Hi All. I have migrated to the savings budget and have a question around income and budget adjustments.
When income comes whether it has been expected or unexpected I have been categorizing that income as income. Then in some situations I have been making a + and - budget adjustment to my categories. lets say I have phone reimbursement come in for $100.00. I have made a “-” budget adjustment to income and then “+” adjustment to the phone category. This seems to work okay, but then the budget for that category gets changed as well which I find a bit confusing. So my question is whether people have been doing this, or if they have just been allocating a portion of the income immediately to the category and not doing the adjustment approach.
Hi @fost9508, for reimbursements, I generally just categorize the income directly to the expense category. I see the logic in how you’re doing it, but like you pointed out I don’t like that it would change the budget.
For any income that is not coming from a regular paycheck e.g. private sales, earned interest, gifted gift cards (yes, I track those!) I do not add that income to my monthly income budget. To utilize that income, transfer it as savings from the income category to wherever I need it. It could go directly to a lagging expense category, but I typically put it into an Emergency Fund or Discretionary Spending category that can be disbursed as needed.
I also do what @matt said regarding reimbursements and credits. For example, if my credit card gives me a credit towards an earlier expense, or if I return a purchase, I will categorize the positive transaction to the related expense’s category, reducing my actual expense for the category.
thanks guys. I had been doing that as well, but thought i would try this + - budget adjustment for a bit and wasn’t too pleased with how it was looking so I wanted to get some feedback. I think i will go back to just categorizing things to their category straight away.