New to Simplifi. Why a Spending Plan rather than Category/Spending?

Glimmer3721

I've used Quicken Desktop and other personal finance applications in the past.

These programs show categories, monthly amount budgeted/saved for those categories, and amount spent against those categories.

The Spending Plan does more. I feel like I'm missing a bit of education as to why I need a Spending Plan more than just the simple reports that other personal finance software provides.

I believe that the Spending Plan is superior since the Devs have spent so much time building it out, I just need some education around why it's superior.

Any thoughts on this one?

Thanks!

RobWilk

In my opinion, a traditional budget is usually very -static-. That is, the numbers and limits don't change throughout the month, or month-to-month. The spending plan automatically figures out, based on scheduled recuring income PLUS actual transactions (perhaps not recurring) what your spending allowance is for that month, then figures out using both recurring expenses PLUS actual expenses, what you have left to spend in each month. You can optionally still reserve amounts for each planned spending category, and as a guide you can use the other spending "bubbles" to figure out which categories (unplanned) you may want to plan for. I like that it factors in the ability to hide/unhide one side of a transfer (to include in spending plan or not), so i can count a savings→checking transfer as a credit "if" i want to. I especially like that I can forecast my spending plan into future months (with estimates based on previous spending) to see what I "have left" those months, so I can tell if my plan is going to work. I prefer to use the other spending area than planned spending (unless I really know I'm going to spend it) because I feel like if (traditioanlly) I budget $10 for 'entertainment' I'm going to spend that whether or not I want/need to actually spend it.

This is just my opinion and some people love the spending plan, others still prefer traditional budgeting.

Glimmer3721

@RobWilk

I was pondering your post this morning and I had an "ah ha" moment. I've been thinking about managing finances by looking at spending categories and balances within my accounts. Simplifi wants us to think about spending as an aggregate across all accounts.

That's a different way of thinking and I really need to switch my brain to think of spending in this new way.

And as you mentioned, the ability to hide transactions from the Spending Plan and Reports leads to a better understanding of how our money is spent.

I believe that this is probably the biggest concept that new commers to Simplifi need to understand because the way the Spending plan works. Since Savings Goals works the same way, meaning, you can save money towards a goal across accounts, it really means we need to think of our money and how it's used regardless of where it's stored.

In the olden days, people only had a checking and savings account. This meant that there really wasn't a need to differentiate spending in categories across accounts because people only had a checking and savings account. Today, people have many accounts. The way we manage money has become more complicated. The Savings Plan is really a great concept.

In fact, maybe Simplifi should create a video instructing new users to think about money in a different way and why the Spending Plan is so revolutionary.

Glimmer3721

@RobWilk

Had another thought about this topic…

Every month we transfer certain dollar amounts from income to savings buckets for things like Christmas, Auto Maintenance, etc.

These transfers should be part of my spending plan because I'm saving up for future expenses.

When it comes time to spend the money from these savings buckets, I should be sure to exclude the expenses from the Spending Plan because I've already accounted for those dollars in the Spending Plan when I transferred the money from Income to the Savings Buckets.

This workflow seems simplest for persons that want to save for future expenses.

Other thoughts are of course welcome.

RobWilk

@Glimmer3721

I agree with you.

What I do: I transfer money to a savings account before contributing it to the goal (now that my bank doesn't have transfer limits on savings since around April 2023). When I withdraw the savings goal, I transfer the money back — and under the 'transfers bucket' in the spending plan, I unhide the credit side of the transfer.

It's not ideal, but it's workable.

Someone else may have other ideas on how to handle this.