Reimagining my budgets with PocketSmith
15 Nov, 2020
For all you budget haters out there and for those who find it easy to start one, but find it hard to stick to one. I understand. I really encourage you to stick with it.
I budget, have done for years, but I’m not a zealot about it. I use a budget as a way to guide our financial life and although I have budgets for different areas; food, electricity etc, if I go slightly over or under it’s no biggie, I just take that into account for next month. I figure it’s better to have a rough idea, than no idea at all. A lot of times when people think they are having a one off spike in spending, well, a budget will point out to you in black and white that it’s not a one off at all - every single month or year there is a spike. Therefore I create a budget that allows for that surprise purchase. When the unexpected ALWAYS comes up, we can’t really call it unexpected can we?
A trick for us is that we also keep our banking very simple, with just one account that spending comes from and income comes to. No credit card either, just a debit card from that same account. We are not big spenders so it was just not worth the annual fee, negligible points and added spending that always comes with a credit card. We have a number of other sub-accounts that we regularly move money into as we aim for savings goals (sinking funds) such as new tyres for the car, car insurance, laptop for school...
From time to time I give my budgets an overhaul and this week I made a cup of coffee and took a look over every corner of my budgets in PocketSmith. The prompt to do this was because PocketSmith have launched a brand spanking new Dashboard with heaps of new customisable features and once I started having a look around, I was like a kid in a candy store (I will go through a few of my favourite changes below).
I basically played for an hour with my budgets. SUCH FUN! WHAT A LOSER! Depends which way you look at it!
It’s no secret that I’m a fan of budgeting in some way, shape or form and knowing where your money is coming from and going to honestly helps you get ahead faster. There is no doubt in my mind about this. I’m in contact with a lot of people with either low or high incomes whom I suggest a budget to. Those that do it tell me that it’s a game changer and they go from feeling stuck and lost to empowered with a new sense of direction in their life.
To me it does not matter HOW you keep track of your finances:
Pen and paper (I think this is actually the best way to start out)
Homemade spreadsheet
Banking app
Budgeting software (ones I have heard of and some I’ve used myself are: YNAB, Barefoot Investor % system, Better Than Budgeting, Dave Ramsey, Toshl, Lumen Trails)
- If you have suggestions then please leave a comment below!
Money hub did a breakdown of budgeting apps that you might also want to check out:
Best Budget Apps for New Zealanders - The Definitive Guide
It’s just important that you do find a system that presents your money to you in a way that YOU understand so that you can use that information to guide your life. Talk to your friends and find out what they use for some ideas, but at the end of the day if the budget you are using is not working, keep looking!
Whether you are tracking every cent in order to get out of debt, saving your guts out for your education or a house, or like me, debt free and working towards early retirement you HAVE to know what’s going on with your money. I don’t see any negativity around the word ‘budget’ because to me, when I budget well it gives me a sense of control over life and permission to spend my money where it gives me meaning.
Whatever end of the spectrum you find yourself on, either high or low income, there is no doubt that tracking your money shows you just where you are at so at any given time you can check in with how you are doing and plan for any life changes. But I’ve always said with budgeting that it's not a two minute exercise to set up. You have to commit to it and you have to stay the course. As I’ve blogged about previously, (Take Control of Your Finances: PocketSmith Part 1, REVIEW: PocketSmith Part 2, My PocketSmith analysis: We buy a lot of eggs!) when I first started to really track our money, it took me MONTHS to feel comfortable and to find the information I was collating actually useful. And although it’s now a two minute check in every couple of days, keeping a close eye on our finances is still something that I maintain an active interest in and that I regularly check in with.
Just like you don’t go for one run and consider yourself fit, or tidy your house and consider it ‘job done’ for a month, it’s the same with a budget. You can’t just set it up and forget about it, it needs regular check ins and adjustments over a long period of time, otherwise you can end up in a mess.
The day you stop running, your fitness will decline.
If you don’t tidy the house regularly you will end up living in a trashed house (I‘m speaking from experience here as I look around at dumped clothing, dumped art projects, dumped dishes on the bench - and I tidied up yesterday!)
The day you stop budgeting, your finances will suffer too.
So, I wish I could tell you that using budgeting software such as PocketSmith and developing a budget for your household finances is easy and it will take you two minutes to arrange, but I can’t.
Nothing in life that’s worthwhile is ever that easy.
So, my advice to you in regards to getting in control of your money is to just START today, make a little progress everyday and before long you WILL feel competent in using your budget and then it will start to help you forecast and navigate the weeks months and years ahead. After a while emphasis moves away from ‘the budget’ to what it allows you to do.
Just like we were made to do homework as kids and now we make our own kids do homework, the same applies to us. So, stop rolling your eyes and just bloody well go and do it!
PocketSmith
Having never used any form of budgeting software of this calibre before, I found it hard to get my head around it at first, but I stuck with it and I’m forever thankful that I did! My first concern was bank security but that became a non issue when I dug into it and realised that they can’t move my money around, it’s all ‘read only’ of my accounts. They are just presenting the information to me that is there. I then had to get over that initial hump of it feeling like hard work so that I could reach the point where it genuinely helped guide our life. Now, if Jonny and I have a decision to make we check in on our numbers to see how well placed we are. If we have the money, then that's great, we buy the item. If not though we use our budget to help us plan for upcoming expenses, sometimes years in advance. Doing it this way gives us freedom to spend when the time is right and because of that a budget to us never ever feels constricting.
A disclaimer
So, today I thought I would go through the changes to PocketSmith so that those of you who already use it know that there are a heap of new useful features available and that those of you who are looking to start budgeting can get a feel for if PocketSmith might be a good fit for you. I should also say too that I have an affiliate with PocketSmith and if you use this code you get a 50% discount off the first two months BUT that they are having a “Black Friday” sale between the 27th - 30th November where they are giving 30% off their annual plans, so it might be worth waiting before using this link. I have also been doing some writing for them and I think that it’s because I have formed a closer relationship with them that now more than ever I get to see how useful their software is.
I talk in person with PocketSmith (because they are a Dunedin based New Zealand company YAY) and they say one of their challenges is not getting people to begin using the software, but to KEEP them using it, because it requires some commitment from you and I to stick with it! I think these new features will help.
Try new custom dashboards - you won’t regret it!
I use a lot of software that is forever advising of updates and improvements and I go ahead and do them, but they are generally just tweaks to their system. But make no mistake, the features that PocketSmith have added have improved their functionality and customisation by leaps and bounds. It’s a game changer for me and I was already very happy with their software! But once I dug into the new dashboard that they have developed, I was genuinely excited.
A new tab appeared on my dashboard with the words “Try new custom dashboards” and not really knowing what to expect, I clicked. Do you know that feeling of trepidation you have when you do an update of your software and you have that sinking feeling of “oh no this new version sucks and now I can’t go back”. PocketSmith have left the door open for those people and if you want to revert to your old set up, you can! I think that is important because for those of us who track our numbers for many years, the thought of losing historical data freaks many of us out. I have talked to many people who are working on ancient (and now unsupported) budgeting software because they can’t transition to the new system without losing information or having to laboriously update it. So, PocketSmith kinda gives us an ‘out’ if we want to go back and we can have the best of both worlds, the comfort of the system we’ve become used to and the excitement of what the new system offers. For the record, I won’t be going back.
PocketSmith launched in 2008 and they have been evolving and taking on board feedback for all of that time, making tweaks and improvements in response to customer feedback. Therefore there were a LOT of features available to use, many of which I didn’t because they were not necessary to me.
“But is it going to help you in any way Ruth?”
What they have done now is have every single feature available BUT I can fully customise what I get to see, enabling me to turn off the features that I don’t use. But if at some point I change my mind, I can bring them back again. I was geeking out on this and Jonny could hear ‘Oohs and ahhs coming from my desk and finally he asked: “but is it going to help you in any way Ruth?”. Yes, Jonny, YES it certainly is! It’s giving me access to the financial information that is relevant to me in a clear and concise way and it stops me having to go and look in multiple places for it. That’s a big positive for me.
They have written a blog post on their changes that you can check out here too: Custom Dashboards Feature Preview
Show me the editing controls!
In order for me to fully customise my dashboard I enabled ‘show editing controls’ because they show you what customisable options are available. As soon as I discovered that button I was like “whoa, this is awesome”.
Honestly, for someone who does not consider themselves good at math, I’m such a numbers geek. The main reason is that I’m really just analysing the figures, looking at transactions and looking at graphs, they do all the math!
I had been using PocketSmith for a couple of years now but what these changes have allowed me to do is rediscover a whole heap of old and new features. I always use PocketSmith on my desktop (I very rarely check in on my phone) and I have a large monitor, so I use the full screen to line up all of the areas I track and I can drag and drop different parts of the dashboard to put them where they are meaningful to me. So, I can get a huge amount of information in one single screen which saves me time.
It’s kinda feeling unbreakable. I can move and adjust things, without changing any of the data itself, THAT information is always there, but I can choose how I view and interact with it, which I like.
Multiple dashboards, if I feel so inclined
I can now operate many dashboards at the same time, all using the same information from my bank accounts, yet configured in different ways using what they call ‘widgets’. I can see it being handy for couples who always think about money differently. As I set up my new dashboard it speaks directly to me and I have a mix of graphs, pinwheels (what they call the donut), individual transactions, budgets and investments. Mine is PACKED with what I think is incredibly useful information, none of which I could be without:
My PocketSmith Dashboard packed with what I think is incredibly useful information.
BUT what I have found is that while I like the fine details Jonny does not, he finds them tedious. If I am showing him my dashboard I am always saying “don’t focus on that bit there, just look here” but in all honesty, while he humours me, he can’t get away quick enough. But now - and this is exciting - I can create a dashboard that is completely relevant to him, thereby engaging him in our household finances!
So, that’s what I did.
I asked him what he was interested in knowing about in relation to our money and then it took me two minutes to create a dashboard for him. He is interested in:
“Are we spending more than we are earning”?
“How are our sinking funds going”?
So, I kept four ‘widgets’:
Net worth
Selected Bank Accounts (I only included the seven of the ten that were relevant to him)
Earning + Spending donut
Plus for good measure I added a balance graph showing how our net worth has tracked over the last 18 months. As you would imagine, he was DELIGHTED by my thoughtfulness. Yeah/nah. But he did look at it! And that is progress y'all!
Here is Jonny’s personalised/simplified dashboard:
Jonny’s PocketSmith Dashboard is a whole lot simpler.
Honestly, that’s a breakthrough because I talk to so many people who are trying to get their partner to take an interest, but as soon as they pull up a confusing spreadsheet (which the author of it is super proud of) they have lost them! If you were to do a bit of background work and create a dashboard that was relevant to the non budgeter of the household, the battle would be half won!
Balance Graph
I now really like the balance graph at the top of the dashboard screen. It used to take up quite a lot of space, yet I never used it. I’ve now configured mine to show the last 18 months of my financial life and it shows me the minimum and the maximum net worth during that period, with a percentage change. I no longer let it forecast forward, but it instead shows me exactly where I am at today:
Earning + Spending Donut
I have made simple little changes, changing my headings to ALL CAPS and changing the category names to things that resonate with me better. And the updated donut graph still lets me colour code into the three areas that I’ve determined:
Red - necessary expenses
Yellow - for insurance
Orange - for the nice to haves (but can cut from our budget in an instant if needed - like we did during our emergency budget meeting for COVID-19)
Green - for income
Plus this pinwheel now shows my savings rate which is brilliant and a must have for any person aiming for FI. I have it showing TWICE on my dashboard now, one I can glance at and get an idea of how we are doing this month and the other has all of the transactions we have made for the period listed out in DETAIL. Oh my!
* If you are reading this Jacinda Ardern, please can you do some work around reducing the cost of groceries for New Zealanders! They are taking up too much of my monthly spend!
Account List
I still keep my list of bank accounts and their current balances predominantly displayed. Currently we have 10 bank accounts - one for incoming and outgoing money and the rest are for various savings goals. And whereas I used to head to a different tab to look at my investments I now also have them on my home screen so I can see at a glance their totals. I still have to manually update my investments each month, but I know that PocketSmith is in talks with another company that I use to track my investments, Sharesight. to enable me to have these automatically updated as well. That will be awesome when that day arrives sometime in 2021.
Bill Reminder
I actually chose to hide this function because I don’t use it. But if I wanted to I could use it to show my upcoming, overdue and paid bills. One thing I do use though is the ‘search’ feature in the accounts screen that lets me quickly work out if I HAVE paid a bill or not!
Budget
I set up annual budgets that run from Jan 1st to Dec 31st. I took the opportunity this week to go back and tweak these budgets because I had underestimated the cost of some things. For example, my grocery budget was forever showing us overspending because although my ideal was to spend $200 a week, this NEVER happens, so I updated it to $250 a week to better reflect what we do spend. Now, on the home screen at a glance I can see each budget category and how we are tracking and the colour coding is a visual representation of where we are at:
Blue - I’m on track
Green - we have exceeded our income target
Red - holy crap, would you stop spending already Ruth!
Plus, it shows me how many days are left to go in each budget period.
Uncategorized and Unconfirmed Transactions
PocketSmith automatically brings in any new transactions from my bank, so if I’ve been out and about spending, these are imported for me. The majority of them are automatically categorized and confirmed for me based on the parameters I created back when I first started using it, but still there are a couple that I need to do myself because if I’ve shopped at a new store for the first time, the system does not recognise it. So, this is the first thing I look at when I log in, do I need to do anything, yes or no?
Individual Transactions
I also keep every single transaction very prominent on my dashboard. Those which are expenses are RED and those which are income, GREEN. At a glance I can see what has been happening on any given day, including any transfers I make to our sinking funds accounts. As we start to head into Christmas I particularly like to keep an eye on this so I can remind myself to stay within my budget. This area is also the biggest giveaway for if Jonny has been buying me presents, because I can see where he shopped! So, he has had to create a workaround here by getting cash out and THEN going shopping, that way it won’t show up!
Some things have stayed the same
It is only the dashboard that has changed, but all the other tabs are the same (but they tell me there will be some tweaks coming) so it’s good to have the old and the new come together so smoothly. I also took the time this week to better use their calendars to exactly pinpoint when I will reach a particular balance for one of my sinking funds. Because I’ve already done the math in my head, I pretty much know when a target will be reached, but in order to use PocketSmith as the one stop shop that I want it to be, I decided to make better use of that feature. Up until now I had been lazy about this but I took a dose of my own advice and sat down and did my homework!!!
Just have a go, only good things will happen
It’s been a good workout for my brain to reimagine our budget this week and reshape and remould it to fit our goals. And I’ve really enjoyed it to be honest. I guess the final thought I want to leave you with is that I get a lot of emails from people who are really wanting to start to take ownership of their money. One of the first things I suggest is to start to track where your money is coming from and going to and I’ll always stress that I don’t care HOW you achieve this, whether it be a pen and paper, a super basic spreadsheet on your computer, using the budgeting app supplied by your bank or by using a budgeting software app like I do.
You just have to think about what you are trying to achieve:
To become debt free
To not be surprised by Christmas each year
To save for your child's dental work in three years time
To not run out of money each month
To know when you have hit a financial goal
Find your ‘why’ and then stop the eye rolling and commit to sitting down at a regular time to work out if the way you are structuring your finances is getting you closer to those goals, or further away.
