Savings Budget How do I Calculate Seed Savings

I think I’ve read pretty much every thread regarding the savings budget and watched all the videos. I think have a good understanding of how to set everything up and the mechanics of how it works. What I’m struggling a bit to understand is how to properly calculate my “seed savings” which would be some portion of the cash that I have in all my savings and checking accounts. Once I have this number I would then incorporate it into my savings so I can properly allocate those funds to goals. I think I understand clearly how to incorporate the savings into my savings budget and allocate to specific savings categories. What I’m struggling with is how do I properly calculate what my savings is that is actually available to save?

Is it just today’s current total account balances from savings and checking? Or is is total account balances from savings and checking minus my next credit card payment? The credit card payments are really tripping me up. I have cash, but some of that cash should be earmarked to pay off the full balance of my credit card each month. So I’m thinking that my true available balance to allocate to savings goals would be less than what is in my accounts due to the upcoming credit card payments? Another tricky thing is that my credit card billing cycle is not the first of the month to the end of the month. So my credit card payment for the month is not directly aligned to each month of spending, but it spans transactions from two months.

Am I overthinking this? Can someone please help me think through how to properly calculate this? I’ve been spending a lot of time getting this budget setup and so far I’m pretty happy with it. This is the last piece that I need to understand so that I can actually incorporate my savings and then get into maintenance phase of this budget instead of being in setup mode! @randy, maybe you can help me out with this one.

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Hi @Lieder,

Your “seed savings” would be the sum of the end-of-month balances for all of your accounts prior to Day 1 of your budget tracking. End-of-month won’t necessarily align with your statement periods, but that is OK. The important thing is to capture a snapshot of your ending balances going into your tracking with Tiller. This information is fairly easy to obtain from your online accounts, though you may need to do some manual addition and subtraction to get your mid-cycle end-of-month credit card balances.

Here is a simplistic example, with a single checking account and credit card account:
Tiller budget tracking start date: 7/1/2022
Checking account balance on 6/30/2022: $10,000
Credit card balance on 6/30/2022: $2,500
“Seed Savings”: $7,500

Any specific debits or credit card transactions prior to your start date are immaterial. By offsetting your checking balance with your credit card balance you are preventing any accidental “over-saving”. Any transactions beginning with your budget start date will be covered by that month’s budget and any savings you choose to allocate.

I hope that helps!

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Hi @cculber2,

Thank you for the input. I think what you described makes sense. So the credit card balance would be whatever payment I’m going to make in the month of July due to the previous billing cycle that spanned from the middle of May to the middle of June (I always pay the full balance) plus whatever transactions I incurred between the start of the new billing cycle in June all the way up to the end of June. I think it makes sense to capture that payment as part of the total balance since I categorize the payments as transfers, they won’t affect my budget. Then all new transactions going forward on July 1st will be captured by my budget. I think this make sense! Thank you for helping me think through this!

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Hi @cculber2, one more question for you. Entering the seed savings as a savings income adjustment and then distribute it out to expenses from there, this seems to work well for the most part, however I’ve hit a snag. I now have thousands of dollars that are not accounted for in my cash flow calculations and have since had some very large transactions using those savings dollars. So on my annual cashflow roll up numbers on the Yearly Insights sheet, it appears as though my cash flow is in the red since June, however I’m not spending money I didn’t have. What would happen if instead of entering the seed savings as a savings adjustment to income, what if we entered the seed savings as an income transaction at the beginning of the budget for each of those accounts? How it shows as income and any cash flow calculations would take these values into account. Would this be bad practice for reasons I can’t think of? Seems like another advantage to doing this would be that I could track and reconcile my account balances more easily since I would have my starting balances entered as transactions? I would have to create a separate sheet for this, but just an idea.

Hi @Lieder,

The reason that your cash flow amounts in the Yearly Insights sheet may be negative is that cash flow in this sheet does not represent whether or not you are spending money that you have, but the net direction of your spending in the specified calendar year. It does not matter how much savings you have, the fact is that you spent more in the specified year than you earned. The fact is you are spending more than you are earning in the current budget year, which is very different from spending more than you have earned overall. Seeing a negative cash flow can be unsettling at first, but because you know that your balances have already been trued up, you can stay confident knowing that in this case, a negative cash flow will show that you are spending out of your savings rather than only your income.

I do not believe this would be a good idea as it would over-inflate your income figures and throw off many reporting metrics. You did the proper setup for the Savings Budget sheet by seeding the savings in advance. Your savings should be used to cover any unbudgeted expenses. This will give you a more honest picture of your overall financial health.