Adjustments to Envelopes

Envelopes are eventually going to have balances -- positive or negative -- that we don't like.

As an example, suppose we have a run of bad luck with the car. In addition to new tires, we had a higher than expected repair bill and other expenses, so now the balance in the car expense account is +$1000, meaning the envelope is $1000 overdrawn.

Here are some ways to deal with the situation.

  • Do nothing. Trust that the amount set aside for the car budget will eventually resolve the situation.

  • Realize we are not allocating enough for car expenses. Adjust the budget so that in future months we put more into the car and less someplace else.

  • Do a one-time transfer from another envelope.

As an example of the third option, suppose we have extra money in the home envelope because we haven't had as many home expenses as we budgeted for, and we're willing to move some of the excess over to the car envelope. This transaction will transfer $1000 from home to car:

2024-02-28  move $1K from home to car            ; budget:
    expenses:home                  $1000.00
    expenses:car                  $-1000.00

Note that the signs on the amounts are not intuitive: we are not "adding to" home by "taking from" car. Just the opposite, in fact. The debits and credits on this transaction need to be consistent with other transactions that involve these accounts:

  • the positive amount on the debit to the home account is similar to transactions that debit the home account in a purchase, where it means "take this amount from the envelope"

  • the credit to the car account, indicated by the minus sign, is comparable to credits in other transactions, for example if we return a purchase or when when money is allocated by a budget transaction; it means "we are adding this much money to the envelope"

One other important note: this transaction should be tagged to make sure it is not included in reports that use the traditional definition of the expense account balances.

Dexter can import transactions from a Journal file. In those files tags use the Ledger/hledger format of a tag name followed by a colon. In the database and in shell commands tags are denoted by a hash tag before the tag name.