unofficial microsoft.public.money FAQ and A
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Q) How can I note that, say, Automobile : Gasoline expenses applied to a specific car?
A) Sometimes Money users want to be able to differentiate like income or expenses between different objectives. Examples include determining how much is spent on which of your automobiles and what rental income is associated with which rental properties.
Some people think that expanding the categories list is the obvious way to do this. E.g., Automobile : '05 Accord Gasoline. The problem with this approach is that it doesn't scale well. Add another car? Double up the categories by adding Automobile : '06 SL550 Gasoline. Want to track insurance and taxes? Add Insurance : '05 Accord Auto and Taxes : '05 Accord Personal Property. It just gets worse…
Luckily, Money provides an alternate approach called "classification". A classification is a set of two-level tagging just like, but parallel to, Category, with its own name like "Class" or "Tax Applicability". Money allows two degrees of classification. Thus, a given expense can be Category Automobile : Gasoline, and Class My Autos : '05 Accord, and Tax Applicability Tax Year 2006 : Reimbursable Job Expense, all at the same time. This allows you to dice and slice the data readily into all Automobile : Gasoline expenses or all My Autos : '05 Accord expenses or any intersecting set (Automobile : Gasoline for just My Autos : '05 Accord). You can also do things like classify Insurance : Automobile or Taxes : License Plate Ad Valorem Tax to a My Autos : '06 SL550. Most Money reports allow the report to select specific classifications just like they allow selecting specific categories.
What are the downsides? It's more data to collect, but you needn't classify every transaction, just those you'd like to be able to select this way. The classification isn't supported by things like the "guessing" of categories by Payee name when downloading or hand entering transactions. You can't schedule classification of the elements of a Loan Payment, though you can edit a Loan Payment transaction--or fix it when you select Enter in Register--to include classification in the elements. (See "Why can't I schedule a Loan Payment with pre-assigned classification?" for more.) Classification isn't supported in Find and Replace. (Still. How hard could it be, Money team?) It make the two-line register view a three- or four-line proposition. You can't get classification data out to Excel via MoneyLink.
How to get started with Classification? It varies slightly by version and the Help pages should provide definitive advice. In general, find your way to a Categories & Payees screen. In the View section, you will see choices Classification 1 and Classification 2, assuming you haven't setup Classification already. Click on the first one and it will let you name and Enable the first classification set. Once enabled, each transaction entry form or register entry will let you enter the two levels of your classification 1 just as you do with Categories.
You might also want to use classification for things like Vacation : Hawaii 2004, Cell Phone : (888)555-1212, Computer : Desktop IV, Other : Daughter gets married, Property : 123 Republican Circle and so forth.
Q) How do I setup a money market account as a checking account?
A) If you aren't downloading the information from your investment company into Money, you can set it up and manage it as a checking account.
If you are downloading the information, Money will likely insist that the money market account is an investment in an investment account. This will make it harder to manage like a checking account. There is no good solution.
Q) I've entered charges in my credit card account, when I pay the bill aren't I spending twice? Is my card a category or account?
A) These, and many other fundamentally related questions, are frequently asked by people new to personal finance software and formalized accounting methods.
There are two ways to approach this whole issue. Let's describe the more useful, and generally preferred, way first: You setup Accounts, not Categories, for the tools you use to spend money. I.e., setup accounts for your checking account and your credit card account(s).
When you spend on the cards, you record transactions in the credit card account for WHY you spent the money. E.g., $50 to MCI WorldCom for category:subcategory "Utilities:Long Distance."
When you pay the credit card bills, you "Transfer" money from, say, your Checking Account to your Visa Account. Paying a bill like this is not an expense. It's just taking money you have and applying it to expenses (i.e., liabilities) you already incurred--hence the transfer. The special category "Credit Card Payment" is just a less confusing (but less insightful) way to say "Transfer" and it behaves exactly the same except you can't create a scheduled "Credit Card Payment" but you can create a scheduled "Transfer" and it works exactly the same. M05 came along and added a new Expense Category "Credit Card Payments/Transfer" just to mess with anybody who is just starting to understand this stuff. As Cal Learner--MVP recommended, the best thing to do is probably to delete this category. It just causes confusion.
The second way, if you are not ready to dive in just yet, is to categorize the entire payment to the credit card as "Miscellaneous" and not worry about what, in turn, the credit card charges were for. In this scenario you don't even have to setup the credit card as a separate Account. If you really want to use Money to understand where the money comes from and goes to, don't do it this way; it masks what you are really spending the money for.
Money provides an intermediate path that can be simple to start while you are getting up and running and can easily morph into the recommended method. When you create the account, tell it you want to "AutoBalance" the account. (This is the same as the radio buttons "Account tracking: I want to track individual charges/Just track the amount I owe" on the Account Details page.) When AutoBalance is enabled, a "Credit Card Payment:[credit card account]" or the more normative "Transfer:[credit card account]" will popup a dialog box to balance the account. It will also do automagically what was outlined above as a manual task: it will enter an account adjustment transaction to expense the entire balance as "Miscellaneous."
There is much more on this in Help, the Help videos, Audio Help, and the book that came with Money. Also look at the sample file. The key hurdles for many people to cross are that: 1) Accounts are HOW you spend/receive money and are where individual expense and income transactions are recorded. 2) Categories and Subcategories are WHY you spend/receive money and are recorded as transactions in accounts. 3) Transfer is how you move Money from one account (say a cash account of which checking is one type) to another (say a liability account of which credit card is one type).
Q) My Credit Card Payments don't show up in Spending Reports--how come?
A) See the answer to the question "I've entered charges in my credit card account, when I pay the bill aren't I spending twice? Is my card a category or account?"
Q) When should I create an Account instead of a Payee? Aren't Payees just Accounts? Or is my Payee really a Category?
A) An Account in Money allows recording of transactions with credits and debits to a balance carried forward. Accounts are places to group transactions that frequently reflect some of your real world accounts like checking, savings, and revolving credit card accounts.
Payees are people or institutions you interact with financially. The simplest example is the name you put in a Pay To on a check. That's always a payee. Your employer who pays you is technically a Payer, but Money always calls Payers Payees. A Payee in Money is a name with optional attributes like address information, phone numbers and account numbers. Payees are typically used to record information about people and businesses you regularly pay or receive money from. Examples might include a grocery store, a utility company, an ISP and so on.
Not all Payees you enter transactions for need to be Payees explicitly listed on the Payees page. (Accounts & Bills|Categories & Payees|Payees in M02.) See answer to question "Why do I have to create an entry in the Payees every time I spend money somewhere new?" for more information.
Sometimes you have accounts that are associated with a Payee and maybe this is also an Account in Money, but by no means always. The determining factor tends to be whether the account you have with a Payee involves its own transactions and a standing balance from month to month. Credit cards are almost always best treated as Money Accounts. Accounts like the account your plumber has for you and the accounts you have with your utility companies rarely need their own Money Accounts.
The name of a Payee and an Account in Money are occasionally the same.
Categories are ways to assign income and expense to, for lack of a better word, reasons for the income or expense. Categories could include Wage & Salary:Bonus, Food:Groceries, Utilities:Garbage Pickup.
Examples:
I charge $55.00 for Category "Food:Groceries" to my Discover credit card account. I enter a transaction for $55.00 for Food:Groceries in my Money "Discover" Account, which is a Money Account of type "Credit Card." I pay the Payee "Discover" $1,234.56 for the Food:Groceries, among other things, by entering another, separate, transaction in my "Checking" Account in Money using the Special Category "Transfer:Discover" which moves money from one Account to the other.
I pay my Payee "Xcel Energy" for $123.45 of Category "Utilities:Gas" and $65.43 of Category "Utilities Electricity" by entering a split transaction in my Money "Checking" Account. I include my account number for my Xcel Energy account (which is not a Money Account) in the Memo field of the check.
Q) Why don't my car Loan Payments show up as an expense in monthly expense reports?
A) The short answer is that the loan payments really aren't expenses--only the interest portion is an expense. The expense happened when you bought the car. The expense continues to happen as you pay the interest each month for the money you are still borrowing to pay for the car.
If you really want the payment to look like an expense every month, then do not setup a loan account in Money and use an expense category like Automobile:Payments. You may have to create this category.
Money (per standard accounting and personal finance management practice) tries to manage cash flow (like the principal component of your loan payments) as a separate issue from income and expense (like buying the car and paying rent on the money you borrowed to buy the car). It takes some getting used to but it is a much better approach to managing your money since it recognizes expenses when they occur and doesn't let simple cash flow mask where you are really spending money.
See also the answer to "My Credit Card Payments don't show up in Spending Reports--how come?"
Please see this disclaimer if you are using Money 2005 or this comment if you are using Money 2006.
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Last update: 10 December 2006 |
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