Tracking Savings Account Transfers in the Savings Budget

[aronos]

@ss21

available amount double counting the budget is fixed. So now it reads as Available =11200 + 6550-0 (as the actuals are all zero)

Awesome!

@ss21

While the available amount is fixed, i am still confused how this helps me knowing whether i saved enough this month or which month i dipped in the long term goals category. Like i can can always set my budget as 6550 but that doesnt mean that i can always afford to transfer 6550 to my savings accounts.

Right, so the budget is more about your intentions. You intend to allocate $X to groceries, $X to savings, etc. As long as you are only allocating money that you’re actually receiving, you’ll be fine. But there is another sheet that will give you kind of a “reality check” to make sure you’ve really saved the money as you intended. It’s the Savings and Debt sheet and works alongside your budget sheet using your actual account balances to say, “yeah, you really have the money you’ve allocated for these goals” or not.

@ss21

Also another question is if i add an account like “Betterment” as my savings account how do i categorize the positive dividends or any additional profit that comes into that account (shares repurchase or something). Do i classify that also as “transfer” or should i classify that as savings? Do you recommend not adding those kind of accounts?

There are multiple ways to handle this. What is probably the “most correct” (and least used) way is to categorize all purchases as an expense, and all sales as income. Dividends are definitely income. A dividend reinvestment would be another purchase and thus an expense. You could even go so far as to categorize sales into five different income groups, Long Term Capital Gain, Short Term Capital Gain, Long Term Capital Loss, Short Term Capital Loss, and Untaxable Income. (You could also achieve a similar breakout using tags in your Transaction sheet.)

A lot of people don’t want to deal with these types of transactions though. Another option is to create a category called something like “Investment Activity” and mark them as Hide. Then they sort of “disappear” from the budget but the balances are still tracked for Net Worth calculations.

You can also adopt a hybrid solution, which is what I do. Some types of transactions I hide, some I categorize though I’m probably going to try something closer to the first solution starting in 2021. It would definitely make tax time easier.

I think it’s helpful to think of stocks or other investments as you would any other type of property. If you bought a car, that’s an expense. If you later sold it you have money coming in, so that’s income. It’s easy to not think of it as income because you’re almost certainly going to get less than you paid, but it’s money coming into your account that you’re going to spend on something. There are other ways to handle transactions but in my opinion, this is the most correct.