Sinking Funds In Monarch Money Part 2

[@BrittanyFlammer]

Great explanation. I'm also a financial coach and how to handle sinking funds comes up so often. Thanks for sharing!

[@evolvingmoney]

Awesome! Thanks so much! As a financial coach, is there anything you would have added or done differently to explain it?

[@bigchaloopa]

Hi. This was excellent and it answered my question. I'm currently set up like your second example. I have to re-watch this a few times to get my brain around it but it explains how I want to handle it. I will work through this to see the results. Thank you 😊. Very much appreciated! Your channel and content is great. I can see it growing with Mint dissolving.

[@annamalcolm2697]

This was so so so helpful. Been looking for this video for months.!! Thanks gal

[@evolvingmoney]

So glad!

[@ThomasLEsperance]

This has been super helpful! I am worried I will accidentally be overdrawn in my checking with all the transfers to pay off cards as well as expenses coming right out of checking. How do you ensure you don't accidentally overdraw your checking? I do love the cash flow concept and has broken me out of the old habit.

[@evolvingmoney]

Don't go over budget! Budget diligently and you won't overdraft. Make sure you budget for any transfers or CC payments so that you don't send more money than you make during the month out of the account.

[@nhathuynguyen]

Thank you for the video. I do like the second approach with goals better but wondering if there is a way to track individual buckets within the sinking fund? When I spend something on a specific category of the sinking funds, I would like to check how much I have spent and how much do I have left. Is there a way to track that in Monarch without having to reference the spreadsheet?

[@evolvingmoney]

Of course! You just create the category you want to track in Monarch and use the rollover feature to set the starting balance. That way you can see the amount you have remaining slowly reducing as you spend on that category!

[@maciejleja9709]

​@@evolvingmoney this makes sense to me but my only annoyance is if I have a category for ski passes in a sinking fund, and I buy those passes and categorize it as such, it doesn't then go into the Outdoor Adventure/ Gear category that tracks overall spend on that throughout the year. Only way I can see it work is then delete that ski pass category when the purchase showed up and categorize the purchase under the Outdoor Adventure/Gear category. Any advice to work around that?

[@m.pippen1624]

Love your videos they have been very helpful. However, I wish you would slow your pace down to make it easier to grasp the concept you are sharing. Thanks

[@evolvingmoney]

Thanks for the feedback!

[@BrandonBee013]

Hi I prefer to keep my sinking funds and smaller savings amounts in cash as I've just always found enveloping to be the best way my brain handles saving money. I'm trying to represent these in Monarch using a combination of manual accounts, categories like you have, and goals. I would like the balance of all my cash accounts to be displayed in my net worth and reporting, but i dont want the budget to rollover and misrepresent that i have a higher monthly budget than actual. Any tips on how to handle this scenario? Thanks for your help!

[@evolvingmoney]

As long as you are creating manual transactions for every time you spend the cash, there is no reason why your rollovers can't exactly match the same amount in your cash envelopes! You just have to make sure things are getting categorized correctly.

[@LauraandShane]

We are retired and have automatic transfers from our investment accounts into our checking account. How do I get the transfers to show as income for us to spend each month in our budget? (I currently have our investment accounts set as Hide from Transactions and Budget so all the trades aren't showing.)

[@evolvingmoney]

You can set the automatic transfer transaction category as "income". The Green transaction that comes into your checking account can be labelled as income. When you are retired and that is the exception in the rule of labelling all transfers between accounts as transfers. The alternative would be only labelling pensions/social security as income and if you don't label your investment withdrawals as income, then you would likely show a deficit during the year (which is technically true, since you are pulling from your retirement savings). Either way works, really. Most people I work with though generally will just mark retirement account withdrawals as income. I would have a separate income category made so you have "Social Security Income", "Retirement Withdrawal Income" and then any other income sources you have should have their own category. Does that help?

[@COKAIN625]

Great video, I found this very helpful as a new Monarch user! Quick question: how do you use Monarch as a Demo user? I'm interested in this feature to be able to share my screen with others without sharing personal data. Thanks in advance!!

[@evolvingmoney]

Hey there! I do believe it is a feature that is available if you are on the advisor/coach platform!

[@mlmcbride1]

Great video. I have a home renovation project that I have set a budget for. I would like to track how we are doing against that budget. Monarch doesn’t allow a separate budget. Should I use this sinking fund approach to track that project budget? Or is there a better way in Monarch?

[@evolvingmoney]

Yes, I would make sure you have a home improvement category to track the spending. You can use tags for the various aspects of the home improvement project. If you have funds already set aside for this project, when you turn on the sinking fund, you can set a starting balance and you can watch that starting balance decrease as you spend for the project. You can also run reports on the tags or the category so it will show you how much you have spent so far on that project!

[@kendahembrough24]

@@evolvingmoney Thank you for all these great videos! How do you set a starting balance for a sinking fund in MM?

[@evolvingmoney]

@@kendahembrough24 if you click on the gear icon next to the category you want as a rollover, it will open up settings for that category. Once you switch h on the rollover function, there will be a place to enter a starting balance

[@joseffoureauxdaelander774]

I'm not sure I grasp how you recommend using the money in the sinking fund. Do you recommend using GOALS? That function I thought wasn't working very well in MM yet. If I DON'T use GOALS (I stopped that a while ago) and I spend from my sinking fund (how to I log that in the budget? Let's say I monthly put 500 USD to the sinking fund, but a particular month I extract 1000 USD for a specific purchase. Should I correct the budget so that I draw 500 USD that particular month so that the sinking fund reflects what's in the actual bank account?

[@evolvingmoney]

I'm not totally sure what you mean, but I will say it's important to not overthink it or manipulate the budget unnecessarily. Let's say you don't use goals and you are budgeting $500 per month in a sinking fund category. If you have the rollover feature turned on then your budget will say $500 Remaining in the first month and $1,000 in the next month. When you finally spend that $1,000, your remaining will now say $0 since you accumulated $1,000 in your budget by budgeting $500/mo. I recommend using the free trial of the Sustainable Budget program to hop on our live group workshops and we can talk through this scenario live! members.evolvingmoneycoaching.com

[@steveborrelli8800]

great video on sinking funds. question f you have seperate acct for sinking funds and an expense comes up and you use it (annual costco sub) you pay the subscription out of main acct and transfer money from sinking fund to reimburse acct (main) should those transfer in/out be labeled transfers or same category as Costco membership

[@evolvingmoney]

Great question! No, transfers between accounts will never be categorized as anything but a transfer or else you would have the $100 transfer and the $100 costco charge totaling $200 spent on that category in the report. Transfers are not an expense and they are not income and shouldn't be categorized as such!

[@BC-gq7bw]

How does Monarch or how should you adjust income that is based on bi-weekly pay schedule

[@evolvingmoney]

Monarch only offers budgeting on a monthly schedule. You would input your monthly expected income. When you have the two "extra paychecks" months you would adjust your income for that month only accordingly.

[@bigchaloopa]

Hi. I have a question. I feel like I'm counting my sinking fund expense twice. 1st, when I transfer it from my budget to the fund as a monthly expense and then a 2nd time when I pay the actual annual expense. This makes me want to treat the actual expense as a transfer since I have been expenses it all year long.

[@evolvingmoney]

Great question! I am doing a video here in the next week to give examples of this. To answer your question, you are on the right track, just reverse it. 1st - the transfer from your budget to your fund should be labelled as a TRANSFER, not an expense category. When you are transferring funds in a sinking fund, it is SAVING money, not an expense. Your budget and cash flow is designed to give you information on money leaving your control (expenses) and money coming into your control (income). 2nd - the actual annual expense is listed as a expense category

[@tjlasonde]

She explains in her video that moving it to another account (i.e. HYSA) is not an expense/debit; it's a transfer to another account. It's akin to moving your beer from the house frig to the garage fridge; it's still your beer and still in your house; you just transferred it to another frig. It's only an expense if you spend the money (drink the beer). I've moved forward with her first option of creating a Sinking Funds category. All my annual "planned" expenses are sub-categories. All sub-categories are set to "Rollover." For me, these average out to $3,000 per month. I'm transferring that amount to my HYSA every month. $420 per month of that $3,000 is for property taxes. With the rollover feature turned on, that $420 accrues each month because I'm not spending it until November. When that tax bill is due, I transfer the $5,000 back to my checking account and write the check, categorizing it as Property Taxes. That debit reduces my Property Tax accrual from $5,040 to $40. I then use the $40 at the bar to get over the pain of paying taxes. 🙂

[@evolvingmoney]

@@tjlasonde this beer analogy is perfect 😂

[@faYte0607]

Thanks so much for this video. @11:30 With using the savings goal method, is there a way to see the total balance of the goal directly within Budget? I guess in other words, enabling Rollover Budget for Sinking Fund. What I'm finding is that on the month that an expense is due and I'm also contributing to my sinking fund, there's a likelihood that Budget

[@evolvingmoney]

If you choose to have your sinking funds accounted for in the Goal section, then the expense category will be red in that month and that is okay! It is indicating that you pulled from savings and that is normal. If you want to see the balances in the budget and not show red, then you will keep your sinking fund categories just in the budget to rollover ever month and you can ignore the goal section for the sinking fund. Does that make sense?

[@mollybailey5004]

Thank you so much for making these videos! Sinking funding are revolutionizing my budgeting but I still learning how to implement. I am doing sinking funds in my goal section (second way you explained sinking funds). In your example of a Christmas expense, you add it to the sinking funds section in expenses but you turn off roll overs. Let’s say I have a sinking fund category for holidays/birthdays with an annual budget of $1500. I have a birthday expense coming up in several months, is there a way to track how much of this $1500 I have spent in this category (since rollovers are turned off)? Or if I care about tracking this, should I just do sinking funds the first way you showed?

[@evolvingmoney]

Yeah I would use the rollover feature if you care to see this. I prefer the rollover feature for this reason!

[@TheTerscelle]

Okay so I've almost got it. So my sinking funds arent as big as those you mentioned thankfully.. But most of the money is either paid by check, online payment or venmo. Not swipe of credit cards.How or what is the best way to handle these?

[@evolvingmoney]

Hey there! You would handle it the exact same way, if I am understanding correctly. When you pay online or with venmo the transactions should come through in Monarch and you would categorize as whatever the charge was for.

[@phillipwalters1314]

What if Im using a different credit card to pay for Christmas Land that isnt associated to the goal account?

[@evolvingmoney]

You wouldn't be able to attach the transaction to the goal if it isn't connected. If it is a savings account that is connected to the goal, you could mark the withdrawal of funds that is used to pay the card as a goal.

[@patrickflynn7875]

When I go into individual transactions, none of my goals appear in the goals area. I can't select anything. Is this just a bug? Or am I doing something wrong?

[@evolvingmoney]

Hey there! I just did a new video on goals that might help demonstrate the answer to this questions. Check it out! To answer in this comment, you may need to make sure that the account that the transaction is coming from is properly linked to the goal. For example, if I have a savings account linked to my Travel goal, I can ONLY link any transactions that come in and out of my savings account to the goal. I cannot link the transfer from my checking account to the goal because the checking account is not linked to the goal. Does that help?

[@mcsmith7692]

Another good video. The more I think about this the more I believe that Monarch is missing a unique opportunity and should have a "Transfer Section" with its Budget and Forecast Section (the new "Transfer Section" would stand on its own and be classified neither as an "Income" nor an "Expense" -- it would be either an inflow or an outflow (+/-). This would allow for proper zero-based budgeting for the multiple situations whereby transfers are required to come into a budget cycle (month) from a Savings Account to cover the expenses associated with going over Income each month. Otherwise, the Budget and Forecast will be way off if you can't account for the projected transfers. Many, many people (especially retirees) pull from savings to cover the cost of expenses -and plan this way. They sometimes lack the income to meet expenses so they pull from Savings and Retirement Accounts to meet expenses. Almost cannot believe Monarch didn't consider this. I've figured out a work-around for this scenario but it's not overly elegant.

[@evolvingmoney]

I believe that is what they tried to do with the goal section. I generally have retirees treat transfers from their retirement accounts or savings as income. You are right, it isn't ideal for proper cash flow.

[@DataTranslator]

I need to do mental gymnastics to use monarch . Maybe I’m extremely used to the concepts from YNAB

[@evolvingmoney]

YNAB and Monarch are very different in a ton of ways and there aren't a lot of budgeting apps that replicate YNAB.

[@bez28june]

you did not show how to add a "Sinking Fund" Goal. Please provide instructions as Monarch app does not show "add goal" as an option

[@KristopherHesson]

Look at the part one video she did before this one.

[@evolvingmoney]

Hey! I can totally do a video showing more in depth how to set up the goal. What you need to know for now is that on the left side menu, you will see a tab for Goals. Click on the Goal and in the top corner you will see the option to "add goal". You can select the Savings goal and rename it to your sinking fund. Make sure you watch part 1 of the video to help you determine how much you need in a sinking fund and set that yearly amount as the goal amount. I hope that helps!

[@bradwilson8265]

I setup my sunk funds with Monarch. I wanted to try the 2nd way with Ally Bank using their savings buckets. Unfortunately, FYI the individual buckets doesn’t update to Monarch only the total savings account amount. At the end, the combination of roll over accounts with a sunk fund goal may be the best way to conceptualize this different yet needed addition to any budget. Thanks for the inspiration!

[@evolvingmoney]

Yes, you would need to look at the group level total of sinking funds to balance out in Ally bank since the buckets won't show up in Monarch. It's definitely takes some work to get them to match, but it can be done!

[@danielgirard239]

Why even set up a sinking fund? Why not have the budget just roll over. I set $100 a month for gifts but have the total roll over each month. Is that not the same as a sinking fund. Just seems more confusing this way.

[@evolvingmoney]

That is the same thing as a sinking fund and a much simpler way to do it. You don't necessarily need a different bank account to do sinking funds, you can just use the rollover each category that you want to build! That is how I showed to do it in part 1/the prior sinking fund video!