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Let's say I'm saving for a car and I would like to save X amount on a month to month basis, where would I generally put this?

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The answer for this is "it depends".

Normally, you'd indeed see it as an asset, bein an account where you put money into and out of as you need.

On the other hand, if you don't want to include your savings in the book keeping, you can see it as a kind of "special expense". In this case, you should not book it on "profit and loss" (is that the right name of the account?), but directly on the equity account.


I misinterpreted the question. What I told above holds for money which is put onto a separate account.

If you want to logically keep this money away from your equity, you can create an account which, as debts or equity, is on the right side of the balance. You have to manually book the respective amounts onto it and from it.

In this case, this money is "out of your mind". I do that with money which I am saving on contracts of long duration and with my stocks.

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I don't use GNUCash, but in quicken or in "regular" double-entry accounting it would be a transfer from one asset to another. It's not an expense until you actually purchase the car.

I would also note that I do something similar for planned annual expenses (like property tax). In that case, I do a periodic transfer to a separate "escrow" account just for that purpose. In business accounting, the expense would then be amortized over the year, but I don't think you need to deal with that complexity.

The main point is to do whatever makes sense to you and your budget. The fact that you're saving for a car is much more important that how you account for it.

  • This. But unless you set up a different account for it, it will just be in the cash balance. you could get creative with accounting and set up a monthly liability that is saving for the car. you could also add an account for the car. – xyious Nov 28 '18 at 16:19
  • @xyious Sure, you could do that as well. But to me, it's still an asset since I could decide to do something else with it. It's just "earmarked" for a car. I could have a medical emergency and need to use that money for it instead. – D Stanley Nov 28 '18 at 16:32
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If you haven't purchased it yet, it's not an expense, so to answer your title question - Asset. As for the mechanics, there are many options, all of which are basically a variant on envelope budgeting. Here are a couple:

  1. Create a sub-account of a common Asset for the item you're saving for. Say you want to put money asside from your savings account - then create a 'Car Savings' sub-account. You then periodically transfer the portion you want to save from savings into the sub-account. The advantage to this technique is that the Car Savings actually exist in the Savings account, the disadvantage is that it's difficult to allocate 'Car savings' from anything other than the parent account.

  2. Create a separate top level Asset for 'Car Savings'. You can 'transfer' money to it from various Assets. Think of this as an envelope under your bed (which you can actually do if you want to make it 'concrete' and reconcilable). The key here is that the assets you're transfering money from still contain the cash, but your (non-reconciled) balance reflects those assets minus the amount you've allotted for car savings. The advantage to this technique is that you can reserve Car Savings from multiple assets (Checking, Savings, Money Market, etc).

When you purchase the car, you can then transfer the actual money from the actual assets and list it as an expense, then delete the 'Car Savings' (sub)account and transactions. In general, budgeting in GNUCash is not intuitive, but can be made to work with a little effort.

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