Entering Transactions

This tutorial builds upon the earlier two.  If you haven’t yet checked out the Intro to Stacks or Handling Credit Cards you should have a peek at those first.

This tutorial is about entering transactions and transferring money between accounts in Stacks.  Transactions come in two types: income and expense. Now that you’ve created your budget and allocated the incoming money from your accounts you should be in a position to use Stacks to track your expenses.  Let’s start with something simple like buying groceries.

You spent $8 at the supermarket on dry beans, rice and cabbage or maybe it’s $100 on steaks, organic cheese and almond butter.  Either is fine as long as you’re keeping in mind what you’ve budgeted for groceries for the month.  In the end you’ll need to enter it into Stacks.  So go to the Accounts tab and click +New Transaction at the bottom and fill in the fields:

But what if you bought some toilet paper and household cleaners during your trip to Superstore.  That’s not really groceries so you’d like to track that in a different part of your budget.  Maybe you’ve got a Household or Miscellaneous line item and you’d like to use that.  The key is to use the Add Split Component button to breakdown your transaction.  Clicking that button will bring up another tab on the Details section where you can enter the rest of the transaction:

Now you have a transaction that’s $25 for groceries and $15 for miscellaneous items.  Click Add Transaction to add it to the ledger for the account you used. On your Budget tab you’ll see that you’ve spent $25 against your Groceries line item and $15 against the Miscellaneous line item.  Their balances for the month have been reduced accordingly:

Looking at that example you can see what happens when you overspend during the month.  The default behaviour is for Stacks to adjust the available funds for the next month to cover any overspending.  Here we didn’t budget anything for Miscellaneous so we overspent by $15 which puts us in the red for February.

The following is in bold because it’s important …

This brings us to the other type of transaction: income.  Income can be recorded in two ways:  Immediate and Deferred.  Immediate income is available for budgeting immediately in the month that it is recorded. Deferred income is available for budgeting in the next month.  Ideally you want to progress towards deferring all your income for the current month to the following one.  This breaks the paycheck to paycheck cycle and gives you a buffer of one month’s worth of income on hand at all times.  The way to do this is to spend a little less money than perhaps you’re accustomed to and let the money accumulate in the line items from month to month. Eventually you’ll reach a point where you won’t need to budget as much for one of your categories because you’ve built up a balance there already. This will allow you to defer your income to the following month.

Let’s enter an income transaction:

When you add that transaction you’ll see that your Budget screen is updated with the new money.  The Planning Tab still shows that Step 0 is green though since in this example we deferred the income to next month.

If you’re not quite at the stage of deferring all your income to the next month because you have a few items left to cover off for the current month then you can split your income between Immediate and Deferred.  You would create a split transaction like the earlier example at Superstore.

Next up: transfers.  Super simple.  Let’s update our ongoing example to add an On-budget savings account and an Off-budget TFSA (IRA for those of you to the south).  (Our new savings account had $500 in it already and our TFSA was empty).  The new Budget screen looks like this:

Notice the extra $500 available to budget with because of the addition of the new Savings account.  Let’s transfer $300 from My Checking to My Savings.  Go to the Accounts tab and click on “Make a Transfer” at the bottom:

Because these are two On-budget accounts there is no line item needed – no money ever leaves the “On-budget” area.  Now let’s make a transfer of $250 from My Savings to the TFSA account:

After these 2 transfers the Budget screen looks like this:

You can see the $250 overspend on the TFSA line item because we hadn’t budgeted that yet.  Also notice that all the balances on the left have been updated.

In this tutorial we’ve really ignored the Planning tab.  Transferring money into our retirement savings before having a small emergency fund and paying off our credit cards way out of order.  But just for fun let’s have a look at our Savings Rate that’s reported in Step 6 of Planning:

7.1%  … we’ve directed $250 to our retirement savings out of $3500 of income ($1500 starting balance of My Checking, $1500 of income from our job and $500 starting balance of My Savings).  Math checks out.

Next time we’ll fill out our month with transactions and have a look at the various reporting options available in Stacks.