Preface: I am not a spreadsheet person. I am not good at this so I am on a huge learning curve.
Do I need to use “Transfer” types?
Example: We are building up our savings, and we have different categories we are saving towards. Both our Checking & Savings accounts are linked to Tiller.
-I have the Expense “Pet Emergencies (Out)” as a category, where the $20 leaves our Checking Account every month.
-I have the Income “Pet Emergencies (Savings)” as a category where the $20 enters our Savings Account every month.
Don’t these zero each other out? Do I need to use “Transfer” types at all? Or hide anything?
If so, I have zero understanding of how those work and could use some help.
While your net worth may read correctly because they are balancing each other out, things like budgeting won’t work well since you’ll be seeing income and expenses transactions that don’t really exist mixed in with real income and expense transactions. For example, if you transfer $100 from savings to checking so you can pay a pet bill, and then you spend the $100 paying the bill, with your method your budget for pets is going to reflect that you spent $200. By classifying the transfer of funds as a transfer type, it will be filtered from budget consideration, so only the actual expense transaction will be shown.
So if I can ask, how would you go about moving the $20 from your Checking to your Savings, using categories & Transfer types? Would you be able to give me a step by step? My brain’s having a hard time understanding it…
Most people would just mark both of the transactions (out of checking, and into savings) with a category called “Transfer” that is of type “Transfer”. I’m a bit more fussy, I have both “Transfer Out” and “Transfer In” categories, both of type “Transfer” which makes it easier for me to tell if I’m missing a transaction on either side of each transfer (see the Linked Transfers template). With both transfers in a transfer category, they won’t show up in most reports or templates, giving you cleaner results for budgeting information.
One last question, are these Transfers “hidden” anywhere? I would like for my Savings Budget sheet to show I moved the $20, so our budget is accurately funded/dispersed…but I also want my Savings Goal sheet to show that $20 is allocated for the Pet Emergencies fund.
I am also having some confusion with my husbands student loan repayment. We allocated $500 in the budget. We have a transaction showing the money leaving our checking account, and we have the transaction from the Student Loan company showing the $500 paid towards the loan. So I would mark these as Transfers as well?
Savings Budget doesn’t know about your accounts. When you move $20 from one account to another, it’s a transfer, so it doesn’t affect budgets. You’d need to use the ‘Adjust Savings’ tool in the Savings Budget sheet to modify your savings.
I don’t have any loans, so I haven’t had to worry about how to categorize those transactions, but if both accounts are in Tiller, then you’re transferring money between accounts, so they should be transfers. Seems there would be two other transactions from the loan company (the income/expense transactions) showing that some of the money transferred in went towards your interest payment, and some went toward reducing your principle, which would be reflected in a change in your balance for that loan. Maybe someone else with more loan experience can chime in on how they handle these.
On the loans i have, I use the debit from checking as the payment categorizing it as the debt payment since it is a negative amount and then have a transfer category of loan into account since the opposite will usually be a positive going towards the balance of the loan, this transfer stays hidden so it doesnt affect the budget besides the first transaction of a debit from the checking account.
Did the responses from @jpfieber and @bentyre1 help answer your question, @amcelroy09? They are some of the most knowledgeable users in the community and their suggestions align with Tiller best practices.