Everything you need to know about scenarios in PocketSmith
In PocketSmith, a scenario is a set of scheduled budgets that can be assigned to an account. These budgets create a projected cash forecast with daily closing balances.
'Primary scenarios' are automatically created for each account. These contain your regular budgets, allowing you to forecast the account's balance into the future. 'Secondary scenarios' can be added to model what-if scenarios, helping to make financial decisions ⚖️
In this article
Overview & using scenarios for forecasting
Every account you manage in PocketSmith has a 'primary scenario' of the same name. The primary scenario contains the budgets that have been assigned to that account, and are used to project the account's future balance, or, 'forecast'. An account's primary scenario begins its forecast from the account's current balance.
As such, you can think of a 'primary scenario' as the future state of your bank account. You can see an account's future balances on the Calendar and forecast graph by scheduling upcoming budgets. Seeing potential outcomes allows you to make better financial decisions. To learn more about viewing your forecast balances based on your budgets check out: Using the Calendar and forecast graph
All additional scenarios belonging to an account are called Secondary Scenarios, which can be used to model sets of potential decisions. Read on to learn more about Secondary Scenarios.
Secondary scenarios are used to model 'what-if scenarios' to see how a proposed set of scheduled budgets or payments would impact your financial forecast.
Some examples you can create secondary scenarios for are:
- The purchase of a large asset, like a car or a house 🚘🏡
This scenario would contain a budget for an initial down-payment, followed by a repeating budget for a recurring payment
- Paying off debt 💸
- A vacation, a wedding, or house renovations - where a series of expenditures need to be planned over time ✈️🏖💍🏠🔨
- An increase or decrease in your mortgage or rent payments 📈
Secondary scenarios have an additive/subtractive effect on the account's forecast, and you are able to switch scenarios on or off to allow you to view your forecast balances with, or without, the secondary scenario applied. Learn more about this here: Change the scenarios shown on the calendar
You can add multiple secondary scenarios to an account, alongside the primary scenario, to allow you to model and compare different sets of potential decisions.
If the scenario you would like to model involves an increase or decrease to an existing budget, you need only add a budget for the difference between these amounts.
For example, if your current rent is budgeted at $800 per month and you want to see if you can afford a better apartment at $1000 per month, you only need to add a budget for the difference of $200 to the secondary scenario.
Examples of secondary scenario set-up
Secondary scenarios will vary in set-up according to the 'what-if' scenario they are reflecting, however, the main steps are:
- Create a secondary scenario, attached to the account the potential budgets will affect
- Add new budgets to model the 'what-if' situation, ensuring that these are assigned to the secondary scenario under 'Which account's this budget for?'
- Use the Calendar & forecast graph to view how these budgets will affect your future account balances
Ray would like to buy a new computer and a retailer is offering a 12-month interest-free deal 🖥 💸
To determine if he can afford to pay off the computer within the 12 months to avoid any interest, Ray calculates the amount he would need to repay each fortnight and creates a secondary scenario to see how this will impact his finances.
- Create a secondary scenario, eg Computer repayment, attached to the account the payments will be coming from.
- Calculate the amount needed to repay in 12 months, in this case fortnightly. (eg. Computer cost $3250, divided by 26 = $125 per fortnight)
- Create a repeating expense budget reflecting the fortnightly repayments. Under 'Which account's this budget for?' select the Secondary scenario - Computer repayment
- Use the Calendar and forecast to see how the budgeted payments will affect his future account balances to determine whether the purchase is feasible.
Alex and Anne are planning their wedding and want to see how this will impact their finances 💍🥂🎉
They already have some savings set aside, but want to see how much more they will need to save in order to cover their costs. To do this, they create a secondary scenario and add their planned wedding expenses.
- Create a Wedding Budget scenario and assign this to their Savings account.
- Create budgets for the various costs, eg. venue hire, celebrant, suit costs, catering, dress, photographer etc, and assign these to their Wedding Budget scenario
- Use the Calendar and forecast graph to see how this will impact their finances, and make adjustments to their budget, or increase their savings contributions accordingly.
Emilia wants to move out of a shared apartment and rent her own place instead 🙌
She already has a rent budget set up for $600 per month to reflect her current Rent costs and has seen a place for $1100 per month. To see if she can afford the increased rent she'll need to:
- Create a secondary scenario
- Add an expense budget that reflects the difference between her current rent budget, and the proposed new amount, in this case, $500 per month
- Use the Calendar and forecast graph to see how this will impact her finances
Creating a secondary scenario
Scenarios are created, moved amongst accounts, and deleted, by heading to Organize Accounts & Scenarios in the Settings menu.
Each of your accounts is listed on the left, and all Unused scenarios are shown on the right.
Steps to add a secondary scenario
- Hover over Manage on the account you would like to add the scenario to and select Add scenario
- Enter your new scenario details into the form that appears, including any relevant interest and the starting balance for the scenario.
- Once complete, click Save settings
Add budgets to your secondary scenario
Once you have created your secondary scenario, you'll need to add budgets to it by creating a new budget, and assigning the budget to the secondary scenario under 'What account's this budget for?'.
To learn how to create a budget please see: Creating a new budget
Deleting a secondary scenario
To delete a scenario, it needs to be a secondary scenario to an account - the primary scenario for an account will be shown in the Organize page as greyed out, with a padlock icon instead of a calendar icon
Changing the primary scenario on an account
If the scenario you'd like to delete, or park, is, in fact, a primary scenario, you can edit the account to use a different scenario as its primary.
Hover over Manage on the account, and select Edit
Parking unused scenarios
Secondary scenarios will show as part of your Budget on the Budget page, so you may wish to temporarily park these so that you can analyze your actual earning and spending excluding any 'what-if budgets'. You can do this from the Organize accounts & scenarios page ( Settings >Organize accounts & scenarios)
Steps to park an unused scenario
Navigate to the desired account and simply drag the scenario over to the Unused scenarios section of the page as shown below
If you'd like to activate the scenario again, just drag and drop to move it back.
Parked scenarios from deleted accounts
If you delete a bank account from PocketSmith, by default, its scenario, containing all the accounts' budgets, will be parked.
The budget categories assigned to the parked scenario will still appear on the Budget page, however, as the budgets are not assigned to an account the budget will be inactive. Any spending in the associated category will not accrue against the budget and the message 'No data available for this date range' will show.
If you are wanting to retain all of the budgets associated with a parked scenario, you will need to assign the scenario to an active account. Simply drag the parked scenario over to the account you wish to assign its budgets to.
If you only wish to retain a few of the budgets, then it's best to edit these budgets individually, selecting a new account under 'Which account's this budget for?'.
Change the scenarios shown on the calendar
- Forecast > Calendar
- On the sidebar, hover your mouse over the account, click on the three-dot menu
- Select the circle next to the scenario you wish to display so that it shows green. This will change what forecast events are shown and also the forecast balance to include all active scenarios.
If you notice a grey dot appear against the selected account icon this means that not all scenarios associated with the account have been selected.
The 'scenario balance' option
The Scenario balance option is for when you want the balance of the account to be based on the scheduled budget events for an account, rather than the actual transactions that occur within the account.
This option is useful if you are a Scenario-only user, meaning your PocketSmith account only has budgets and a forecast and you don't import transactions.
The 'Scenario balance' option is designed for accounts with no transactions and only scheduled budgets. This is for users who choose to manage their finances only by manipulating their forecast (using budgets), without the need for uploading and categorizing actual bank transactions.
These accounts are called 'Scenario-only' accounts and are virtual representations of their real-world counterparts. Some users choose to create broad scenarios with repeating budgets for key categories and payments; others choose to schedule all expected payments and change them once they've passed.
Scenario-only accounts have the 'Scenario balance' option selected by default when the account is created. If you have an existing account that requires this option, you can change it in the balance options for an account.