Tracking money borrowed by, or lent to another person
If you loan a friend or someone some money, you might want to track this in Microsoft Money. There are a number of ways that it can be done, these can depend on the nature of the loan.
- Track the money using an asset account - choose to do this if the loan is simple to administer. For example, if you've loaned some money interest free, then this is the simplest way to do it.
If you regularly lend money, then you may wish to use classifications (Article 189) to track who the money is lent to, to allow you to generate better reports.
When setting up this type of account, make a transfer from the account you lent the money from, to this account. As the person who has borrowed the money repays it, then put in transfers from the asset back to the account you receive the money to reflect this.
Doing it this way allows your net worth to be unaltered.
- Use a loan account. Loan accounts can be used to record money lent, as well as money borrowed. This type of account is most suitable for loans which incur interest.
Using a loan account is a lot more complex, but if you are charging for the loan, then you have the ability to see the interest that is chargeable each period of the loan and the time it will take to pay the loan off.
A workthrough of the loan wizard can be found in Article 332.
There are probably other ways of tracking money lent to others - these are the two mechanisms I would use.