As a fan of tracking my finances electronically, I've paid attention to GnuCash for quite a while. In the past, it wasn't ready for my needs since it didn't automatically import finances from my bank. That has changed though. I was happy to recently successfully download bank transactions with the latest GnuCash and I decided to go ahead and make the switch for good.
There are a few reasons GnuCash is better than a number of proprietary alternatives. GnuCash is Open Source Software and can be downloaded and used without purchasing anything. You don't have to pay extra to unlock more advanced features. You don't have to pay anything at all! Speaking of the advanced features, you can track stock prices and investment accounts in addition to normal cash based accounts. Also, GnuCash uses a double entry accounting style that can be used to do your accounting in a GAAP compliant fashion.
Anyway, that brings me to my reason for writing this post. I have been somewhat dissatisfied with the budget tracking abilities of other software. I've been using Quicken for years and have found that it's budget features provide a disincentive for my wife and I to actually continually use them. Here are a few of the problems:
- Budgets don't accumulate money
Lets say you want to save for a vacation and you'd like to budget $300 a month so that after 6 months you have $1800 to go on your vacation. That works fine if your six months fall within a calendar year. You can run a budget report and see how much money you have in that budget. If you happen to cross years however, you'll have to create a new budget and initialize it with amounts from your old budget. Suppose you had 4 months saved. You'd have to put your budget for the new year's January at $1200 and then continue saving $300 for the next couple months. This is not only annoying to do for more than a couple budgets, but it causes your budgeted money for January to exceed your income if you've been saving for a while. This is especially the case when part of your budget includes savings that you don't spend.
- Budgets don't balance
This problem is directly related to the 1st problem. Because you can't accrue a balance in a budget, you can't balance your budget with the money you actually have in a savings account. I created a custom report to do this manually but it was never exact.
- Budget balances are difficult to adjust
Suppose you save $50 a month in one budget and $50 in another. After 6 months, you decide that you didn't need as much money in one account. When do you make the budget adjustment. You can go back and edit every month for the 6 months. You could also make adjustments to a budget all in one month. There isn't a good way to do it though and unless you adjust it tediously every month to reflect what you need, it'll mess up your custom reports that you worked hard on.
Anyway, I don't claim to be an expert at Quicken so you may find my rational unsupported if there are better ways of doing your budget. The point of this however, is that my wife and I didn't have time to adjust our budget every month. Life doesn't follow a preset budget. Sometimes you need to make a purchase and use money from savings or another account. We found that every month we wanted to adjust budget values and it was too time consuming.
Getting back on track, we've found a much better way to track our budget and are happy with GnuCash. The rest of this post shows how we've created budget accounts with GnuCash and how we've solved the problems we had with Quicken.