Setting Up Your Budget

MoneyWell uses Envelope Budgeting, which is a simple way to make sure that you only spend what you earn. The buckets in MoneyWell are split up into two types: Income and Expense. When you earn money, you assign your deposit to one of your income buckets. Then you fill your expense buckets from that income.

MoneyWell allows you to proactively monitor the balances in your expense buckets so you never overspend. When your buckets are empty, you simply stop spending. There's no guesswork about how much of the money in your accounts has already been spent.

Before you start filling your buckets, you need to tell MoneyWell how much you typically spend. This is done by assigning events to your buckets to create a budget amount for each category.

Events - Your Budget Building Blocks

Instead of pulling out a calculator to figure out how much you spend each month for a budget category, MoneyWell lets you assign numbers you know off the top of your head and it calculates your budget amounts. For example, you probably can't answer the question, "How much do you spend each month on your automobile?" But you probably know how much you spend to fill your gas tank and how often. So instead of assigning a guesstimate amount to your Automobile bucket, you add known events:

  • Fill gas tank every week: $40
  • Car wash every month: $20
  • Oil change every three months: $60
  • Insurance every six months: $600
  • Annual maintenance: $240

There's no limit to how many events you can assign to a bucket and you have full control over how they repeat and how often they get filled. Here's that same list in MoneyWell.

Automobile budget events

MoneyWell Spending Plan with the Automobile bucket selected.

As you can see, the list of events reads just like the list we jotted down above. In the source list on the left, MoneyWell shows you how much money you need for the Automobile bucket during the month. Below the event amount, MoneyWell displays the amount for that specific event.

Adjusting Your Budget

Change happens and MoneyWell is designed to keep your budget current. If your budget is simply a list of categories and amounts, it can be difficult to update. If I had set my Automobile budget at $360 per month, will I know how I came up with that amount six months from now? Probably not. At the very least, I'll have to break out my calculator to figure out a new amount.

What's great about events is that you don't have to do any of the heavy lifting to get your budget amounts. If life changes and you start to drive less and only need to fill your tank every other week, you only need to change that one setting on your event and your budget adjusts automatically.

If I switch to an electric vehicle, I can delete the event to fill my gas tank and my budget changes are done. Okay, I should adjust my electric bill, but that's just another event to tweak.

Transactions vs. Events

Events may look like bank transactions, but they are designed to be used as broader strokes than transactions. Instead of creating an event for every restaurant you dine at, you want a single event for each time you eat out. So if you go out to lunch a few times a week and a more fancy dinner out with your spouse once a month, those would be two events—even if there are half a dozen restaurants in the mix.

The goal with events is to create enough of them to make editing your budget easy, but not so many events that you are overwhelmed when you look at it. Some buckets may just need one event and others might need a dozen. Focus on building a budget you can maintain rather than duplicating your bank statement in events.

Once your budget has been created, you need to tell MoneyWell how much money is in your buckets at the start of this plan period using Starting Bucket Balances panel.

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