Budget vs Discretionary Spending

Brad R

I have created a budget. Some bills are paid via a bank account where I can tie the transaction to a category. However, many budget items (e.g., grocery, fuel, gym, etc.) are paid using a credit card. I lump sum pay the credit card (e.g., $1,000) but in doing so, lose the allocations against my budget. I would like to be able to tie those expenses back to my budget. Also, I would like to better differentiate between discretionary, non discretionary and/or one time charges on my credit card. Lets say I have to have a tree cut down on my property and it costs $2,500. I want to be able to reflect that is not a normal or re-occurring cost. Without being able to reconcile my credit card spending against a budget and account for one offs, I can't really tell if my budget is realistic and/or whether I am managing. I am retiring next year and I really want to understand my bills from a non discretionary and discretionary spending.

Bob_L

It sounds like you do not have a separate credit card account set up in quicken? If you set one up you will be able to capture and categorize all your expenditures easily. Controlling actual expenses is the way to control the credit card payment. (The payment to your CC account will be a transfer from your bank account to the credit card account).

bmciance

Hi Brad,

It sounds like you are not recording your credit card charges properly. The payment to the credit card should be a "transfer" transaction from your checking account to your credit card account in Quicken. Also, prior to that you should be either downloading or entering each credit card transaction into this credit card account. This is where you would categorize those transactions so that they hit your budget. The payment to the credit card does not hit your budget, only the individual charges. Doing it this way will allow you to compare your actual charges on the credit card to the budget you created.

mshiggins

Regarding discretionary vs. non-discretionary spending, you can create Category Groups to group various categories, then use the Category Groups in your budget and spending reports. As the other answers pointed out, you will need to set up your credit card accounts in Quicken so you can track that spending along with spending from banking accounts.

Brad R

I have read about the transfer method, but it has not been explained in sufficient detail for me to understand. Lest say my credit card has 30 transactions that total $1,000. These transaction are downloaded into Quicken against the credit card. But, when I pay $1,000 against my credit card and the payment is reconciled, it basically represents a lump sum payment. I don't fully understand the transfer process where the individual charges are reflected against my budget

bmciance

https://community.quicken.com/discussion/comment/20442424#Comment_20442424

It's actually quite simple. When you download the 30 transactions into the credit card account these transactions will each hit a "category" that shows up in your budget. Categories are used for expenses or income. The $1,000 payment of the credit card balance is a transfer from an asset account (your bank checking acct) to a liability account (the credit card account). The transfer has no impact on your budget as you are just moving money from one place to another. In Quicken selecting a category on a transaction shows as just the category name ("Groceries" for example). On the other hand, transfers will show the other account name in square brackets like "[Visa Card]" rather than a category.