I am having some trouble aligning everything properly while utilizing the savings budget template.
I have a few things that I want to save for (new car, travel, emergency fund, etc.) by transferring money from my checking to my savings account each month. These are budget items that usually come in one lump sum payment rather than a monthly expense so I want to save money monthly to contribute toward them. When those transactions appear in my transactions tab, I have been categorizing them as SAVINGS-NEW CAR, SAVINGS-TRAVEL, etc.). I don’t currently have my savings account populating transactions in my sheet because I typically don’t “spend” money from those accounts, the money always flows to and from the checking or credit card accounts. This works well on my savings budget sheet because I can see each month that I am contributing toward those goals and it will zero out if I contribute the proper amounts over time.
However, My trouble comes when I actually want to spend that money. When I buy that new car and put $5,000 down likely through my checking account, a transaction for -$5,000 will flow into my money feeds. I can categorize that as my CAR-PAYMENT category, then the typical monthly payment on my car would continue to get categorized under that category. But when I wish to “reimburse” myself for the down payment from my savings, I can transfer $5,000 from savings back to my checking. The +$5,000 transfer would flow into the transactions sheet.
Here is where I’m confused on how to categorize. If I categorize as a transfer of some sort, it would look like I way overspent on my CAR-PAYMENT category for that month. Same goes for if I categorize as SAVINGS-NEW CAR, but at least that category would zero out on the transactions sheet once I purchase the car.
Is there a better way to go about this? Should I connect my savings account and start categorizing transactions there as well? Any suggestions are welcomed.
Hi, there. So, I think the issue might be in how you’re trying to use the Savings Budget. I don’t have actual transactions that constitute the Savings within the Savings Budget. They are (for lack of a better term) Savings Budget Transactions, but they are not transactions that are reflected in my Transactions sheet. I think this is one of the trickiest things to grasp with the Savings Budget: the addition/subtraction of Savings within a category in the Savings Budget doesn’t have to correspond to actual transactions, and in fact, it sort of confuses things to try to make them correspond (as you’re discovering).
So, as an example, I am saving money for kid’s school tuition. I budget money every month within the Savings Budget that goes into the Savings for the College Tuition category. When the tuition bill hits, I use the Savings to pay for it. The only thing in that process that corresponds to an actual transaction on my Transaction sheet is payment of the bill. The rest of the transactions are internal to the Savings Budget.
I fear that explanation won’t make much sense. It’s a bit tricky to explain, but happy to try to clarify if I can.
This is definitely helpful. For clarification, how do you keep track of how much you’ve saved? Your college tuition example is basically how I budget for car insurance which the bill hits twice a year. I “budget” ~150/month knowing that every 6 months I pay a lump sum of just under $900. That $150 per month never leaves my checking account, though so when the bill comes due, it essentially zeroes out.
The problem I am having is that if I do this for too many things I am saving up for (new car, travel, home renovations, emergency fund, wedding, future college savings for a kid, etc.) which are all going to be lump sum payments, not on a regular basis. If I don’t transfer that money to my savings account to remove it from being “usable” income, then I would be more likely to allow that money to cover overages on other categories (i.e. dining out, clothes, activities, etc.) which I already budget for as well.
Transferring the money to my savings account is my way of holding myself accountable to my budget which is why I want to figure out a way to make this work that makes sense.
Yeah, good question. I’m really only tracking savings for the tuition, so I suppose it’s a bit easier to keep track of. But there was a recent thread on here in which I made the point that I think it’s necessary to separately track (a) budget and (b) cash flow. The two are interrelated, but require different tools. I use the Scheduled Transactions template for tracking cash flow, but I’m not sure how much that would help if you are trying to track a significant sum of money across multiple categories. That is a trickier problem that I’m not sure I have a great solution for.
I also transfer to dedicated savings accounts for my longer term savings. I’ll use my “car repairs” account as an example. I transfer a set amount every month into that account. The amount I transfer every month matches the amount I budget for in my Savings Budget, but the two transactions that show up in my Transactions sheet after the money moves I just classify as Transfers. When I swipe my card to spend in that category for oil changes, new tires, etc. then I classify that swipe as “car repairs”. The amount available in my budget for that category then goes down by the amount of the charge. At least once every two weeks, I “reconcile” my savings accounts and make sure that the balances match the savings amounts in my Savings Budget. Hope that helps.
I have both my checking and my savings accounts transactions coming into my transactions. Any time I move money between those accounts I categorize it as “transfer”. That category is always $0 since a removal in one will be an addition in the other and both transactions will show up and cancel each other out.
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