Spending plan feature can’t handle transfers (edited)

Gnnd

Spending plan feature can’t handle transfers.

This issue is compounded when accounts are not checking, savings, or credit accounts.

If I transfer 1k to a range of accounts, the income after bills page should show 1k in transfers.

SRC54

Transfers are by default not counted as income or expenses. They are excluded from the Spending Plan and Reports.

There is a Spending Plan section where you can see your transfers. It is below Income, Bills and Subscriptions and above Savings Goals. It will show what is excluded and included.

With that said, if you wish to count a transfer as income or expense, you can do so by including it in the Spending Plan and/or Reports.

I hope this helps. If not, please explain what you need your transfers to do.

Gnnd

Hello SRC54.

Thanks for following up on the post.

In summary, if what you say is true, the Spending Plan features design scope is miscalibrated as a budgeting feature. Yes, transfers are not expenses, but they do take cash from the total budget.

Here is an example for you. I have 4,132 available to me after taxes. These are received bi-weekly; in 2066 dollar amounts. I have a linked checking account that this goes into. The day after these amounts hit the checking account, transfers to linked brokerage accounts pull on that deposited cash. Currently, this totals to 500 dollars per month. If the program was processing these correctly, I would have two recurring series for them.

The income after bills and savings should show that I have 500 dollars in transfers going to other linked accounts. Showing me correctly that I have:

3132 Income after bills and savings

1000 Planned Spending

0 Other spending

2132 Available

Why the program can't seem to correctly process this is beyond me or that this was missing from the feature's design scope is beyond me.

IF I am leveraging the wrong feature within Quicken Simplify to capture this part of a budget or if the Spending Plan is not a budgeting tool, then please let me know.

DryHeat

@Gnnd

Spending Plan is a budgeting tool, not a cashflow tool. It compares the money you are taking in each month to the money you are spending each month. But the way it defines those two things confuses some people:

Money you are taking in = This is pretty normal. It mainly looks at the funds that come into your asset accounts (banks, etc) during the month from outside of your own finances. It does not include transfers between your own asset, liability, or credit card accounts

Money you are spending = This is the confusing one because it does not include all the funds that are flowing out of your bank accounts. It does include money paid out of your bank accounts for goods, services, etc. But it does not include money paid (transferred) to other asset, liability, or credit card accounts. Instead, it includes the amounts you have charged on credit cards during the month.

The idea is to give you a handle on your financial behavior, not your financial position. (Your financial position can be seen in the Cash Flow projections.)

By financial behavior, I mean that it shows you how your spending decisions in a month (including bills you have scheduled to pay, etc.) compare to your income that month. It doesn't show you whether you have the money to actually pay your bills (again, see Cash Flow for that), it shows you whether you are controlling your behavior such that your income outpaces your spending.

Some people like the way this works. I do. But some don't.

(Here's another explanation I did a while back:)

https://community.simplifimoney.com/discussion/comment/48613#Comment_48613

RobWilk

Another way I like to look at the spending plan (edit: oops) is that it's a one-month snapshot with many details of the "Net Income" report. If the Spending Plan is negative, you're looking at negative Net Income that month; if the Spending Plan is positive, you've had positive net income. Yes, you can hold aside money in the spending plan (Planned Spending) that you won't spend necessarily, unlike the Net Income report, but that helps you forecast your net income, presuming you plan to make those planned expenses.

SRC54

I will just add to the excellent comments above that if you want to have two recurring transactions instead of one that you can unlink the transfers by just using the generic category:transfer on both sides. This will allow you to keep them separate and keep the accounting right. Of course, Spending Plan will still ignore them as they cancel each other out.

You can then go to the Transfers section of the Spending Plan and add a custom amount of $1000 transfers so that it counts that -$1000 as spending if you wish. I suggest you play around with this. I had to do this for a while with my wife's transfer to Retirement Plan because I didn't have a retirement account in Simplifi as she was retiring and the equity was going to be taken away when they switched her to an annuity. So it went from a transfer to an expense.

The Spending Plan just keeps up with your spending. When you buy goods and services with a credit card you are borrowing money and your payments are paying it back. It isn't really spending unless you pay interest, which is an expense. If you move money from savings to checking, you haven't spent anything although you are planning to do so. In my case, I am probably repaying the credit card.

DryHeat

@SRC54

When you buy goods and services with a credit card you are borrowing money and your payments are paying it back. It isn't really spending unless you pay interest, which is an expense.

That's almost the opposite of how I view it. When you buy with a credit card, you are borrowing money (from the credit card company), but you are spending that money at the same time (with the store or whatever).

It's the second part, the spending, that is important for your Spending Plan budget. Because it is the spending that needs to be controlled to make financial progress.

To see why Spending Plan focuses on CC spending (not payments to the CC), imagine this:

(1) In April you buy a ton of stuff on your CC card but have a low CC payment because you bought very little in March. If the Spending Plan focused on payments to your CC, it would look like you were very responsible in April — when in fact you were spending like crazy.

(2) In May, you buy very little but have a huge CC payment for the ton of stuff you bought in April. If the Spending Plan focused on payments to your CC, it would look like you were a big spender in May — when in fact you were being very careful.

This is what I mean when I say that Spending Plan focuses on current spending behavior, not cash flow.

SRC54

@DryHeat Well, I agree with you that Cash Flow and Spending aren't the same thing, and I can see that people who use credit cards as a spending account rather than a convenience (as I do) might think of the payments as expenses. Which is why I pointed out to GNND a workaround to force the Spending Plan to count it as an expense.

But from a bookkeeping perspective, they are not the same. You are certainly correct that when one incurs a lot of debt one month and pays for it the next month, he has postponed the decrease in his accounts, but one still spent the money the month before. The credit card balance deducts from the net worth in month one, but the payment the next month transfers from an asset account and neither increases nor decreases net worth. So it is not spending. This is another reason why I prefer to pay off my credit card the same month as I incur the expense. I merely use the credit card as a convenience when I order things or if I want to have more legal recourse if something goes wrong. I realize, of course, that not all can do that.

I have friends that purchase everything on credit cards and pay it off the next month. I remember I used to do that with gasoline until I realized I now owed for this month's gasoline and next. I stopped doing that when I was young mainly because I was a teacher and saw I would never be rich so I made up my mind to save money and not pay interest.

I feel so sorry for people who get hooked on credit cards because it must seem impossible to pay it off if you use it to float a high interest loan. At least, when one buys a car or a house, you get an asset to balance it. When you buy groceries and services with a credit card each month especially if you cannot pay it all off, you incur a debt that drops your net worth, and it can develop into a vicious cycle.

None of this is to say that this what the author of this thread was talking about. I think we were both saying that keeping up with Cash Flow is not the purpose of the Spending Plan. But Simplifi's purpose overall is to try to help folks keep a handle on their finances and, one hopes, not squander their resources on debt that will just create more expense and make it harder to build their Net Worth.

Gnnd

Thank y’all for the diligent responses.

I appreciate the help. I still hold that the spending plan should be able to handle cash flow (as y’all call it) as a wholistic view on budgeting and this tool should have some intelligence built into it for user confirmed data cleaning and detection of reoccurring items.

I will try to bridge the gap in capacity by hiding the positive charge in the case of the transfer and the inverse in the case of the credit account for the spending plan.