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Did You Know...
Family Law Software can calculate child support guideline amounts in 21 states.
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Question: What is Accumulated Savings?
Answer: In real life, when there is positive net cash flow at the end of the year, it is reinvested.
The accumulated savings account is that reinvestment account.
In real life, those funds are typically invest in a portfolio.
In the software, that happens as well. The accumulated savings account is invested in a portfolio of income and appreciation there and assets. You can see the composition of returns from that investment on the Assumptions screen.
In real life, the investments on those returns yield some taxable income.
In the software, that happens as well. That income appears on the budget and cash flow reports as "Income On Accumulated Savings."
In real life, if the person has negative cash flow and no liquid assets, then the person borrows.
In the software, this happens as well. Net borrowing is represented by a negative accumulated savings account.
In real life, a person pays interest on that borrowing.
In the software, this happens as well. That interest appears on the budget and cash flow reports as "Accumulated Debt Interest Expense."
There is a report among the key reports called "Accumulated Savings." In that report, you can follow through in detail the contributions into and withdrawals from that account.
In real life, if you have to cover negative cash flow and you do have liquid assets, you sell those assets.
In the software, this happens as well. The call such sales "liquidations." In this case, both parties' have liquidations of their IRAs in 2010. You can see information about the liquidations on the following reports:
- Liquidations to Cover Negative Cash Flow
- Financial Investment Liquidation
- IRA/401 (K) Liquidation