Using Savings Goals for Quarterly, Semi-Annual, and Yearly Bills

DryHeat

(I know that there was a discussion on this topic called “Savings Goal Heavy Lifting,” but it appears to have been closed so I am starting this one anew.)

I’m new to Simplifi (but a Quicken user since the 1990s). I want to use the Savings Goals feature to earmark money in my checking account each month for bills that are paid less often.

By “earmark,” I mean I want a visible cue in the checking account balance display to tell me that a certain amount of the actual balance needs to be reserved for a non-monthly future bill. The "Available Balance" in the account (driven by Savings Goals) is sufficient for me. I want a way to make this work with quarterly, etc. bills.

The following description is kind of long, but I don’t want to leave out any details that might be crucial. So bear with me and let me know if I am off track here. Here's the plan:

1. Assume a semi-annual bill of $600 payable in April and October (yearly total $1200).
2. Create a Savings Goal of $1200 in November with a planned monthly contribution of $100.
3. Contribute $100 monthly through April. Simplify now shows a Savings Goal of $1200 with $600 contributed and $600 needed, along with $600 "reserved" as a Savings Goal in the checking account.
4. In April, withdraw $600 from the Savings Goal to “Spend a custom amount.” Simplify now shows a Savings Goal of $1200 with $600 contributed/released and $600 needed, along with $0 “reserved” as a Savings Goal in the checking account.
5. Pay the $600 April bill from the checking account.
6. Continue to contribute $100 monthly through November, completing the goal. Simplify now shows a Savings Goal of $1200 with $600 contributed/released, $600 contributed and $0 needed, along with $600 "reserved" as a Savings Goal in the checking account.
7. In November, withdraw $600 from the Savings Goal to “Spend a custom amount.” Simplify now shows a Savings Goal of $1200 with $1200 contributed/released, along with $0 “reserved” as a Savings Goal in the checking account
8. Pay the $600 November bill from the checking account.
9. Delete the completed (and fully released) “Savings Goal” as no longer needed.
10. Create a new Savings Goal for the next year’s bills.

I'm hoping that will work. It seems the simplest way to proceed as it requires only one savings goal for each group of bills and only one actual account. But it would be helpful if I could get corrections or feedback from those with more experience.

Coach Natalie

@DryHeat, thanks for posting to the Community!

I think your plan definitely sounds like a sufficient way to save for those less-than-monthly bills. Other users may come along with additional feedback for you, but I think you are on the right track!

We also have this old, but still insightful, #TipTuesday you may want to look over:

https://community.simplifimoney.com/discussion/3446/tiptuesday-using-savings-goals-to-break-down-annual-bi-annual-expenses-in-the-spending-plan

I hope this helps!

TiggerTrainer

Here is another option.

You can create rollover categories in your spending plan. You then rollover monthly for the annual expense. In the month of the expense the bill will show in the "bills" section of your spending plan. Once you have the transaction it will automatically connect the bill and the bank transaction. Once the transaction has cleared you can go in and mark the transaction as "non recurring" and this will move it from the "bills" section of your spending plan and will go against the category in the rollover.

It sounds a lot more complex than it is. This has worked well for me.

DryHeat

@TiggerTrainer "Here is another option. … You can create rollover categories in your spending plan."

I can see how this would work in the Spending Plan, but I'm not sure it gives me what I'm looking for when I'm checking my account balances.

Using Savings Goals not only shows me how much I should consider "available to spend" from a monthly budget point of view, but also gives me notice in the Transactions view that that a certain amount of the checking account balance (for example) is unavailable to spend because it is "reserved" for the future annual bill.

Does the rollover function (which I have not used yet) do anything like that? Or is its effect limited to the Spending Plan display?

DannyB

@DryHeat

I would guess that quite a few QSers are being successful with using the Rollover feature in Planned Spending. I gave it a try for awhile but reverted back to using Saving Goals for my non-monthly, semi-annual and annual expenses as that seems to work better for me until the development team adds a way to more effectively incorporate these expense into the Spending Plan more organically. I believe the rollover feature is a start but would need some refinement for me to feel comfortable using it.

The issue with using the rollover function, as you observe, is that you do not get an accounting of those reserved funds in your accounts list the way you do with Savings Goals.

Here are my rather lengthy records of working with Rollover:

https://community.simplifimoney.com/discussion/8500/working-with-planned-spending-rollover-an-experiment

And here is a discussion of Rollover funds… again a bit lengthy, but perhaps helpful.

https://community.simplifimoney.com/discussion/9488/rollover-money-where-is-it

DryHeat

@DannyB

I read through your Planned Spending/Rollover discussions. I understand what you did with Rollovers but I think it is too complicated for me. I guess I'm too lazy to move funds through multiple dedicated savings accounts or do much in the way of manipulating QS.

I find that I use the Spending Plan page and the Transactions page for two conceptually different functions and that trying to make either one do the other's job doesn't work well for me.

(1) The Spending Plan page helps me see, on a month-at-a-time basis, how my income compares to my expenses. Because it takes into account cash purchases, credit card purchases, and (using Savings Goals) the accrual of funds for non-monthly expenses, it gives me a good view of whether I am living within my means (on an income vs. expense basis).

—What the Spending Plan doesn't do is tell me how much money I actually have or how much of that money is already "spoken for."

(2) The Transactions (accounts) page, on the other hand, does show me how much money I really have in the bank and (using Savings Goals) tells me how much of my bank balance is already "spoken for." It also reminds me of significant bills that I plan to pay out of that money, which can help if "real money" is tight.

—What it doesn't do is let me look at the current and future months to get a sense of how things are going to go.

I'm happy to keep these two functions separate, largely because integrating them is too much work for me. So, like you, I'll be sticking with the Savings Goals for a while to see how it works out.

DannyB

I agree.

TiggerTrainer

https://community.simplifimoney.com/discussion/comment/48217#Comment_48217

I agree with you and would love to see things enhanced. Currently I do a reconciliation in Excel each month to make sure all money was allocated to a home. By doing that I know that all money in the rollover, spending plan, or savings goal, accounts for all the money I have. So in a way my spending plan then shows me exactly what I have access to.

I agree that it would be nice to have everything within Quicken Simplifi.

Flopbot

@DryHeat ,

I like your steps. You've already considered this with #9 and #10, but there's not currently a way to reset a Savings Goal so all you can do is to delete the old one and create a new one.

If that's something important to you, vote this idea up!

https://community.simplifimoney.com/discussion/2753/recurring-savings-goals-year-over-year-ability-to-restart-goals-edited

I do like Simplifi's Savings Goal feature, but have largely shifted away from it to creating real-world savings accounts for 10 of my most critical things (Auto, Food, Education, Health, Christmas, B-Days, etc.). The lovely thing about this method is that you can take advantage of Simplifi's projected balances for each account! For example, I can say: "At my current pace, how much will be in Christmas in 10 months?"

Someday, if Simplifi adds more automation to the Savings Goals feature, I will happily go back to them.

DryHeat

@Flopbot "I … have largely shifted away from [Savings Goals] to creating real-world savings accounts for 10 of my most critical things (Auto, Food, Education, Health, Christmas, B-Days, etc.)."

It sounds like you are doing a modern version of Envelope Budgeting, but using interest-earning savings accounts instead of envelopes (good move). A lot of people have success with that method and, as you say, it gives good visibility into how you are doing at any given moment.

But it has always seemed like too much work to me … creating and closing accounts and making multiple transfers to save up for and pay one bill. I guess it wouldn't be that burdensome nowadays with electronic banking but, as I said in another post, I'm pretty lazy.

Flopbot

@DryHeat ,

I never thought of it, but yeah. It's basically envelope accounting. Once it's all set up, it's actually not that much work. My main thing is that I try only to create savings accounts for things that have automatically scheduled recurring deposits (even if it's just $25 every Monday). I set these up on the bank's website and as long as you stay on top of creating Recurring Series in Simplifi, everything matches up quite nicely. If it's not automatic, it doesn't happen.

KP_9

https://community.simplifimoney.com/discussion/comment/48350#Comment_48350

Great discussion, @DryHeat and @Flopbot. For the last ~15 years, I used the same style of savings account envelope accounting Flopbot described, with about 10-15 different savings accounts at any given time. It it worked wonderfully for me for much of that time.

The challenge I ran into was that I found myself clinging to those savings accounts for larger, long-term goals when the better financial decision would have been to invest those savings instead. This became particularly detrimental in the decade I spent saving up for a down payment on a house; I would have reached that goal years sooner if I had invested those savings in a broad market index fund instead of keeping it in a savings account to preserve my envelope strategy. While I certainly benefitted from the envelope setup in some ways, like organization & motivation, I sacrificed for it big time in opportunity cost.

Now that Simplifi's Savings Goals finally work with Brokerage accounts (only a relatively recent feature enhancement that's opened up so many doors for me), I've closed out most of my envelope savings accounts and moved nearly everything into a Brokerage, where overlayed SG's now represent my various envelopes. The funds are invested at different levels of aggressive/conservative to match my goals' risk tolerance and time horizons - i.e. a very conservative Money Market for Emergency Fund SG dollars vs. S&P 500 Index fund for longer-term goals like an eventual roof replacement, etc. It feels like I now get the best of both worlds; I get to keep the organization of savings envelopes while also enjoying the much better averaged returns of diversified investing to reach my longer term/larger goals faster.

Overall, moving from individual savings account envelopes to SGs-over-a-Brokerage instead has been quite transformative for me.

Anyone else using SG's in this way to blend traditional envelope accounting and investing?