Chris, Great question--I'm sure it will generate some discussion.
I do both. I also take a different approach to my Savings account, as well, than that officially prescribed--I don't think it's important that the buckets by "synced" with their respective accounts. I explain why, considering the current relationship between Credit Cards, Checking, and Cash) Consider for a moment how your checking and credit card interact within MoneyWell--I'll assume you have a credit card with which you make many purchases that you pay off every month. The money spent or available in your buckets can normally be spent by either your credit card or your checking account. Where the money is actually located, or how it was spent, is transparent to you. If you spent $500 on groceries last month, as long as that was all that you had planned to spend, it makes little difference as to whether you used funds in your checking account or charged your credit card, or a combination, to make the purchase. When you stay below your planned amount, which is based on your income deposited into your checking account, you can be guaranteed that you'll have enough to pay off your credit card each month if you didn't spend more than you allowed in your buckets. You might add a Cash account to the above duet, making a triad of accounts that equally account for all the money in your buckets. Along with this, I add one Savings account. Therefore, in my setup, all the money that I have assigned to buckets can be found somewhere between Savings, Checking, Credit Card, or a Cash account. It matters very little to me where my grocery money is "stored." If my checking account gets low, I can transfer funds from Savings to cover. My bank will also automatically draft my Savings account if I overdraw Checking for no charge. If I don't have enough money in Checking to pay my Credit card, I'll move that money from Savings to Checking first. In this way, I treat Savings as a bucket and allow it to accumulate over time. I don't have to worry about "spending" it and moving it when I transfer money to/from Savings. I know approximately how much money I need in Checking every month to cover immediate bills, and then I move the rest to Savings. On the other hand, I treat long-term investments differently. For these accounts, I include the amount I intend to invest in my Spending Plan. Each month, I spend money from the Investments bucket as a transfer from Checking (but it could also be from Savings, or Cash, or, if allowed, Credit Card) to my Investment account, which I also have in my MoneyWell document. Some have suggested tying buckets to accounts (so that you could allocate different kinds of Savings within your Savings account), but to me this unnecessarily complicates the document, and I would not use such a feature it were made available. We don't use this approach when it comes to the interaction between Checking, Credit and Cash. Furthermore, having a fluid relationship between Savings and Checking provides a great way to earn interest income. Consider the $600 insurance payment that is due at the end of the month and you get paid at the beginning of each month. Suppose your Savings account earns APY 5%. If you kept this $600 in Checking in order to pay the bill, you'd lose $36 per year. Instead, if you took short-term bills like this and moved them to Savings, then back to checking for the payment, you can earn interest on your money. Another example is your credit card payment with its 30-day grace period. Suppose you have $2000 of credit card charges throughout a month. Since you have 30-days to pay for these charges before incurring a Finance Charge, the money that you'll use to pay your credit card every month can sit in Savings for the month until you need to pay your bill, yielding as much as $100. Hope this makes sense. Blair On Dec 23, 2008, at 12:05 PM, Chris Larson wrote: > > I'm curious about the way people go about handling their savings in > MoneyWell. I'm thinking one could either let the money build up in a > bucket, or they could allocate income for what they plan on saving > that month to it, but then "spend" it when moving it into the savings > account, leaving the bucket balance at 0 at the end of the month. > I've been taking the latter route lately, just because it can be a > pain dealing with the former if it ever becomes desynced with the > actual contents of the savings account(s). What method do people > prefer, generally? The problem I see with "spending" the savings when > moving it into the account, is trying to remember which accounts have > money which is available to spend in the bucket balances, and which > are "spent" and need to become income again if you want to spend it. > -- > Chris Larson > clarson at kergoth dot com > clarson at mvista dot com > Founder - BitBake, OpenEmbedded, OpenZaurus > Maintainer - Tslib > Software Engineer > MontaVista Software, Inc. > > > --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "No Thirst Software User Forum" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/no-thirst-software?hl=en -~----------~----~----~----~------~----~------~--~---
