I saw a post over at the recently launched Hello, Dollar! website
that asked about the best way to create and use Virtual Accounts in
available financial software. I personally use Quicken and I thought it
might be helpful to outline my method below.Rather then use
categories or classes to keep track of my spending in certain areas, I
create whole other accounts. To do this, I simply go to File
-> New -> New Quicken Account. I then go through the
wizard, creating a "Savings" account (Savings or Cash will work).
I name it to whatever my budget category may be, ie Groceries, and put
it on my list.When my pay check comes, I simply transfer the
month from WF Checking to Groceries. This is the easy part.
This results in the WF Checking balance being appropriate because it
reflects the $XX saved away for Groceries.The second part is tricky. I am going to use real numbers to help with the illustration.As a result of Step 1, here's what we have in our accounts after receiving a $1000 paycheck and transferring $100 to groceries:
WF Checking - $900
Groceries - $100
TOTAL - $1000
The next day, at the grocery store, I spend $35.43. When
I enter this transaction into Quicken, I enter it into my WF Checking
account. I then subtract $35.43 from the transfer transaction I
made to my Groceries account. The result is this:
WF Checking - $900.00
Groceries - $64.57
TOTAL - $964.57 ($1000-$35.43)
A couple of notes about this technique. First of all,
when you reconcile your accounts you have to ignore all the extra
transfers. This isn't that hard. Secondly, you have no way
of knowing that your $35.43 you spent at the Grocery Store came from
your grocery account. I usually put something in the Memo field
to remind me and provide a bit of tracking.
Comments
If you have the Deluxe (or
If you have the Deluxe (or whatever they're branding it as today) edition of Quicken, there's a feature called "Savings Goal" accounts that are designed for exactly this. You can choose from the menu whether to show them in a real account's register, and they're automatically ignored during account reconciliation.
I mark spent money as coming from the real account. At the beginning of the month I have the budget amounts transferred in automatically, and then at the end of the month when reviewing the budget, I transfer the appropriate amount back out. But of course you could do that part differently.
Matt, I understnad you have
Matt,
I understnad you have an investment in Quicken, and perhaps even love the constant challenge and tinkering. But for those who want to get the job done...and move on to other things in their life...you must learn about the easiest and most efficient cashflow system in the universe: The B Word. No joke. Out of habit, you will say to yourself for approximately 3 months or more...."there must be more I have to do". Lee
http://www.thebword.com