Managing budgets for large periodic bills or savings goals

It can be tricky to make sure you've got enough funds set aside to cover larger annual or quarterly bills or to maintain your savings goals. This user guide covers how we recommend managing large annual or periodic expenses, as well as tracking your contributions towards your savings goals.
In this user guide

Managing budgets for large periodic bills

If you're wanting to set aside money for large annual/quarterly bills, we recommend using a separate bank account, dedicated to your larger bills and adding this to your PocketSmith account. This will ensure you can't accidentally spend money earmarked for bills and will allow you to see at a glance whether you're on track to meet your targets!

Once your account is set up and added to PocketSmith, calculate the amount you'll need to set aside to cover your larger annual or periodic expenses and create a transfer budget reflecting the amount and frequency of your contributions.

You can then add expense budgets for each of your bills, reflecting the amount and date the payment will be made.

Once your categories and budgets are set up, you can use the Calendar page to see if you're on track to cover your larger periodic bills. 

Example - Setting aside funds and managing budgets for large periodic bills

George has to pay local City council rates quarterly, as well as Regional council rates annually. The quarterly rates bills are $500 per quarter, while the Regional rates bill is $200 annually. 

George wants to put aside money each fortnight to ensure he has enough funds to cover these bills when they are due. He calculates that, when combined, his rates total $2200 per year, which works out to be $84.61 a fortnight. 

In order to keep money aside, George sets up a new bank account with his bank, and adds this to PocketSmith, calling it ' Rates account'. 

He creates a new transfer category called ' Rates Transfer' - where he assigns any transactions that are transferred to the 'Rates account'. He also creates a fortnightly transfer budget reflecting the fortnightly contributions to the account ($85).

Next, George will want to create budgets against his ' City Council rates' category, reflecting the quarterly bills and his 'Regional Council rates' category reflecting the annual bill, assigning each budget to his 'Rates account'. 

George can then use the Calendar and forecast graph ( Forecast > Calendar) to see, at a glance, whether he has enough money in his 'Rates account' when the rates bills are due to be paid.

When each the rates bills are paid, George assigns the transactions to the appropriate expense category and the expenditure is tracked against the respective budgets.

Setting up budgets for large periodic bills

1
If you haven't already got a specific bills account, create a separate bank account for your large bills with your bank, and add this to PocketSmith. 

For detail on creating a new account see:  Adding a new account on the Account Summary page

2
Calculate the total amount needed to cover any large periodic bills over the year, and then work out how much you'll need to set aside on a regular basis to meet this amount. 
3
Set up a transfer category to assign any contributions to your Bills account.

To learn how to create a transfer category please see: Steps to create a transfer category

4
Next, you'll need to create a transfer budget, reflecting the amount and frequency of your regular contributions. These budgets will allow you to forecast the amount of money coming into the Bills account.

For detail on creating a budget like this, see: Creating a transfer budget

5
You'll then need to set up an expense budget for each of your bills' due dates. These budget events will allow you to see when money is due to come out of your account.

Under ' Which account's this budget for', select your Bills account.

For more detail on creating budgets see: Creating a new budget

6
Once you're all set up, head over to the forecast calendar to see your projected balances based on your budgeted events. You'll be able to see when each of your bills are due, and whether you'll have enough money to cover the expense on the due date. 
For detail on using the Calendar and Forecast graph to see your projected balances, check out: Using the Calendar


Managing budgets for savings goals

If you're wanting to set aside money for savings goals, we recommend using a separate bank account, dedicated to your savings goals and adding this to your PocketSmith account. This will ensure you can't accidentally spend money earmarked for your savings and will allow you to see at a glance whether you're on track to meet your targets!

Once your account is set up and added to PocketSmith, calculate the amount you'd need to set aside each fortnight/month to reach your goal. In order to forecast and track your savings progress in PocketSmith, set up a transfer budget reflecting your regular savings contributions. 

Once you've reached your savings goal, and/or you make a purchase as part of your goal, you can add an expense budget to reflect the transaction.

Example

Julie is planning to go on a 3 week trip around Europe in June 2021. She's calculated that she'll need $6000 to fund her travels. She's planning to start saving from January 1, 2020. To reach this goal, Julie calculates that she'll need to put aside $162.16 every two weeks. 

In order to keep money aside, Julie sets up a dedicated Savings account with her bank and adds this to PocketSmith, calling it ' Europe travel fund'.

She creates a new transfer category called ' Europe Savings' - where she assigns any transactions that are transferred to the 'Europe travel fund'. She also creates a fortnightly transfer budget reflecting the regular contributions to the account ($163 every two weeks).

With the transfer budget in place, Julie can use the Calendar page to see her forecast balances for her ' Europe travel fund'. 

The forecast balance for an account is based on the current balance of the account + any budget events. This means that if Julie misses one of her savings transfers, her future balance will reflect the amount by which she is behind, and she can re-adjust her contributions and budgets accordingly to ensure she can still meet her target date. 

Setting up budgets for savings goals

1
If you haven't already got a specific 'Savings account', create a separate bank account for your savings goal with your bank, and add this to PocketSmith. 

For detail on creating a new account see:  Adding a new account on the Account Summary page
2
Set your savings goal, and calculate the amount and frequency of contributions needed to reach this goal by your target date. 
3
Set up a ' Savings transfer' category to assign any contributions to your savings account. To learn how to create a transfer category please see: Steps to create a transfer category
4
Next, you'll need to create a transfer budget, reflecting the amount and frequency of your regular contributions. These budgets will allow you to forecast the amount of money coming into the savings account.

For detail on creating a budget like this, see: Creating a transfer budget
5
Once you're all set up, head over to the forecast calendar to see your projected balances based on your budgeted events. You'll be able to see your projected balances, and whether you're on track to reach your savings goal by a specific date.

For detail on using the Calendar and Forecast graph to see your projected balances, check out: Using the Calendar

Spending your Savings

If you spend any of your savings, you'll just need to create an expense budget to reflect the transaction, so that this can be reflected in your forecast balance. 

Under ' Which account's this budget for', select your Savings account

For more detail on creating budgets see: Creating a new budget.

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