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So, I'm working on getting a bit better at managing my household finances and am currently working to learn double-entry bookkeeping.

One thing I need to separate out and track a little better is planned / budgeted expenses (where I've budgeted some funds for household projects, such as renovations).

Is there a standard practice for tracking planned expenses via double-entry book-keeping?

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  • Read some more. Expenses can be tricky. Prepaid expenses go in asset, debited from another asset i.e. cash etc and are ticked off as they are expended.
    – DumbCoder
    Oct 15, 2018 at 10:57
  • There is no standard way but you can be creative. Where should the increase in budgeted fund be reflected? Income Statement or Balance Sheet? When you finally make the big purchase, should it be shown on Income Statement, or just show the over/underbudget?
    – base64
    Oct 15, 2018 at 13:17
  • Mainly, I want to separate out the big planned expenses so that they don't obscure the smaller movements that I want to keep an eye on (e.g. ensuring savings are accumulating).
    – Adam Luchjenbroers
    Oct 16, 2018 at 0:30

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One thing I need to separate out and track a little better is planned / budgeted expenses (where I've budgeted some funds for household projects, such as renovations).

Double Entry Book Keeping has nothing to do with budgeting. It's designed to help keep track of expense and assets across multiple accounts.

I believe what your looking for is a a Zero Sum Budget (Sometimes called a Zero Based Budget). Essentially you give each dollar a job, such as rent, groceries, savings, etc. Each month, you should have every dollar allocated so your income - expenses = 0.

Every financial guru on the radio is selling a Zero Sum Budget. Once you actually spend or save the money, that would be where Double Entry Bookkeeping comes in.

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While not conventional, you could create an asset account titled "savings for XXX" and just transfer funds into/out of that account. When you actually spend the money, you then debit the savings account and credit the expense (or asset if a purchase) account.

Normally, though, this type of planning and budgeting is done separately from the accounting system. If you change your mind or decide not to spend the money, you're adding extra work for no benefit.

If you don't want to be specific to a single purchase, you can also just have a "savings" account that you can build up and spend however you want.

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In double entry technique you can create two account

Renovation expenses - Dr.
Provision for renovation - Cr.
of each months allocation.

Provision for renovations - Dr.
Cash/Bank - Cr.
When renovation expenditure happens

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  • Would "Provision for renovation" be an asset account in this scheme?
    – Andrés Mejía
    Apr 5, 2021 at 1:56

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