Rollover budgeting in PocketSmith, now in beta

How it works, when to use it, and why it might be more useful than you think.

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Twelve years ago, PocketSmith introduced a unique take on budgeting: the ability to see your future bank balances by entering repeat financial events in a calendar.

We let you forge your own path by scheduling incomes and expenses like appointments, breaking free from rigid monthly budgeting and helping you be financially prepared ahead of time.

It’s our take on personal cashflow forecasting. It empowers you to control your spending by showing you what you can achieve when you stick to your budget.

Now, we’re proud to introduce the biggest improvement to the PocketSmith budgeting system since this original innovation: rollover budgeting. If you’ve been waiting for it, the day has come. And if you don’t know what rollover budgeting is, boy do we have a treat for you!

 

What is rollover budgeting?

Rollover budgeting means unspent or overspent amounts from historical budget periods are rolled into the current budget period. For example, if you only spent $80 of your $100 Entertainment budget last week, this week your Entertainment budget will be $120.

There are many similarities between rollover budgeting and “envelope” style budgeting systems. With envelope budgeting, each budget is a virtual envelope of money, and unspent amounts left in the envelope accumulate over time.

Our rollover approach gives you even more flexibility because it lets you choose how, what and when your budget rolls over for both your incomes and expenses. We’ll explain more below.

 

Why use rollover budgeting?

Rollover budgeting is very useful for a range of situations. Enabling it in PocketSmith allows you to solve financial problems in all-new ways that are more meaningful.

1. Ensure you’re going to hit your goals

Typical budgets do not pass on the consequences of overspending. As such, you are encouraged to continue spending as per usual even if you’ve blown your budget in the previous period.

But with rollover activated, the budget amount available in your current period is directly related to how well you stuck to your budget in the previous period. If you blow out your budget, you’ve got less to spend this period.

So when you put financial goals in place, rollover will keep you and your spending on track towards those goals.

2. Save for large expenses over a longer period

For large annual or semi-annual bills, rollover lets you allocate money each month to be put towards these bills. For example, if you have a $1200 / year rates bill, put aside money for it by setting up a $100 monthly budget.

Similarly, your unspent funds in a category can be money set aside to splurge with. For example, with a good run on a “Healthcare” budget, you can accumulate a surplus and buy a new pair of glasses.

3. Avoid debt by highlighting categories where spending problems exist

Many of us lean on our credit cards for spending. This means that when overspending occurs on a particular budget, the debt gets absorbed by the credit card. You’ll have more to pay off on your credit card at the end of the billing period, but it’s not always easy to see why.

But activating rollover for your key budgets will highlight exactly where you’re going off course. Severe overspending will indicate that you have $0 available to spend in a particular category, and every cent spent will push you further over your budget.

When you’re consistently over your budget, it’ll be immediately apparent in PocketSmith. This helps you prevent further overspending and getting yourself into a debt hole - or simply allows you to adjust your expectations for what you really spend on Groceries.

4. Reward good budgeting and saving habits

If you underspend on your budget, rollover lets you know about it so you can reward yourself! When you rollover unspent budget amounts, you’re able to redistribute surpluses to any other category. Saving money on groceries meaning that you can splurge on a new Raspberry Pi? Yes please!

5. Plan better for irregular, unknown spending

Planning to spend a set amount each year on “Clothing” or “Pet care” is easy. But the reality is, we don’t always pay for these things on a regular basis, and when we do, the amounts will vary. To work around this, some of us set regular budgets each month. Others set one for half a year, or a year. Both have been partial solutions to the above.

Rollover solves this by letting you plan to spend a target amount over a year, while scheduling a budget to set money aside monthly. This lets you better reflect irregular spending patterns that are inherent for some categories.

6. Better income planning for freelancers and side-hustlers

If you’re a freelancer with an irregular income, turning on rollover for your income budgets will let you know when you need to push harder to earn more, and when you can pull back a bit.

Once you’ve set up your average required income on a monthly basis, rollover takes care of letting you know if you need to hustle extra hard - or whether you can take a breath. We get it, because we’ve been there too.

This means that if you’ve earned less than planned in your previous period, your next target will be increased to match the shortfall.

If however, you had a great period, your next target(s) will be reduced. So kick back, maybe take a break! PocketSmith will show you when you’ve earned it.

 

What makes rollover in PocketSmith special

We’ve taken the time and care to produce the best version of rollover budgeting possible, one that lives up to PocketSmith’s power and flexibility.

In truth, we encountered a number of hurdles during development, and at times it appeared that it would not be possible to deliver on that vision.

In those moments, these were the tempting alternatives: limit types of editing; no moving funds between budget categories; removing rollover data once deactivated or changed.

Instead, thanks in part to the patience and support of our users, we persisted. And though this meant the feature took longer than expected to deliver, we’re proud to release it to you as a fully-realised endeavour.

So without further ado, here’s what makes PocketSmith’s rollover budgeting as special as you are.

1. Adjustable rollover types

You’re free to rollover only unspent budget amounts, or only overspent amounts, or both. Pick and choose what works best for a given budget category! Most budgets would likely work best having both unspent and overspent amounts rolled over, but there may be exceptions to this.

For example, you may not want to accumulate a surplus on a weekly “Lunch” budget through rolling over unspent amounts, but you want to ensure that if you overspent, you have less available to you the following week.

Conversely, for unavoidable large and unexpected expenses such as vet bills or car repairs - you might want to accumulate a surplus over time by rolling over unspent amounts, but not reduce the budget available to you afterwards. And because PocketSmith’s forecasting helps you plan better, you can ensure unexpected bills don’t push you too far into the red.

2. Flexible ‘rollover period’ dates

You choose when you want rollover to happen by applying it to a date range as a ‘rollover period’.

This means that rollover isn’t “all or nothing” - the flexibility is in your hands.

This is useful for regular events, like the holiday period over Christmas. Despite all best efforts, many of us overspend during the silly season.

Use rollover to store up a budget surplus leading up to December. Then switch to rolling over unspent amounts only at the start of December. You can even turn off rollover completely for a period of time, and then reactivate it again later.

Rollover periods lets the feature start working for you right away.

At PocketSmith, we’ve found that backdating rollover periods highlights where we’ve historically overspent or underspent for certain budgets.

This has given us additional insight - beyond the averages in Trends - to be able to adjust our budgets to better reflect reality.

3. Understandable rollover information where you need it

PocketSmith will show you how rollover arrived at your current budget on the Calendar and Trends pages.

These pop-ups appear when you hover over the budget in the Calendar or a period bar in the Trends graph. Inside, you’ll see the rollover amount from the previous period, the available budget resulting from this, and your actual spending with the rollover amount carried over to the next budget period.

4. Intuitive distribution of rollover surpluses

We’ve made it possible for you to distribute your rollover surpluses wherever and whenever you want.

We also know how important it is to be able to allocate a surplus in a flexible manner and not only distribute it to a specific budget each time.

For example, the surplus from your entertainment budget might be best placed in your groceries budget this week, but best used to offset a large unexpected utility bill next week.

You can do all of this on a new page that lets you redistribute leftover money from previous budget periods whenever it works for you, and however you’d like.

Pay back budgets which are in deficit, allocate extra funds to entirely different budgets, or just rollover the surplus into the budget it belongs to.

Best of all, we have made an easy-to-use, drag-and-drop UI that makes clear the amount you have available to be redistributed, and where it’s going.

5. Reset your rollovers (or, forgive your overspending)

You can reset rollover amounts from the pop-ups that appear on the Trends and Calendar pages. This means you’re able to clear a rollover surplus or a deficit on your budget, and it will no longer affect future budget periods from that point.

Use this to forgive yourself if you’ve overspent. Sometimes it’s good to splurge and not have your budgets punish you afterwards. Just don’t use it too often!

And if you decide that you were perhaps remiss in resetting your rollover for a particular category - no problem, you can delete the reset and everything will go back to how it was before.

6. Rollovers are a permanent record

Your budget history sticks around forever in PocketSmith. The longer you maintain your account, the more data you have at hand to see the big picture on how your spending habits have changed over time.

Rollover is the same. Along with your historical budgets, the amounts that have been rolled over are permanent until you choose to delete them. If you reset your rollover at some point, the rollovers calculated before that point will remain intact so you can dig into what happened any time in the future.

7. Deficits are tracked into the future

If you drastically overspend in a budget (e.g. more than twice the budgeted amount), you’ll end up blowing out your budget for a number of periods into the future.

For example, if you spend $500 of a $150 weekly budget, it might not be until next month that you’re able to spend any money in that category again as the deficit carries over two whole periods, and $50 into the third.

This is unless you forgive yourself and reset your rollover or distribute the surplus from another budget - we’ve got your back.

PocketSmith tracks this deficit into the future, so you can see exactly when you’ll have a budget again on the Calendar and Trends pages. This means you’re able to overspend in any category, and be assured that you’ll still reach your financial goals because PocketSmith will tell you when you can start spending money again.

We look forward to your feedback!

We’re very excited about putting this feature in your hands! Have fun playing with it, and be sure to check out the user guide to learn more. Please let us know about the new things you’re discovering with rollover budgeting in PocketSmith!