Discretionary Member Encumbrances

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Discretionary Member Encumbrances

Aaron Laws
In my personal books, my wife and I have discretionary accounts that are
populated when we exercise or eat healthily. We then spend the money as we
like. The money never actually moves from our checking account until it's
spent. How should I be accounting for this in my books? For the two
transaction types: populating the discretionary account and spending money
from that discretionary account, how should they look? What type of account
should the discretionary account be? Thanks!
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Re: Discretionary Member Encumbrances

Mike or Penny Novack-2
On 7/14/2016 9:46 AM, Aaron Laws wrote:
> In my personal books, my wife and I have discretionary accounts that are
> populated when we exercise or eat healthily. We then spend the money as we
> like. The money never actually moves from our checking account until it's
> spent. How should I be accounting for this in my books? For the two
> transaction types: populating the discretionary account and spending money
> from that discretionary account, how should they look? What type of account
> should the discretionary account be? Thanks!
I would handle this the same way I do for organizations that have
restricted funds without a separate bank account for each. You partition
the bank account. For example, here the bank account is checking.

1) Create a parent account named checking. The parent total will show
the actual checking account balance from the bank's point of view, what
you will reconcile against (old sense of that term).
2) Create a child account for checking. It is this account where
deposits will  be made, checks written, bank charges and interest
recorded, AND transfers to and from the restricted accounts.
3) Create child accounts for these "discretionary accounts". You would
transfer in what has been "earned". You would transfer out when such
discretionary amounts are spent. When you are practiced with entering
split transactions to the point able to do two way splits need not be a
separate transaction.

Michael D Novack


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Re: Discretionary Member Encumbrances

Aaron Laws
On Thu, Jul 14, 2016 at 1:30 PM, Mike or Penny Novack <[hidden email]>
wrote:

> On 7/14/2016 9:46 AM, Aaron Laws wrote:
>
>> In my personal books, my wife and I have discretionary accounts that are
>> populated when we exercise or eat healthily. We then spend the money as we
>> like. The money never actually moves from our checking account until it's
>> spent. How should I be accounting for this in my books? For the two
>> transaction types: populating the discretionary account and spending money
>> from that discretionary account, how should they look? What type of
>> account
>> should the discretionary account be? Thanks!
>>
> I would handle this the same way I do for organizations that have
> restricted funds without a separate bank account for each. You partition
> the bank account. For example, here the bank account is checking.
>
> 1) Create a parent account named checking. The parent total will show the
> actual checking account balance from the bank's point of view, what you
> will reconcile against (old sense of that term).
> 2) Create a child account for checking. It is this account where deposits
> will  be made, checks written, bank charges and interest recorded, AND
> transfers to and from the restricted accounts.
> 3) Create child accounts for these "discretionary accounts". You would
> transfer in what has been "earned". You would transfer out when such
> discretionary amounts are spent. When you are practiced with entering split
> transactions to the point able to do two way splits need not be a separate
> transaction.
>
> Michael D Novack
>

So a transaction using the discretionary funds looks like this?

Junk Food                  5
        Credit Card                    5
Checking                   5
        Discretionary                 5

Is this an inappropriate combination of two transactions?
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Re: Discretionary Member Encumbrances

Aaron Laws
>
> On 7/14/2016 9:46 AM, Aaron Laws wrote:
>>
>>> In my personal books, my wife and I have discretionary accounts that are
>>> populated when we exercise or eat healthily. We then spend the money as
>>> we
>>> like. The money never actually moves from our checking account until it's
>>> spent. How should I be accounting for this in my books? For the two
>>> transaction types: populating the discretionary account and spending
>>> money
>>> from that discretionary account, how should they look? What type of
>>> account
>>> should the discretionary account be? Thanks!
>>
>>
Another suggestion I received is to create a liability:Discretionary. When
money is "earned" into the discretionary pile, the transaction looks like
this:

expense:exercise rewards      5
          Discretionary                              5

And when money is spent from it:

Discretionary                 5
             Credit card                     5

This has the added benefit of not hitting other expense accounts ("junk
food" in my previous example). What are everyone's thoughts on this? Thanks
again!
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Re: Discretionary Member Encumbrances

Wm...
On Fri, 15 Jul 2016 08:57:14 -0400, in gmane.comp.gnome.apps.gnucash.user,
Aaron Laws <[hidden email]> wrote:

>>
>> On 7/14/2016 9:46 AM, Aaron Laws wrote:
>>>
>>>> In my personal books, my wife and I have discretionary accounts that are
>>>> populated when we exercise or eat healthily. We then spend the money as
>>>> we
>>>> like. The money never actually moves from our checking account until it's
>>>> spent. How should I be accounting for this in my books? For the two
>>>> transaction types: populating the discretionary account and spending
>>>> money
>>>> from that discretionary account, how should they look? What type of
>>>> account
>>>> should the discretionary account be? Thanks!
>>>
>>>
> Another suggestion I received is to create a liability:Discretionary. When
> money is "earned" into the discretionary pile, the transaction looks like
> this:
>
> expense:exercise rewards      5
>           Discretionary                              5
>
> And when money is spent from it:
>
> Discretionary                 5
>              Credit card                     5
>
> This has the added benefit of not hitting other expense accounts ("junk
> food" in my previous example). What are everyone's thoughts on this? Thanks
> again!

Currency XXX works well and is meant for this sort of thing.  The main
benefit being you get to choose the rate at which non-monetary
healthy-points get converted to real money at the time of use thus avoiding
having to work out whether Ms's 2 marathon runs in a month are worth more
or less than you having a salad rather than a beer for lunch (or however it
works).

--
Wm

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Re: Discretionary Member Encumbrances

Wm...
In reply to this post by Aaron Laws
On Fri, 15 Jul 2016 08:57:14 -0400, in gmane.comp.gnome.apps.gnucash.user,
Aaron Laws <[hidden email]> wrote:

>>
>> On 7/14/2016 9:46 AM, Aaron Laws wrote:
>>>
>>>> In my personal books, my wife and I have discretionary accounts that are
>>>> populated when we exercise or eat healthily. We then spend the money as
>>>> we
>>>> like. The money never actually moves from our checking account until it's
>>>> spent. How should I be accounting for this in my books? For the two
>>>> transaction types: populating the discretionary account and spending
>>>> money
>>>> from that discretionary account, how should they look? What type of
>>>> account
>>>> should the discretionary account be? Thanks!
>>>
>>>
> Another suggestion I received is to create a liability:Discretionary. When
> money is "earned" into the discretionary pile, the transaction looks like
> this:
>
> expense:exercise rewards      5
>           Discretionary                              5
>
> And when money is spent from it:
>
> Discretionary                 5
>              Credit card                     5
>
> This has the added benefit of not hitting other expense accounts ("junk
> food" in my previous example). What are everyone's thoughts on this? Thanks
> again!

Another approach, specific to made up income and expenses (by made up I
mean not involving money in the sense understood by most people external to
a relationship) is to deliberately place the Income and Expense legs under
Equity and then use those accounts to manipulate the Asset and Liability
accounts however you like.  To some extent this is an intellectual exercise
because Income and Expense are variations on Equity anyway, it is just
making it a bit more obvious that arbitrary value rather than money is
involved until money really is involved.

I'm not sure I should be giving myself or my female friend monetary rewards
for certain behaviour ... but maybe that is a difference in our approach to
women.  I wouldn't vote for Trump and you might :)

--
Wm

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