The short answer is this:

Figure out your projected income and proposed expenses by category. Look as
far into the future as you want, but Money deals real well with one year
windows. Make sure that Income - Savings - Expenses - transfers to
liabilities > = $0. If it's > =$0, then you know your plan will build, or at
least not destroy, wealth. Note also that if you, say, want to save enough
cash between now and five years from now to buy, say, a car with cash in
that fifth year, you have to factor that in in the fifth year and make sure
that the FIVE YEAR budget is still positive.

Now, track income and expenses to those proposed amounts. As long as you
meet projections/proposed expenses, you DON'T NEED TO WORRY FOR A
MILLI-MOMENT if that $1 bill in your pocket should really be in the cookie
jar for buying that car five years from now or in the cookie jar for this
winter's vacation. It will all work out in the end. If you spend more or
earn less, bad things will result. If spending is high one month and low the
next month and income high one month and low the next month but both still
add up to the projected amounts or better (more income/less expenses) over
time, it will still work out in the end.

Now, that's the simplified static case. It just answers the question: can
you execute the plan and not go broke in the period of the budget.

Where things get more complicated is if you are not starting out cash rich
and want the vacation and the car this year not in five years. This is not a
"budget" question. It's a cash flow question. (If you are, say, paying
interest on the money for the car now vs. then, that cost is an expense and
should be budgeted.) Think of budget as the strategic plan and cash flow as
the tactical realities it takes to execute the strategy.

Money provides decent tools to deal with collecting the data on where the
money is coming from and going to. It also provides decent tools to work
cash flow forecasting.

Here's where things get dicey with ALL of Money's plethora of budget models:
they just aren't flexible enough to deal with the fact that I want a
24-month budget with budget amounts that vary by month and you want one that
can reflect the fifth year purchase of the car with cash. So with any of the
models, you have to invest the time and effort to understand what they are
doing and how and why and make the adaptations to make it work for your
case. Excel is frequently a handy add-on to Money.

So what do most people want? They want an easier solution. So they latch
onto things like "envelope" and "cookie jar" and "60% solution" (the Money
Simple Way du jour). But the problem never stops being the same: Income -
Savings - Expenses - transfers to liabilities > = $0.

The reasons I do not think "cookie jar" is a good tool are a) it allows you
to ignore the basic problem (Income - Savings - Expenses - transfers to
liabilities > = $0), and b) it encourages and/or masks inefficient use of
resources ("I put $1 in the vacation cookie jar, aren't I smart?" when you
paid $1 in interest costs elsewhere in order to do it--if you'd
planned/budgeted to save the $1 later, you could have saved more by avoiding
the interest costs now).

I suppose that's not a short answer. And that's why I usually avoid getting
involved in budget threads. The simple answers are inadequate to the problem
at hand and the good answers are not trivially simple.

<rarun9[at]gmail.com> wrote in message
news:1193696816.390282.314630[at]y27g2000pre.googlegroups.com...
- quote -

On Oct 26, 2:21 pm, "Dick Watson" <littlegreenge...[at]mind-enufalready-
spring.com> wrote:
- quote -

Dick, I too am looking into setting up a budget and working with it in
a manner similar to envelope budgeting that would require subaccounts.
I am intrigued by your statement that you have tried to convince
others regarding not using this approach and using a different one.
What would a different method be? I am particularly interested in
moving to a model where money is putaway before spending it for
earmarked purposes, and I'd like to then have the ability to
reallocate funds in order to accomodate unforseen overages in some
categories.

Is there a better way of managing my finances? How?

The short answer is no. Money does not support "cookie jar accounting"
models like subaccounts. Money in Money is money. All created equal. I'd
give you a longer answer if there was one that was any good. There isn't.
I'd try to convince you that subaccounts are all about behavior modification
and not about personal financial management, but I know better from having
tried that on previous posters with the same question.

See also http://umpmfaq.info/faqdb.php?q=113.

"Ricky" <Ricky[at]discussions.microsoft.com> wrote in message
news:FC47E90F-764B-49F8-9549-7B431702FB02[at]microsoft.com...
- quote -

How about using categories and/or classes for this. e.g. Savings:Christmas,
Savings:Vacation, etc.


On Fri, 26 Oct 2007 11:40:03 -0700, Ricky <Ricky[at]discussions.microsoft.comwrote:

- quote -

Hi,
I would like to be able to create sub-accounts in Microsoft Money 2004. The
intention is to transfer money to various 'Saves' sub-accounts which are
still calculated within the main account.
Is this possible?
Help please.