Budget Information

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Background Information about Budgets

There has been quite a lot of talk in the forums about Budgets. Mainly because the budgeting capabilities of Moneydance are rudimentary at best. Which has led to a plethora of extensions, mine (see Extensions) included. I believe that there is also a misunderstanding on how budgets work.

In Moneydance Budgets only work on Categories. Basically you can enter how much expenditure/income you expect on a particular category and then report on actual verses budgeted. These reports use Transaction type 2 and 3 (see Transaction Information) for that reporting.

There are two Styles of budgets. The Old Style that has mixed budgeting intervals and the New Style which sets the budget interval to Weekly, Bi-weekly, Monthly or Annual. With the Old Style you enter your expected income and expenses in a single screen and then you calculate it which creates a set of entries. In my opinion it is not very useful. The New Style allows you to enter different amounts against each category for each time period. This creates a budget which shows budget verses actuals, though the user interface is quite cumbersome.

Moneydance allows you to create Budget Items.

Each Budget Item identifies the following:

• Category being budgeted
• Date range it applies to
• Amount

The date range depends on the type of budget set up. If it is of the New Style then the range will match the period chosen when the budget was created in the Budget Manager. When you update the budget amount on the budget screen, Moneydance will change the Amount on the corresponding Budget Item.

Budgets of the Mixed Style are stored differently and I have not investigated how they work. All I can say is that they too use the Categories.

Though you can Budget income and expenses it is only against the Categories. You can not budget against Accounts. As mentioned in [Accounts Information](Accounts Information) there maybe an Income category for each account, however, no transactions are stored against them. If you budget against these categories there will not be any actuals when you report.

Budgeting is really a prediction of income/expense split by category. Budget Reporting is a comparison of actuals (Transactions type 2 and 3) against Budget predictions by category.

Budgeting is not a running budget of your accounts, ie. net worth. You can not determine predicted cash flow from a budget.

My Extension Budget Generator provides a mechanism where you create model of income/expense for each category. You then run the models which create the appropriate entries into your budget. It only works with the New Style budgets. A second extension of mine is the Budget Report which allows you to create budget reports of actuals verses budgets;

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