Accounting for payment now for a future service (like vacation deposit)

Question

How do you handle an expense that hits the books now, but is for a future service (like a vacation that will occur in the summer)?  My reporting would show that I spent $1000 on vacation this month — let's say February — but I didn't actually take any vacation right now.  I want my reporting to show that I have/had vacation in July (which as of right now is in the future).  Perhaps even more confusing when this bridges one calendar year to the next (pay in one year, vacation in the following year). I could maybe change the transaction date so it is in the future month.  Not sure I like that idea.

DannyB · Accepted Answer

@WMartin

This is what I do for specific future expenses both fixed and flexible.

You mention a vacation expense you incur now for a future planned trip so I'll go with that.

My wife and I budget $6,000/year for travel. This travel takes place at various times through the year, but I'll make and even pay for certain travel expenses prior to the actual travel event, i.e. airfare or perhaps a deposit or full fee on camp sites. So, what I have done is create a Savings Goal that I call [YYYY] Travel Savings. For us the goal amount is $6,000. This goal amount divides neatly into $500/month which is the amount of my monthly contribution. This SG is tied to a real world HYS account at my bank. I make a monthly transfer from our checking account to this saving account in the amount of $500 at the beginning of each month. Once the transfer is completed, I go into the QS Spending Plan and complete the monthly contribution designating the HYS account as the contribute from account.

What this does is spread the "cost" of yearly travels over the whole year and the monthly contribution to the Travel SG ensures that all our travel expenses are accounted for in our Spending Plan month-to-month.

Next, I have a travel rewards focused credit card with the same bank and I use that card exclusively for all our travel expenses. Now, using your example, I make a $1,000 purchase related to the future planned trip today. I use my designated credit card to make the purchase. When this expense shows up on my credit card account and is downloaded into QS I categorize it as Travel, tag it as [XXXX] Travel Saving and a tag for the specific trip the purchase was made for. Then I mark it to be Excluded from the Spending Plan. That last step is important since this is how you will keep this expense from skewing your monthly Spending Plan. You can keep it from skewing your reports by deselecting Travel (or whatever category you use to account for your travel expenses.) when running an expense report. Or you can run a report on your travel expenditures sorted out by tags or by subcategories depending on how you set things up.

When it comes time to pay the balance on the credit card, I pay out of the HYS where I'm saving my travel funds. (I actually have this card set up for auto payment for the full amount with the HYS account as the designated payment account.)

Note: Even though I mark each travel related expense to be excluded from my Spending Plan, these expenses are not ignored in my overall planning and expenses for the year or in a given month since I make a very real checking account balance reducing transfer of funds to a very real savings account increasing balance.

This is probably wordier then necessary but hope that gives you an idea of how to handle current spending on future events without having to mess with the dates of the expenditures in your account register.

DryHeat · Accepted Answer

@WMartin

This question is very similar to one posed by @CHuser yesterday. See here:

https://community.simplifimoney.com/discussion/11629/will-future-dated-transactions-eventually-show-in-the-reminders-tab

Both questions have the same structure:

* You are buying and paying for something now. (For example, a hammer.)
* You don't intend to use that something until some future time. (For example, this summer when you build a shed.)
* You want your financial accounting system to show the expense as related to that future date.

RobWilk · Accepted Answer

I will add that, if you wait until the charge clears, you CAN future date it without it affecting the correct balance (as the balance is not based on cleared transactions,  but reports and spending plan are).  This presumes that when the date hits, it automatically enters as cleared (i haven't tested this).