Tips and tricks for creating budgets in PocketSmith
Creating budgets for your categories lets you quickly see how much money you have available to spend in a particular period, detect overspending, and track incoming funds. In addition, your budgets create your forecast in PocketSmith allowing you to ensure you'll have enough money available to cover your costs in the future! 💪🛒🏡🔭📈
Because PocketSmith is highly customisable, there is no one set strategy for budgeting in PocketSmith, however - we do have some tips and tricks to help ensure your budget is set up for the most accurate reporting 📊✨
Check out the guide to learn how to make the most of budgeting in PocketSmith!
In this user guide
Before setting up budgets
Ensure your transactions are categorized accurately
Before you create budgets, it's best to spend some time making sure your transactions are categorized accurately, in a way that makes sense to you. Accurate categorizing is crucial for accurate budgeting 💰🏡🛍📊
This allows you to see how much money you have incoming and where your money is going - which is the first step to gaining control over your finances.
Use category rules to make this job faster.
If you had previously used bank feed categorization (but don't any longer), you can run your category rules against existing already-categorized transactions. Learn more about how to do this here: Applying a category rule to past transactions
Tips for creating budgets
Once you understand where your money is going, you can start making budgets, and you'll begin to see where you might be able to make small changes in order to spend less ✨
You can create budgets in any order you like! But, if you're not sure where to start, then we would suggest that you:
- First, create budgets that reflect your income
That way you know how much money you have coming in, and therefore, how much you have available to budget.
- Next, create budgets for your necessary spending
For example, mortgage or rent, groceries, and other essential bills.
- Finally, create budgets for your discretionary spending
For example, entertainment, travel, and hobbies.
To learn how to create a new budget, see: Creating a new Budget
Once your budgets are set up, you'll see them listed on your Budget page - with a summary of your budgeted earning compared to your budgeted spending at the top of the page. To see what this looks like, and for more on using the Budget page, see: Using the Budget page
How much should I budget for each category?
For any budgets that don't have a fixed amount, a good indicator of how much to budget for a category is to look at past spending.
Once you've categorized your transactions, you'll be able to use the Trends page to see your average spend in each category, which may serve as a starting point to create your budget.
Use the date selector if you only wish to calculate the average over a particular timeframe (eg. the past three months). You can also choose whether to analyze by month or number of weeks as you see fit!
What repeat dates should I set up for my budgets?
In general, we recommend creating repeating budgets that are set to occur as close as possible to your actual expenditure. This allows for the most accurate reporting and forecasting.
For any bill budgets that repeat on the same date each month/quarter, set these up to match the date the bill is likely to be paid. For example, if your Netflix subscription renews monthly on the 14th, then set up your Netflix budget to recur monthly on the 14th. If you pay your Internet bill every month on the 1st, set this budget to repeat every month on the first.
To ensure a budget is set up as a bill or scheduled income budget, just tick ' This is a bill' when creating the budget:To learn more about bill budgets, see: Bill and scheduled income categories
For general budgets, such as Groceries, or Dining out you may like to align these with your pay cycle, or if you shop weekly on a Tuesday, you could set your Grocery budget to occur every Tuesday.
This allows for the most accurate reporting of your budget and helps to create a more accurate forecast.
Analyzing your budget across a specific date range:
PocketSmith allows you to analyze your budget according to any date range you would like on the Budget page as well as the Income & Expense statement.
This means you can see how you're tracking for the year, or you can view how you're going for this month, or even this week if you'd like to 📆 📊
Any non-bill budgets that do not wholly fit into the budget period will be adjusted to the date range applied. For more on how this works, see: Applying the budget summary date range to the entire page
It's not currently possible to apply a date range to the Budget widget on the Dashboard or the Budget tab in the mobile app.
How budgets create your forecast
As well as helping you keep track of your earning and spending, PocketSmith uses your budgets to create your forecast - allowing you to predict your future financial position.
Every budget you create is applied to the forecast for the account to which the budget is assigned, affecting the account's future forecast balances 📈.
You can view your forecast, and see how your budgets affect your account balances on your Calendar.
To learn more about using the Forecast and Calendar see: Using the Calendar and Forecast graph
Can I set up multiple budgets per category?
We don't recommend creating multiple concurrent budgets against a single category.
For some background, with our budgeting system, for each category, the budget events must be sequential and not overlap. If you do have overlapping budget sequences, you may find that some of our reports and forecasts, e.g., the Budget page and the Calendar, are unable to interpret these, as they cannot determine which budget to display for the category, and therefore produce incorrect results.
Rather than have multiple active budgets per category, consider using Sub-categories and nesting so that you can set up one budget per category. This will also make tracking the budget easier.
For example, rather than having multiple budgets assigned to a Subscriptions category, we recommend creating a parent category called Subscriptions, and then having each individual subscription nested under this parent category.
Each individual nested category would then have just one recurring budget set up against it, which also makes it easier to view each subscription individually.
Please note, that we don't recommend setting up a budget on the parent category as this is used as a container to manage and group categories together. Instead, you can roll-up sub-category budgets to allow analysis at the parent category level. We have more detail on this here: Parent and subcategories: budgets and roll-up budgets
Parent and subcategories: budgets and roll-up budgets
Parent categories are intended to be used as containers for the sub-categories within, allowing you to organize your categories in a way that is meaningful to you.
We don't advise setting up budgets at the parent category level, nor do we recommend assigning any transactions to a parent category. This is because only the transactions assigned to a parent category itself will be tracked against a parent category budget, and transactions assigned to the sub-categories will not be included.
Instead, we recommend creating budgets for your sub-categories and using the roll-up feature to analyze your spending at the parent category level: Roll-up: Parent and sub-category budgets.
When to use one-off budgets
You can use one-off budgets for categories that don't have a regular repeating budget, or, to account for unexpected expenses.
If you have an unexpected expense in a category that already has a repeating budget, we recommend editing the individual instance of that budget to include the one-off amount, rather than adding a separate one-off budget. This ensures that the Trends page, Budget page and any areas of reporting will include the full budgeted amount as expected.
For detail on editing just one instance of a budget, please see: Editing a single budget event
If you do wish to create a one-off budget, it's best to match the budget date to the date the transaction actually occurs. This will provide the best result for reporting and analysis.
Caveats for one-off budgets
The budget analysis for one-off budgets does not include any associated transactions on the Calendar.
Our Calendar's pop-up is designed to provide further details on repeating budgets and does not currently display transaction data for one-off budgets. This is related to there not being a distinct budget period for a one-off budget. What this means is that if you view the pop-up for a budget on the calendar, it will not contain the actual expenses - only the budgeted amount.
For some context, when viewing budget analysis on the Budget page or Trends page, you will usually choose or apply a date range, or a repeat interval - weekly/monthly/etc. The budget analysis then gathers up all of the budget events and transactions that fall within the date range or repeat period applied, and PocketSmith sums them together to form the analysis.
On their own, though, one-off events have no way to be associated with any transactions. On the calendar, the one-off event is shown on its own without having a budget analysis period to gather up any transactions.
If you notice this, don't worry! As long as you have assigned the transaction to the budget category on the same date as the budget is set to occur, the transaction will be included in your reports and on the Budget page.
Rollover budgeting and Safe balance:
Rollover budgeting and Safe balance do not include one-off budgets in their analysis. This is because there is no repeating budget period for the budget, and both of these features rely on a budget period to work. You may not be using either of these features - but just as a head's up! 🙂
Editing just one instance of a repeating budget
If you would like to make a one-off change to a budget that is part of a repeating budget, you can make a one-off edit so that all other budgets remain the same. The benefit of this over a one-off budget is that it will still be included in the repeating budget series, and will be included in all budget analyses, as well as rollover and safe-balance calculations.
For more on editing budgets, see: Deleting or making changes to a repeating budget from the Calendar page
After editing the budget, just be sure to choose the option to ' Only this budget event'.
While you don't have to create transfer budgets, they can be useful for forecasting individual account balances, particularly if you tend to transfer money from one account into another on a regular basis 🔁
For example, if you tend to transfer $500 from your Everyday account to your Bills account each week, you may like to create a 'Bills transfer' budget. You would assign both sides of the weekly transfer between your Everyday and Bills accounts to this category.
The transfer budget would ensure that the balance of your Bills account is forecast to increase by $500 each week, and, the balance of the Everyday account is forecast to decrease by $500 each week - accurately reflecting the regular transfer amount.
Transfer budgets are not included in the overall budget figure at the top of the Budget summary, however, you can keep track of the transfer budget beside the category further down the page 🔍 🧮
For more on Transfer budgets, including how to set them up, please see: Creating a Transfer budget
Rollover budgets allow under-spent / under-earnt or over-spent / over-earnt amounts to be carried over from one budget period to the next ➡️ 📊
For example, if you overspend by $10 on a $50 rollover expense budget, this $10 is rolled over to the next budget period. The budget for this next period will be reduced by $10 and will be $40 instead of $50. This differs from non-rollover budgets, which keep the same amount for each budget period unless manually changed.
You can also distribute rollover surplus to other budgets. For more details on when and why you can use rollover budgets, read our blog post about it: Rollover budgeting in PocketSmith, now in beta.
For detail on setting up and using rollover budgets, check out: Rollover budgeting
See your progress, and adjust budgets if needed
You can see a breakdown of your earning and spending on reports such as the Income & Expense statement, as well as on your Dashboard. For a general overview of our reporting features see My Reports.
You can also use our Calendar feature to quickly see your budgets and forecast across any month. Just above the Calendar, you'll also see the forecast graph where you can view your past and future actual balances versus your forecast (budgeted) balances.
The amount set for each of your budgets is added/subtracted from your forecast balances. This means that any budget change you make on your calendar will be reflected on the forecast graph in real-time! On the Calendar page, you can view how your actual earning and spending has tracked against your past forecast, and how your forecast looks projected into the future 📅 ✨
Expenses don't always stay the same, so if you'd like to edit a repeating budget, you can choose to apply these changes to:
- Only the selected budget event
- To future budget events (leaving past budget events unchanged)
- All budgets within the series (from the beginning of that budget's history)
For more on this see: Repeating budgets and how to delete or make changes to them