What's the significance of Cashflow Type?

[eric]

As far as I can tell, most of the following Cashflow Types are just descriptive titles, which are handled the same way by FRP.

Here's my understanding.

The following Cashflow Types do trigger special handling:
Taxable Savings
Tax Deferred Savings
Tax Free Savings.

But the remaining Cashflow Types are equivalent in terms of how FRP treats them:
Social Security
Pension
Annuity Income
Misc Income
College Expenses
Travel Expenses
Medical Expenses
Other Expenses

Am I understanding this correctly?

Thanks.

[jimr]

Eric,

That sounds about right. Earlier versions of the planner didn't have the memo field and even now some find that the cash flow sub-types are helpful for keeping track of what's what.

In general, I think in terms of three types of cash flows
1) Income
2) Expense
3) Additions to savings.

The main difference between Income and expense cash flows (other than the sign) is that income flows can be taxable, while expenses aren't.

(from your other post about deductible expenses, it might be that adding a 'deductibility' percent to expenses might not be a bad idea. I hadn't thought of that)