Transaction Tags in Moneydance

After making the switch to Moneydance at the beginning of 2010 I discovered a useful feature of the software called “Transaction Tags” (or “Tags” for short).  What are Tags?  Well, the short answer is they provide an alternative way to group transactions beyond the standard categories Moneydance provides.

Why would you use this?  Well, let’s examine a few scenarios.  Let’s say I have a category called Parties.  Let’s go a bit further and say that I threw a backyard BBQ called “Project Velociraptor” in 2011 (which I did) and I placed all the expenses incurred for that party into the Parties category.  Now when I run a category report I see these expenses summed up in the Parties category just as I expect.

Suppose a couple years later I want to throw another party of a similar nature.  I want to see how much it cost me last time, so that I can budget properly.  I could run a category report for Parties for the year 2011 and get my total.  Easy enough.

But, what if I end up also throwing a Halloween party in 2011?  Now I have to try to figure out which transactions belong to the BBQ, and which transactions belong to the Halloween party.  That’s kind of a pain.

I can solve this problem with Tags.  First, I’d create a transaction tag by clicking Tools -> Edit Transaction Tags from the main menu.

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Equity Reporting in Moneydance

One thing Quicken introduced some years back was the ability to associate a liability account to an asset account.  So if you bought a house or a car, for instance, you could associate a corresponding loan account to the asset.  Then Quicken could easily do the math (asset value – liability amount) to determine your equity.

This is useful if you’re contemplating taking out a home equity loan, or maybe selling your house.  You might want to see if you’re upside-down on your car.

Moneydance doesn’t allow you to associate liability accounts with assets.  I liked this feature of Quicken, so I set out to recreate it within Moneydance.

I accomplished this by creating customized net worth reports and graphs.  The graph trends my equity over time, while the report shows me exactly how much equity I have at the time I run the report.

I started by building a standard net worth report.

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Multiple Escrow Payments in Moneydance

Moneydance can track your home’s value as an asset, and it can also track your mortgage as a liability.  When you set up your mortgage in Moneydance it’ll ask you which account you want your escrow payment to transfer into.

If you just want to track the total amount that goes into escrow as an expense, then this is fine.  Just create a category called something like “Mortgage Escrow” and set the loan account to transfer your monthly escrow payment into this category.

However, if you want to track the discreet breakout of each portion of your escrow payment, this poses a problem.  My escrow payment is a combination of my home insurance and my property taxes.  I want to track both of these expenses under Insurance and Taxes categories.

Quicken could do this right from the loan account.  Unfortunately Moneydance can’t.  There is way, however, to make this work in Moneydance.

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Category Reporting in Moneydance

Categories aren’t new to personal finance software.  A category is just a bucket in which to track spending.  You could have categories for Food, Entertainment, Auto, Utilities, and more.  I won’t go into great detail here; you can read the Moneydance documentation for more information.  I’m going to assume you have a rudimentary understanding of what categories are and how they’re used.

The point of this article is to provide examples of useful categories and subcategories, and some tricks on reporting on them.  This is by no means a definitive guide on the subject; rather it’s more of a set of examples to illustrate how I’ve come to use them.

Categories are easy to create.  Click on Tools -> Categories from the main menu.

You’ll be presented with a list of existing categories.  Moneydance also displays the type (Income or Expense), the balance, and the grand total.

One thing to keep in mind is that categories are really just accounts in category’s clothing.  Moneydance presents them as logically different, but functionally they’re the same.  But I don’t want to get off-topic here; it’s not important for this purposes of this article.  It just explains why there are balances in your categories.

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Budgeting With Moneydance

I recently switched from Quicken 2009 to Moneydance 2010 back in February of this year.  Since then I’ve been on sort of a quest to fix our finances.  Part of that quest has been to set a budget and stick to it.  I toyed with budgeting in Quicken a few years back but back then I was trying to budget each subcategory and, since I have so many, I found that difficult and ultimately useless.

So I thought I’d give Moneydance’s budgeting features a go and see what happened.  First though a bit of a disclaimer: this isn’t intended to be a tutorial per se; rather this is an account of how I use the software.  That said, if you find that this information is helpful then all the better.  Also, this article assumes that you have a working knowledge of the software; for example, you have one or more accounts set up and have entered transactions that are assigned to one or more categories.  Hopefully you also have at least a few subcategories set up too.  It’s also a good idea to first read the instructions for the budgeting component of Moneydance, located here.

Creating A Budget

To create a budget you first choose “Budget Manager” from the “Tools” menu.  Then click the “New” button.  You’ll see this window:

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