Should I include my contributions to my IRA as an 'expense' on my monthly balance sheet?

Question

I keep a spreadsheet of my monthly expenses and incomes. For a while I have been including the $250 I contribute to my IRA monthly as an expense. My rationale: it's no longer play money. Any better ideas?

Answer 1

Good job on keeping a spreadsheet. You are doing much better than many, who haven't a clue where their paycheck goes.

Don't you include your mortgage, car insurance, phone, on the balance sheet? Same logic with the IRA. None of these are "play money," they are fixed amounts that you know you will pay. An exception would be if the IRA contributions are direct deposited to an account, before the paycheck even reaches your checking. In that case, you never even saw the money, so you wouldn't need to account for it.

Answer 2

You should absolutely count savings as an expense every month if you want to total to reconcile to your paycheck. Although it's not really a balance sheet. Your keeping a statement of activities. A balance sheet has a list of assets and liabilities adding up to total net worth. A statement of activities has income and expenses adding up to the net for the month.