How should I look at checking account balance at the end of the month?

thomas2123
thomas2123 Member
edited September 2022 in Using the Spending Plan
Can someone please explain how my spending plan and checking account balance are related? If at the end of the month, I have a negative amount available to spend, lets say -$100, but I have $300 in my checking account does that mean $200 can be be spent/saved or should I not touch it? Is the left over money already allotted for next month? I'm still trying to figure out how my plan is accounting for the decrease in checking account balance for credit card payments since the bills and subsequent payments are excluded from the plan. 
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Best Answers

  • DannyB
    DannyB Superuser ✭✭✭✭✭
    Answer ✓
    Hi @thomas2123, good question and I’ll be interested in how others answer it.  Here’s my take, you can’t really think of the spending plan as a bank account register.  The Spending plan is a monthly budgeting tool that takes into account how much income you anticipate receiving in a given month and how much outflow you plan for that same month.  Although Simplifi is designed to work with your banking data to automate much of what it does for you, still it’s not an account register.  

    Once you have planned out your expected income and how you plan to spend that income, including savings you plan for, Simplifi helps you keep track of your actual income and spending by downloading your banking data and sorting it out into your various pre determined categories.  In the Spending Plan, Simplifi will help you track when bills and subscriptions are paid and how much you paid.  If you have savings goals set up and have designated you want to track your contributions, Simplifi will give you a reminder to make those contributions and show if you have done so.  Simplifi gives you the ability to designate how much you plan to spend on variables like groceries and gasoline and then will help you track when and how much you spend on these items and warn you when you are getting close to your planned amount.  But again, the Spending Plan and Simplifi in general is not designed to be a bank account register, it’s a budgeting and tracking tool.

    Now that you are at the end of the month, what your Spending plan has to offer is an accurate picture of how you actually did for the month as far as what you planned and the execution of your plan.  In your example that -$100 Available in your Spending plan is a result of the difference between your actual Spending Plan income and your actual Spending Plan outflow, again including savings.  You will need to go back through your Spending plan to see why your Available is negative.  That you have +$300 in your checking account may indicate that you have funds in your Spending Plan designated for Savings Goals or it’s surplus from your opening balance at the beginning of the month, or any number of things I can’t think of right now and I would guess you can do whatever you want with it.

    At any rate, as you get ready for August, remember that the Spending Plan is the tool you can use to make sure your income goes where you want it to and to help you control how much you want to spend or save for the month of August.  As for July, Simplifi now gives you a solid understanding of what you actually did with your income for the month of July.

    I’ll watch with you to see what others have to say.

    Happy budgeting!
    Danny
    Simplifi user since 01/22
    Budget: a mathematical confirmation of your suspicions.” ~A.A. Latimer
  • RobWilk
    RobWilk Superuser ✭✭✭✭✭
    edited July 2022 Answer ✓
    Can someone please explain how my spending plan and checking account balance are related? If at the end of the month, I have a negative amount available to spend, lets say -$100, but I have $300 in my checking account does that mean $200 can be be spent/saved or should I not touch it? Is the left over money already allotted for next month? I'm still trying to figure out how my plan is accounting for the decrease in checking account balance for credit card payments since the bills and subsequent payments are excluded from the plan. 
    @thomas2123 : If you're charging to credit cards, then no, avoid touching it...  Because your spending includes what you charge to your credit cards.  If you've paid off all your credit cards and your checking account balance varies like this, then maybe.   Remember that a credit card payment does not count as 'spending'. Note: This is how i work it, how you choose to work it may vary.


    Rob Wilkens

Answers

  • DannyB
    DannyB Superuser ✭✭✭✭✭
    Good point, @RobWilk, that was one of the “ any number of things I can’t think of right now” things.  Unless you build in your payments to your credit cards in your bills section, then what Rob said.
    Danny
    Simplifi user since 01/22
    Budget: a mathematical confirmation of your suspicions.” ~A.A. Latimer
  • RobWilk
    RobWilk Superuser ✭✭✭✭✭
    edited July 2022
    @DannyB Not doubting you, but i need to ask because i don't usually do that: When you schedule a payment as a transfer in recurring bills (or even a one-time marked "bill"), does it subtract it as spending for that month?

    I know, in general, a transfer has a net-zero effect on net worth (subtract somewhere, add somewhere else) so it "usually" does not count as spending.  I've never tried marking it as a bill.

    Now, I know, you don't have to list a payment as an account transfer, in which case what you say is correct (at least I think it is).


    Rob Wilkens

  • DannyB
    DannyB Superuser ✭✭✭✭✭
    @RobWilk you are right about payments to credit cards being handled as transfers with net-zero effect on net worth and all that.  Setting up a manual recurring bill for my credit cards has to do with the cashflow chart.  There are several posts in this forum about credit cards and the Spending plan.
    Danny
    Simplifi user since 01/22
    Budget: a mathematical confirmation of your suspicions.” ~A.A. Latimer
  • RobWilk
    RobWilk Superuser ✭✭✭✭✭
    Oh!  Yes I use the Cashflow chart aggressively.  For example, if i don't charge anything but planned charges to one particular credit card, I used the cash flow chart to schedule monthly pay-off payments to that card from now until  late january (the payments are already scheduled in the bank's system).

    I'm now tempted to click 'off topic' on myself because i got sidetracked off the main point, I will try to avoid doing that again.  Sorry, I was hoping i was going to learn something new about spending plan from the question.


    Rob Wilkens

  • DannyB
    DannyB Superuser ✭✭✭✭✭
    @thomas2123 I also forgot that once the month ends you have the opportunity to finalize your Spending plan by releasing unused funds from you Planned Spending categories.  Once this is done and depending on how closely your bank account and your Simplifi Spending plan follow each other you may find your available in Simplifi more closely matches your bank balance.
    Danny
    Simplifi user since 01/22
    Budget: a mathematical confirmation of your suspicions.” ~A.A. Latimer
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