Should I exclude or include transfers to G-kids custodial accounts?

DannyB

I contribute monthly to the custodial accounts I have set up for each of my grandchildren.

These contributions set up as "Transfers" into their individual accounts and by default these transactions have been excluded from both reports and my Spending Plan.

Now that we have more control over how transfers are handled I'm wondering if I should change these transactions to be included in both reports and the Spending Plan.

Should I include both sides of the transfer or just one side, i.e. the from account side or the to account side?

The rationale for excluding transfers is that transfers are moving money around between accounts but this movement doesn't change or impact net worth. In the case of these transfers, they do affect my net worth since I am transferring some of my net worth to my grandchildren and it is no longer part of my net worth - thus the question.

Thanks for any feedback on this.

Coach Natalie

Hey @DannyB!

If the transfers reduce your net worth, I'd personally count them as an expense. However, you won't see transactions with a Transfer Category in Reports at all.

https://community.simplifimoney.com/discussion/4769/ability-to-include-transfers-in-reports-edited

If you do decide to include these transfers as expenses in the Spending Plan, you'd want to ignore the money in side and include the money out side so just the expense portion is counted. If you include both sides of a Linked Transfer, the amounts would just offset each other and you'd end up with $0.

I hope this helps!

-Coach Natalie

Flopbot

@DannyB , I don't have a lot of wisdom here. However, I'll chime in that I suspect - more at a gut level - that you should hide one side (the custodial account) and not hide the other side (your bank account). This recent post (click here) helped me to understand the Transfers bucket in the Spending Plan a bit more. My main takeaway from my initial reading of the post replies is that "It depends on whether you want to track your ____ payments as an expense."

In my case with a CC payment, since the individual transactions are already logged as expenses when they first occur, then the subsequent CC payment transfer should be hidden on both sides so it doesn't get viewed as an expense. If I wanted it to be categorized as an expense, then unhide one side - not fully sure which side or why, yet.

In your case with your custodial account, I'd think of it as the money out is a part of your monthly budgeted spending so, unless it's tracked elsewhere as an expense, then you'd want to see it here - by unhiding one side.

All that said, @Coach Natalie has much better advice and understanding than me.

DannyB

OK, I changed the xfers to the custodial accounts to be included in the Spending Plan and reports from the out side. Now to see how this impacts my plan.

Update: Including the out side of these transactions definitely impacts my Spending Plan by reducing "available" as it should. This will give me a more accurate accounting month-to-month as these transfers definitely reduce our net worth since UTMA accounts are "transfer of wealth" instruments and gifts to these accounts are irrevocable.