Two types of events that can complicate household financial management (HFM) are In-outs (where the money is not part of the budget but just passing through the account); and the use of credit cards. The way that these aspects are dealt with in the HFM example previously described, is outlined below.
In/outs occur when, for example, a purchase is made on behalf of someone else and that person pays the money into the account either before or after the payment is made. The example Budget Sheet deals with this by employing two line items: ‘In/out Spends’ and ‘In/out Balance’. The total of all In/out monies going out (negative amounts) and coming in (plus amounts) in a particular month is entered in the ‘In/out Spend’ cell. The In/out Balance cell is calculated by adding this month’s In/out spend amount to last month’s In/out Balance. To keep track of what each amount refers to, a comment is attached to the cell, recording each individual transaction that makes up the cell total.
It may be useful to give specific types of In/outs their own few lines on the spreadsheet. For instance, in the example Budget Sheet, separate lines were provided for the expenses of one of the partners because the employer paid expenses to the same account that the salary was paid to. Hence, train tickets and other travel expenses were paid out piecemeal from the joint account and the money was reimbursed as a total amount at the end of each month. The line items used for this were ‘Expenses Spend’ and ‘Expenses Balance’. The same principle can be applied to any kind of In/out transaction. To make it even clearer in the spreadsheet of what is coming in and going out, the In/Out spend line could be separated into two separate lines – one for ‘Incoming Money’ and one for ‘Outgoing Money’.
Credit card transactions are another potential complication for month by month Budgeting, though they do have one significant benefit; they provide a statement in advance of when payment has to be made, which gives time for the impact on the budget to be assessed, and for any necessary actions to be taken. However, they also bring with them two complications. One is that the statement is paid as a total amount, so that the individual actual amounts that the total is made up of have to be identified and then placed on the budget sheet separately. Secondly, refunds are often made in a different month to when a purchase was made; and sometimes – at least for the credit card used in the example – the refund amounts in line items on the statement are not reflected in the statement total – which can be very confusing.
In the HFM example, the Statement partner allocated each line item of the credit card statement to a particular Item of Expenditure on the budget sheet. Then, when the end of month budgeting was done, the actual credit card amounts were inserted into the relevant cells for the following month when the total credit card bill was to be paid. This meant that, at the monthly budgeting session, a quick review could be done of the following month’s expected expenditure and bank balance in the knowledge that some of the figures were actual outgoings from the credit card.
The way refunds are dealt with by the credit card in question, however, is not something that the couple concerned have been able to find a standard way of dealing with. Instead, the partner who manages statements makes sure that one way or another the refund amounts and associated purchase costs, are reflected somewhere on the budget sheet. Sometimes the In/out facility is used or else a manual note is made which can be referred to when the next statement comes through.