Money from homeowners insurance?
I just got the money from my insurance claim for replacing the roof. Should I put this money into To be Budgeted? It makes my income seem a higher then it is, plus I'm going to immediately use it to fund my "Maint, Repairs" category. So I was thinking of skipping "To be Budgeted" Is it better for all income to go through "To be Budgeted"?
If insurance has paid you $X, presumably this was to cover a quote for said roof repairs that was also $X.
I would categorise the inflow into the same category the roof repair costs came out of.
I find it weird they paid you directly instead of paying the contractor. Maybe it works differently in the US (took a guess at the country because you use the term homeowners insurance)?
If this is some other scenario where they give you $X but you only had to spend $y and there's some extra money then i would do a split transaction. cover $y as an inflow to that category and the rest is an inflow as TBB. yes is makes your income seem high but you have to remember that it is truly increasing your available money. If you were to inflow it directly into the "Maint, Repairs" category then you are going to see the impact of that in the future when it says your average spending is less than it actually was.
Hello, Green Leaf
I'd like to offer a dissenting opinion on how to treat insurance disbursements. I used to inflow insurance payments directly to the related category, but now I prefer to inflow insurance claim payments as inflow: TBB.
I still categorize some inflows direct to category, but I reserve the inflow direct to category for the Rs: rebates, returns, reimbursements, and refunds (and occasionally for pass-throughs that aren't my funds, such as when one sibling sends me an e-transfer to use to pay another sibling's rent, which I tend to view as the reimbursement before the expense)
I want my reports to show me how much I actually spent on those expenses that are eligible for insurance claims -- such as home repair, medical and dental expenses, car repairs -- and I also want to see how much I received from the insurance policy/claim as a separate line item.
When I used to inflow directly to the medical category, the specific example that caused me to change my method, it resulted in a number that is net spent. I grew uneasy because net spent gave me a false sense of how much I need to plan for in retirement or if a change of employment to an employer who provides different benefits could leave me unprepared. (I'm in Canada, and our mix of publicly funded vs employer-provided or privately-purchase supplemental insurance can really obfuscate the true costs.) Also, medical/dental expenses can be tax deductible if it reaches a certain percentage of taxable income over any consecutive 12-month period, and being able to see how much that is in the reports is kind of helpful. As I near retirement, I also want a realistic sense of the expenses before insurance payments, so separating the outflows from the inflows really helps to provide the raw numbers. It will enable me to assess and choose the supplemental plan coverage I'll need in retirement.
After I made the change to inflow: TBB, I was actually shocked when I saw the total I was spending on wellness, health, medical, and dental.