How to track contributions & transfers to a savings account

Hi @goodmanjosephd:

There is a lot of discussion around this topic in the community with some very good and differing perspectives depending on one’s interests and needs. Some prefer to call both sides of this transaction a transfer (which, in fact, they are.) Others consider savings like any other deduction (and therefore, limitation) of available cash flow. That’s my approach. (A quick search will bring up recent discussions.)

Here is one way to handle your savings activity. There are others, but this works for me:

  1. In your Categories sheet, you’ll need two categories set up like this:

Name: Emergency Savings
Group: Savings
Type: Expense
Hide From Reports: (blank)
Budget: [Set the monthly amounts you choose.]

Name: Transfer
Group: Transfer
Type: Transfer
Hide From Reports: Hide
Budget: $0

  1. If your bank allows it, set up some automatic, monthly transfers from your checking account (or other source account) to your Emergency Savings account, mirroring your monthly budget for your savings goal.

  2. When the monthly transfers to your Emergency Savings account appear in your transactions as deductions from your source account, assign these to your Emergency Savings category. You can then measure this activity against your budget for savings.

  3. When the same transfers appear in your transactions as deposits into your Emergency Savings account, assign these to the Transfer Category: their impact will appear in your Balances sheet.

  4. The opposite is similar. It could work like this: when you need to move money back to your source account from Emergency Savings, the two sides of the transaction will appear in your Transactions Sheet, and you can assign these like this:

Deduction from Emergency Savings: Transfer
Deposit into your Source Account: Emergency Savings.

Don’t be tempted to “cheat” and assign the incoming transfer to the category associated with the reason to withdraw funds in your Emergency Savings account. While this does, in fact, create additional budget space to spend in that category, you will have to rely on your memory about where the funds came from. Also, doing so will overstate your Emergency Savings activity for the time period, since only transfers to that account, but not from it, will appear against your savings budget. (Does this sound like a painful lesson learned from experience? :stuck_out_tongue_closed_eyes:)

Instead, after the transfer, use the Savings Budget tool to move the newly deposited Emergency Savings to the category where its needed. Then you will have a change record created that can tell the story later about where your hard-earned money has gone!

Hope that helps, and congratulations to you for planning to save for emergencies! Very wise.