@kevinwholland I was somewhat confused at first as well, but I think I have a good handle now after spending some time fixing the formulas. Here is my understanding of each value.
Net Budgets: This is a simple balance of your budgeted income minus your budgeted expenses. If this is $0, you have allocated every dollar of income to expenses or savings goals. A positive value means you still have income to allocate, and a negative value means you have budgeted more expenses than you expect to earn. I believe this is how the Rollover value previously behaved.
Net Actuals, All: This is the net sum of all transactions on the Transactions sheet for the specified period, including income, expense, and transfer types. This is similar to Cash Flow on the Monthly Budget sheet.
Net Actuals, Savings: This is similar to the value above, but only categories marked as Savings in the Track column of the Categories sheet are summed.
Offset: This is a more resilient version of what was previously called Rollover. As @randy explains it:
There are basically 3 categories of transactions that need to be handled differently to keep a budget true:
Budgeted transactions with rollovers turned on
Budgeted transactions with rollovers turned off
Unbudgeted transactions (e.g. transfers, uncategorized or no-longer-used categories)
The Offset formula is Net Budgets - Net Actuals, Savings + Net Actuals, All. $0 means you have no errors in your budget. A positive value represents unallocated, but available savings. All spending from non “savings” categories removes from this bucket. All income adds to this bucket. Phantom savings show as a negative [Offset] and is always an error. I.e. you’ve “saved” more than you actually have (Thank you, @matta, for the excellent phrasing).
Ok, so I’m a bit late to the party but I wanted to throw in my two cents, as well as ask some questions.
First, I do find rollover adjustment useful, although I agree with previous commenters that “uncategorized transactions” and “total transfers that don’t net to 0” are data errors, rather than something that needs adjusting with a rollover adjustment. And “categories that are not set as savings categories” doesn’t really affect me since I have everything roll over, but I get that it’s an important issue for you to tackle. Also, it did take my a while to understand how it works so I’m glad you guys are spending time rethinking it. I’m really looking forward to being able to use the Foundation template, but rollover is a requirement for me.
Ok, so now on to my weird use case. My problem started when my wife left her job. While she was looking for a new one our budget exceeded our income, but that was ok since we have the savings to cover it. The question was how to account for that in Tiller (I’m open for other suggestions, this is just what I came up with). First, I have an expense account called “Savings” that carries a large rollover amount and a budget of 0. Basically, this just represents all the cash we have in the bank. Then at the start of each month I look at the rollover adjustment and transfer the appropriate amount from “Savings” rollover to rollover adjustment. That lets me see how the cash in our account is decreasing while still allowing for me to budget more than our income. And have all of the numbers make sense. The biggest downside is that this transfer isn’t particularly visible, and thus could be confusing to look back at.
And now my question, how do you think I should handle this type of situation in the new Savings Budget? I know it’s a specific case, but I think it would help me understand the new system. Also, maybe I’ve missed it but with the Savings Budget “Budget Health” that you added, is there a way to adjust it at all or is it just an indicator? I definitely like it though, and while it’s a bit tough to wrap my head around it all I appreciate all of the thought and streamlining you’ve done.
@matt Your workflow of moving rollover savings from your Savings category to supplement your budgeted expenses is spot on. I use the same workflow when it comes to tracking savings goals and finally making the purchase. You will be happy to hear that the Savings Budget actually logs your transfer of rollover savings from one category to another on the Budget Journal sheet. Take the simple example below of me moving $21.08 from my grocery savings to cover an excess of my restaurant spending.
To answer your question, the Budget Health section is indeed an indicator that doesn’t have any configuration. I went into some detail behind what it represents in my previous post above yours.
The one thing Budget Health doesn’t take into consideration is savings, as it only deals with budgeted and actual dollars, and savings is largely a derived value. Savings health can currently be tracked for individual categories using the Savings & Debt (Prototype) sheet. By tying the savings category to a specific account, you can get at-a-glance feedback on whether or not your savings categories are sufficiently funded by their associated accounts.
@cculber2 thanks for the explanation. Glad to hear that the Savings Budget logs the transfer, that’s pretty straightforward. I know in the envelope budget that was tracked in the Budget History, but this seems more clear.
My use case is slightly different than the one you described though, since I have been transferring from an expense category rollover directly to Rollover Adjustment, rather than another category. This has been helpful since I don’t really have any one specific category that needs the extra rollover. Instead, I know that my expense budget exceeds my income budget (and actuals) so I don’t really pay attention to which categories are getting the extra rollover, it all just gets lumped together in Rollover Adjustment. In other words, my spending is within my expense budget, but I need to reconcile the fact that my expenses are higher than my income. I see how I could do that by decreasing my budget until it’s under my income and then transferring rollover to the categories that need it, but I’d rather have realistic numbers in my budget. I hope that makes sense. I guess I could make a separate Income category called something like “Spent Savings” and transfer rollover from my “Savings” category rollover to “Spent Savings” rollover, thus balancing everything without messing up my budget. What do you think? Am I overcomplicating things? Of course this is a temporary situation (expenses exceeding income), but it’s something I do have to deal with.
I think I understand the Budget health (definitely with the help of your comments, thanks!), I was just asking to make sure I hadn’t missed any other adjustment feature. I used that regularly in the envelope budget, but honestly it might be better not to have it since visibility on what was actually happening behind the scenes was not great. I’ll just have to get used to doing things a different way.
I haven’t yet looked into the Savings & Debt sheet, but that definitely sounds interesting!
I think the key is that the Savings Budget’s “Budget Health” checks expect a zero-sum budget (Income == Expenses). Account for this by using a negative budgeted amount for your “Savings” expense category. Your budget will then be zero-sum, and all the math works out fine. This is what I did when playing with the Savings Budget for my 2020 data and had to account for a series of months of planned over-spending.
I don’t fully understand how the Tiller Envelope Budget treats Rollover Adjustment, but I suspect that what I describe above amounts to the same math.
If I understand what you’re doing correctly, I often handle this sort of situation by returning that allocation to an income category. Since I have extremely variable income I allow “excess” income in fat months build up rather than assigning it to an expense category. Basically that’s how I account for unallocated short term savings amounts. That way my expense budget accurately reflects what I spent (even if that spending is actually saving to spend later, like an annual insurance payment).
That makes sense, I can see how it would effectively do the same thing I’m trying to do. Personally I’m not sure I like leaving excess income in Income categories, but that’s just personal preference. Thanks for the suggestion!
Understandable. I did it the other way for almost a year but it kept resulting in odd problems. Eventually, I went back through my entire budget history and changed it to accumulate in income. The way I see it until I allocate it to a real expense (vs a generic “savings” category, like I had before) it’s like I haven’t earned it yet and it doesn’t throw off my Expense amounts.
The way I like to look at it, money that is being saved towards a goal is already as good as spent. By assigning that income to an expense category you are taking it out of circulation. If the goal is abandoned or overfunded, the money can be transferred to another category’s savings. The running tally doesn’t throw off my bookkeeping because at the end of the day it’s the actuals that will speak for themselves. My budget and savings are just the guardrails to keep my actual spending in check.
Of course, my view all falls back on the assumption of a zero-sum budget. To that end, I have two income groups: Primary Income and Passive Income. Primary Income is our monthly household salaries, and Passive Income is irregular earnings like savings account interest, statement credits, or private sales. I add irregular income to the overall income budget as it is earned, and then assign it to a category. I feel it gives me a better picture of my goals and their progress. If zero-sum isn’t something you’re worried about, I see no problem with letting unspent income accumulate in its respective income categories.
Right… I look at it the exact same way. The only difference is until I have a specific goal to spend it towards, I don’t anymore.
Where this really got me when I held savings in an expense category was moving money to investment accounts. I’d have actuals that greatly exceeded my budget. It’s ultimately not a big deal but I felt like it skewed the reality of what was happening.
My budget is zero-sum in the sense that what I budget for and “spend” into categories always balances out. The only difference is that instead of spending into categories that don’t have a specific purpose to hold “excess” income, I don’t budget it yet. Ultimately this started out of my practice of spending “last month’s” income… November’s budget is based on October’s income. But in practice with a highly variable income, some sort of “buffer” is required. I used an expense category for almost a year before changing it to keeping it in income.
The logical extension of using an expense in that way ultimately gets into a problem with what you consider income. One of the problems I was facing originally is that I would keep an “investment savings” expense category. If I bought a stock or something, it would deduct from that. But if I sold something, how do you think about it? I think a lot of people (if they don’t just hide those transactions) would categorize it as a negative expense, a credit to that category. Heck, if you think about it you don’t really need an income category at all. You could categorize all income as a negative expense. But really if buying a stock is an expense, selling it is income. Buying a house is an expense, selling it is income. So considering those as negative expenses runs into other problems down the line if you’re trying to keep a very comprehensive financial picture.
Ultimately both methods can work depending on your needs and purposes. I’ve often thought that some third, neutral type of category is needed but I haven’t been able to work it out in my head yet.
Yeah, investments are the one area that is gray for me. Currently, I’m logging the transfers from my bank to the brokerage account as a Bank Transfer, but any other transactions internal to the brokerage account are an often-unbalanced Investments transfer category. I hide this category from reports. I haven’t really put much thought into selling yet, but as long as it stays under Investments, I don’t think I need to worry too much. Basically, I’m treating my brokerage accounts as black box accounts with a balance. What goes in and out of the account is balanced, but what happens inside is magic (though still logged). I’m still holding out for more robust investment tracking features in the future.
I’m doing a sort of hybrid right now, categorizing dividend income and reinvestments, and everything else goes into a hidden category. But I’ll probably soon start categorizing all purchases as expenses and all sales as income in order to get a better picture within Tiller of my income and tax situation. Right now I’m still doing a lot of calculating in outside spreadsheets for that.
Quick question, how do you use the rollover for income and how do you make adjustments to it? (Budget vs savings adjustments) I would like to hear how any of you make income adjustments regardless of how you use the savings budget!
I’m trying to do more of a zero-based/envelope system. I don’t want my end of month adjustments to erase my bad spending habits or affect budget history.
I just tried using a new workflow, where I don’t adjust the savings and budget for the current month, but I adjust savings in the following month based off of the savings carried from previous month’s. This makes it so I can see the negative available balances when I look at the previous month. The envelopes start out as zero before adding the current months budgets.
But I’m not settled on what to with income adjustments. I was just subtracting the positive savings values from savings; however, when I have unbuffered income, I realized that I can budget for it in the next month, which reduces the available to zero, and helps fix my budget health.
Does that make sense to any of you? I know I could have explained this further and more clearly.
Income categories will roll over the same way that expense ones do. When you’re budgeting, it’s a good idea to work with the income you received the previous month unless your income is very predicable. So say I earned $100 in July. When I’m setting up my August budget, I allocate $100 in spending. What I end up actually bringing in in August doesn’t matter until I setup my September budget. If you’re doing strict zero-based budgeting, then the amount will be the same as what is shown in the “Savings” column for the month you’re working with since that is what came in during July and rolled over (because in July you spent June’s income.)
I usually do it like this as well.
If you use the “last month’s income” method with a strict zero-based budget then this issue goes away and I highly recommend doing it this way. I know it can be tough to start though because it essentially requires that you have a month’s worth of income sitting in your bank account. Now of course you should anyway (and then some) but that’s sometimes easier said than done. If you don’t, it’s a worthwhile goal.
@hild.jay I do this also, it has worked well for me.
I’ll admit I don’t have a great system for income budgeting. I think the strategy @aronos described, budgeting with the previous month’s income, makes a ton of sense and I’ll probably start doing that.
I’ve actually adjusted my approach to irregular income in the past few months. I’m no longer adding it to my income budget, leaving the budget to planned, reliable income. Similar to @hild.jay and @matt, I move savings from the irregular income categories, but I do it within the current month rather than waiting for the next month. This allows me to be a little more proactive in balancing income and spending.