How do I set up my budget to align with income and expenses?

wpg 51

I want my income and expenses to show in the same month but I don't know how to do this

I receive my income a few days before the start of the month, but it is actually used to pay the next month's expenses. For example, the income I received yesterday will be used to cover March expenses. It is only a problem as it relates to the budget. I don't think I am doing things right and I hope you can help. What I have been doing at Jan 1 is a balance forward entry. This creates a problem in two ways - the budget looks like I had double income in January (the balance forward plus the January deposit) and my year-end budget looks like I only had 11 months' income. I have tried manually changing the deposit date to the 1st day of the month, but then I can't use the scheduled deposits as Quicken only recognizes the date shown when the bank statement is downloaded. I cannot get my actual budget amounts to reflect the actual income received. I guess I could do a journal entry to a "dummy account" to move the income from my chequing account when it is received and then another one to move it back from the dummy account to the chequing account on the 1st of the month. Please let me know if this is the best way of handling my budget issue or if you have a better way of doing it.

Tom Young

"I cannot get my actual budget amounts to reflect the actual income received."

No, you can't get the budget amounts to reflect your own thinking about what you want to see in the budget, as the "actual income" - in the real world - is received a few days before the beginning of each month.

You can "fix" this problem pretty easily doing what you've suggested but the fix, in turn, creates its own problems.

When you receive the income into your bank Account you post the offsetting entry to that deposit into a special Liability Account you create. Name it something like "Deferred Income" or something similar. Then on the first of the month move that Deferred Income balance over to the income Category you use. Problem solved.

But now you have a different problem, an income tax problem in that the Income in Quicken is misstated for income tax purposes. It will be over-stated by the income actually received in the prior December and under-stated for the income actually received in this tax year's December.

But you're the Chief Accountant here so you get to choose what problem you can live with.