categories".

    Let's take a grossly simple example.

    Monthly Income: $1,000

    Monthly Expenses: $700

    Long term Savings: $100

    Savings for Car: $200

    If I only had those four categories and set those as the budget, then in a perfect world I would hit those exact amounts and would know that it will all work out right. In a way I wouldn't have worry about "where is the money for this or that". There is just one "lump of money" and you don't go off spending outside of this budget/plan just because you see the balance of your saving account grow. The main problem with this system isn't "accounting" it is psychological, most people feel better if they can point at a given amount and say that is for "XXX".

    Then there is the fact that we don't live in a perfect world. You will not guess exactly what you are going to spend on any given thing perfectly correctly (hopefully though you will look at what you guessed wrong and update the budget going forward). And then there are the "variable amounts" and the "future amounts".

    The variable amounts are taken care of in the Quicken budget with rollovers. For any given category you can set it as "rollover" or not.

    So, for instance, if "Monthly Expenses" was set to a rollover and on the first month you actually spent $650, then $50 would rollover into the next month. The same would be true of a negative amount if you are using the rollover that rolls over both positive and negative amounts. So, this would "smooth out" this kind of expense. One might start with what they know is their annual average for an expense and then divide that by 12 to get what to set in the budget. And you would track it too see that it in fact is balancing out or not with the rollovers.

    Note that rollovers smooth out of a category, but don't allow for different categories that have surpluses to flow into categories that have negatives. That would be envelop budgeting. There is a lot of psychology that here where one system will work for a given person over another. One might think that because envelop budgeting has "more options" that it would always be the better choice, but let's stop and evaluate the two. If you use a budget like Quicken's properly, and you see that your assumption about how much you spend on gas is wrong you correct it for the future, and now you have a better understanding of your expenses. On the other hand, if you can move money back and forth between categories, do you really have a good handle on what any given expense is? You have a good working system the "overall budget", but unless you study your expenses in a report or something you really haven't pinned down how much you need for a given expense.

    For "saving up", that really sounds like something that the Savings Goals would be best for. They can be included in the budget.

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  • blessyou
    blessyou Member ✭✭

    Thanks for the detailed answer, it was helpful!