What is meant by "Spending Plan"

ianalexschuster

I guess the title says it. There seem to be different ideas floating around about what Simplifi's Spending Plan feature is meant to accomplish. When I think of it, I think of a tool that helps me be ready for all expected—and some unexpected—expenses in the coming month. Unfortunately, with the way Simplifi handles credit card payments, that just isn't possible.

Before I go too far, I should say that I love being able to link transactions between accounts. It's a great way for me to see exactly how my money is moving over time. Since I started using this feature, I've been greatly able to reduce unnecessary transfers and prioritize spending to the accounts that make the most sense for me and my budget.

That being said, this is a major problem when it comes to using the Spending Plan tool. Having the negative transaction from my checking account and the positive transaction to a credit card account both show up in my Spending Plan means that my Income after bills and savings amount doesn't accurately reflect the amount of money I will need to earn to cover all of my bills.

Now I understand that tracking the spending on my cards as well as the spending to pay off my cards will end up making it look like I spent twice what I did, and I guess that's the snag. How do you keep track of spending and all its categories without running into this problem? I don't know. What it comes down to for me is that while seeing my net worth and spending trends is valuable, knowing how much cold, hard cash I need to pay for my life each month matters way more. Knowing that I can afford my payments is a much bigger priority than knowing I have some cash and some available credit.

What's the solution? There could be any number of solutions, but the way I see it is that a Spending Plan should only apply to liquid assets. Or, at the very least, this should be an option. Accounting for and planning for spending on credit accounts has some value, but it's an entirely different activity from planning a checking account.

Coach Natalie

Hello @ianalexschuster,

Thanks for posting your inquiry to the Community!

Although other users may come along with great feedback and advice for you, I wanted to provide the basics on how the Spending Plan and Transfers work in Simplifi. We have a Support Article available here that goes over the Spending Plan, as well as a YouTube video here.

The Spending Plan is built on a monthly basis, and you can plan 12 months into the future. The Spending Plan is built by taking your Recurring Bills, Subscriptions, and Income, as well as any additional income that occurs throughout the month, and then deducts Savings Goals that are elected to be included in the Spending Plan, which gives you your 'Income after bills and saving' total. It then deducts your planned expenses (Planned Spending), and any additional spending that occurs throughout the month (Other Spending), leaving you with the leftover or "Available" amount.

The Spending Plan uses transactions to get its totals, whether Recurring, future-dated, or any regular transaction entered into your account registers. When it comes to Transfers in the Spending Plan, since Transfers are considered neutral, they're not intended to be counted as income or an expense in Simplifi. When it comes to Credit Card Payments specifically, since you're already tracking the charges to the credit card as expenses in Simplifi, you won't want to also count the payment as an expense.

With that said, other users have posted about wanting to have Credit Card Payments and other Transfers count as expenses in Simplifi, maybe due to paying down credit card debt, or performing recurring transfers to a savings account each month that they'd like to count against their available to spend funds. Unfortunately, there's not a whole lot that can be done currently to accommodate these types of situations when it comes to using 'Linked Transfers' since the positive and negative side offset each other, however, that should be changing soon with the addition of a "Transfers" bucket in the Spending Plan.

There are also other types of Transfers that can be used in Simplifi that can be counted as an expense, such as using the Category of "Credit Card Payment" and electing to include the transaction or Series in the Spending Plan. For more details on how the different types of Transfers are currently handled in the Spending Plan, please see our Support Article here. And to track the progress of the upcoming "Transfers" bucket, please be sure to follow along here.

I hope this helps shed some light — let us know if you have additional questions!

-Coach Natalie

DannyB

Hi @ianalexschuster

I see @Coach Natalie has pointed you to some great resources for the purpose and design of the Spending Plan. For me, the Spending Plan is the heart of Simplifi and is pretty much the whole reason I'm a Simplifi user.

As far as your quesiton about credit cards, unless you actually are carrying a balance on a card that is not paid off at the end of each billing cycle - that is one is carrying a debt (i.e. very expensive loan) that you are working to pay off, there really is no reason to track your cc payment in the spending plan. You do state that you understand the reason a cc payment is not included in the spending plan but it seems that you are having a difficult time seeing that "payment" leave one of your cash accounts and not seeing it accounted for in your Spending Plan since it sure feels very much like spending and thus should somehow be included in the Spending Plan and thus allowing you to easily account for it and so your question, "What is menat by 'Spending Plan'"?

Let me make a suggestion that might give you differet way to think about this. A credit card payment that is covering all charges to a cc for the current month/billing cycle is NOT an expense if you are paying the balance in full since the expenses, as far as budgeting and the Spending Plan are concerned, have already been accounted for individually as you acknowledge in your post. But may I suggest that you think of the cc payment is simply a transfer of money from one type of checking account to what is, in essence, a second type of "checking" account. What I mean by this is that a traditional checking account requires you to have funds available in the account before you can spend them - a positive balance. A credit card is the reverse, it is a "checking" account that allows you to pay in arrears - build a balance due or accumulate a negative balance. The first requires you to have money before you can spend it whereas the second allows you to spend money before you have it, or at least before you spend it. In either case, the acutual individual expenses are what you plan for and track in the Spending plan, not the total general balance used to cover the expenses.

Hope that gives you a different way to think about the Spending Plan and credit cards.

RobWilk

If you put your credit card payments as linked transfers (category as transfer to account) you might find credit card payments are ignored from spending plan.