Earmark or "Save" money to set aside for future expense

TrapDoor_CreativeTrapDoor_Creative Member Posts: 2

I'm new to wave and new to accounting, and just trying to figure this all out, so forgive my ignorant question...but is there a way to earmark or "save" some money toward a known future expense? Can I set aside a certain amount for maybe property taxes I know come once a year, and I want to save a portion each month toward that. I see in the buisness account I can set up an account payable to a vendor, but I'm doing this in the personal section and there are no vendors there. How on the personal side do I set some of my total in my savings account apart to earmark it for a known future expense? I just want to be able to see who much I "truly" have in my savings account, after the known future expenses.


  • wagzzwagzz Member Posts: 4

    In accounting we create an "allowance" account. So your example would be "allowance for property taxes" this would be considered a contra cash account.
    Adding an amount to this is considered a credit, and decreases your cash which is a debit balance.

                         Debit | Credit

    Cash 5000
    Allowance 1000

    Leaves you with 4000 in available cash.

    This would mean that you have 4000 in available cash, that other 1000 can be placed in a savings account. If you actually have a savings account, just make it contra to the savings account. You can have as many as you like. Say "allowance for property taxes", "allowance for vacation". You deposit money into the savings account and credit the allowance accounts for the amounts that you want to allocate that money for. In this context the available cash in the savings account should always be zero, because its been allocated to an allowance.

  • TrapDoor_CreativeTrapDoor_Creative Member Posts: 2

    Wagzz, Thank you so much! This sounds like exactly what I want to do. I'm trying to create this contra account, but I don't see anything that says "contra" in the Chart of Accounts. How do I create this account in Wave and make sure that it's marked against the correct bank asset account where the money actually is?

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