Plans: A Guide
A plan as you may have guessed, is used to determine how much you intend on funding a specific category every month. While a category simply acts as the envelope so you know how much money you have available, a plan is how you quickly know exactly how much you have to set aside and if you are on track.
Rather than needing to remember how much money to fund your categories with, Centsible will make the budgeting process easier by giving you a shortcut to quickly budget your planned amount.
Additionally we also use the plan amounts to show you how much money you would need to fully fund everything. This is useful to quickly compare how much you make monthly vs how much you intend on funding monthly. Think of this as an easy way of measuring if your plan is realistic.
Plan Types
Centsible currently supports 5 different plan types: Expense Plan, Monthly Savings Plan, Monthly Expense Plan By Date, Monthly Savings Plan By Date, and Monthly Expense With Cap Plan.
Expense Plan
The Expense Plan as the name suggests, is a plan type used for your standard monthly expenses. You can create a category for every bill you have, and then add an Expense Plan to denote the amount you expect to set aside every month.
Example: Say your cellphone bill is $75 monthly. So you create a category, creatively named "Cellphone Bill". You add an Expense Plan with the $75 you expect to need monthly. When you have money available in the "Available Funds", you can go to the cellphone bill category and quick fund the exact amount you need to pay the bill.
Expense Plan looks at the value in the fund column.
When you've met this plan but spent the money, the plan will still show as met because the funded amount is still set. However, if you move money from the category, it will show as underfunded.
Monthly Savings Plan
The Monthly Savings Plan is a plan used for instances where you want to have a certain amount saved without a specific date. Maybe the amount you can save varies. Or you constantly need it replenished.
Could be an emergency fund, down payment for a home, or smaller one time purchases.
Since you can never be off track, it won't show a warning when you are "underfunded. But if you have progress bars on, you'll see your progress. It's a nice way to have a goal to work towards.
Monthly Savings Plan looks at the value in the available column.
As you spend you'll be asked to refill it.
Monthly Expense Plan By Date
A Monthly Expense Plan By Date is a plan to save up for a big purchase by breaking down the saving between now until it's due, while being able to spend from it. It's a sinking fund. You set a total amount, select an end date, and Centsible calculates how much you need to save per month in order to meet your plan. If you overfund or underfund it'll adjust accordingly.
Example: say you want to save up for a vacation in 1 year. You need $2,000 in 12 months. You enter that info and let us tell you how much you need to fund every month ($166.66). Usually you'd buy the flights and hotel before you need the money. You can safely do that while staying on track.
Monthly Expense Plan By Date looks at the value in the fund column.
You can safely spend from a category with this plan type without it affecting that you met your plan.
Monthly Savings Plan By Date
The Monthly Savings Plan By Date is a plan to save up for a big purchase by breaking down the saving between now until it's due. It's a sinking fund. You set a total amount, select an end date, and Centsible calculates how much you need to save per month in order to meet your plan. If you have less or more than expected each month, the amount you need to fund will adjust.
Example: you need to save up for a new washing machine. It costs $600 and you'd like to have it by 6 months. Since you need the full amount in 6 months you use a Monthly Savings Plan By Date. You see it takes $100 per month for 6 months to get your washing machine, which fits perfectly within your budget.
Monthly Savings Plan By Date looks at the value in the available column.
It's expected to save up to the total amount before spending from it, otherwise you will be asked to refill what was spent.
Monthly Expense With Cap Plan
The Monthly Expense With Cap Plan is used when you want to save up to the same amount every month, but can prompt you to save less if your category total available amount reaches the max amount you set.
Examples
- Say you want to save up for an emergency fund of $5,000, but your budget only allows you to save $100 monthly. You can use the Monthly Expense With Cap Plan to remind you to save that $100 every month. If you reach $4,950, we only prompt you to fund $50 the following month because you set a max amount of $5,000.
- You know that you have medical insurance deductibles and sometimes a max out-of-pocket amount. Your budget can only handle about $100 a month towards medical. So you use a Monthly Expense With Cap Plan in order to save $100 monthly on your "Medical" category, but only need to save a max of $2,500 in case of a serious emergency. Once you reach that max amount, you stop saving. Odds are you'll have small co-pays and other deductibles, so you draw from the medical category. You'll be prompted to refill up to $100, or less.
Planned Expense Component
Near the top of the budget screen you will see a Planned Expense card. This card represents the total sum of the following plans for the current month:
- Expense Plan
- Monthly Expense Plan By Date
- Monthly Savings Plan By Date
- Monthly Expense With Cap Plan
The Monthly Savings Plans doesn't have an end date, thus is not used in this calculation.
This component is shown to illustrate the power of using plans to create a budget that matches your income. When adding all your plans it's much easier to see if your whole budget is realistic or not.
For example, if your income is $4000 a month but the planned expenses adds up to $4300, your budget is not realistic. However, if your planned expenses adds up to $1000, you likely haven't planned enough.
It's also important to note that plans can be used not only for spending, but also saving. Just because you fund money to a category, doesn't mean you have to spend it. A proper budget takes into account both expected expenses, but also saving. Which is why you are encouraged to plan every cent.