Forecast Your Financial Future With PocketSmith

Most personal finance tools take a look back on your finances: The tell you how much you spent, where your money went and so on. For a more complete picture of your financial situation, however, you should also look forward, so you can answer questions like “How much money will I have at the end of the year after spending $1000 on gifts?” or “Will I have enough in my account to cover the huge ATO bill in November?” PocketSmith is a web vapp that can answer these questions, completely replace your desktop personal finance software and more, using an intuitive financial calendar. Here’s how to use PocketSmith to track and forecast your finances wisely.

In this guide, I’ll show you what PocketSmith is all about and help you set up both your recurring and irregular but predictable financial events on a calendar. By accounting for non-recurring expenses (car maintenance, membership fees, occasional gifts, etc), you get a much more comprehensive view of your finances than typical monthly budgets. The calendar view is also useful for seeing at any point in time just how much money you’ll have in your accounts, so you can be a more nimble money manager.

PocketSmith offers a free, limited account as well as premium plans, but I’ll show you how to maximise the free account.

PocketSmith’s Money Tracking and Forecasting Features

We briefly mentioned PocketSmith’s impressive financial forecasting capabilities when the service first became available, but since then PocketSmith has updated to version 2 with a sleeker look and stronger analysis and categorisation of transactions. In other words, it’s prettier and it works more like Mint, categorising your transactions into pretty graphs.

PocketSmith’s new money management features are swell, but the most compelling feature of the service still is its original selling point: financial forecasts on a calendar. In the calendar view, you can add your income and expenses by date and see daily balances at a glance. Multiple calendars let you see more granular information about your finances: how much you’ll have in any one account at time, when your debt will actually be paid off, and when you should transfer some money from one account to another to avoid that red negative balance.

With version 2, you get graphs for your spending, a monthly cash flow chart showing balance by month, a goals tracking tool and the cash flow calendar. (One of the things I missed most when moving from Windows to Mac was Quicken’s rich features, especially the cash flow calendar. PocketSmith brings these capabilities to your web browser.)

What’s in your calendar

The PocketView calendar looks like every other calendar, with a distinct difference: Calendar “Events” are anything with a dollar value, whether the event denotes income or expenses. For example, buying groceries, paying the electricity bill, paying the rent or getting paid would be events on the calendar. You can set these events to be one-time occurrences or repeating (every week, month, every two days, etc).

In this example at right (click to see closer), there’s a starting balance in your account of $1370. Two expenses, eating out for $150 and grabbing coffee for $100, are added as events. At the bottom of the calendar day the “Daily Balance” shows what’s left over: $1120.

A line graph at the top of the calendar, your “Financial Lifeline“, summarises where your Daily Balances will be in the future, based on all the income and expenses you enter into the calendar. Click on any point in the Lifeline to jump to that date in the calendar or hover over a point in the line to quickly see the future balance. This is useful for seeing, for example, how much your money will grow (or shrink) in six months, given your spending habits and expected income.

PocketSmith Free and Premium Accounts

The free version of PocketSmith lets you have two calendars. Your first calendar would be based on your main transaction account you use daily — tracking your income and expenses every day. The second calendar can be used to track a second account, like your savings account, or you can use the second calendar for forecasting balances for specific goals, like building an emergency fund or paying down debt. (More on using PocketSmith’s Goals calendars in a bit.)

The free account also allows up to eight recurring or one-time events. For example, if you have your pay deposited twice a month, that will count as one event, even though it happens two times on the monthly calendar. If you add a non-repeating event like a birthday dinner out, that counts as one event.

You can look six months into the future and three months into the past with the free account. (Below, we’ll show you how to make the most of a free account.)

In addition to the two calendars, you can also link two bank or other financial accounts in PocketSmith for the transactions analysis. However, the free account doesn’t automatically update with all your bank account information (they call this an “automatic bank feed”), so if you want spending analysis you’ll need to either manually import your bank transactions (OFX, QFX, QIF or CSV format) or upgrade to one of the paid plans. (Also, the auto update feature is in beta now and rolling out to US and New Zealand users in batches. This won’t concern you if you’re using the free plan.)

The Premium plan ($US9.95/month) gives you the automatic bank feeds plus unlimited event categories, six more calendars and accounts, and a look 10 years into the future and five years into the past.

A Super plan ($US19.95) offers unlimited calendars and accounts, and 30 years of financial forecasts — good for retirement planning, perhaps — and 10 years of historical transactions.

Read on to see how to maximise the free account.

Set Up Your PocketSmith Calendars

As mentioned above, the free account gives you two calendars (under “My Calendars”) to play with. This is where we’ll set up the main transaction account plus any other calendars you want.

How to create your calendars

1. Click on the Calendar tab and then in the sidebar, the “Manage” button in the My Calendars section.
2. Enter in a name for your calendar, e.g. “Savings”, and select a default (Normal) calendar or a Savings or Debt calendar type for each account. PocketSmith will calculate the interest you set on the balances automatically. (For a Debt calendar type, interest accrues on negative balances; for a Normal or Savings account, interest accrues on positive balances.)
3. Consult your online bank statement to find today’s balance in your account and then enter that in.
4. If you like, you can set an alert for if the balance goes below a certain amount.
5. Hit “Save Calendar” and your default calendar is created.

To illustrate, we’ve set up a calendar for our checking account with a $US1,000 balance (seen in the large image at the top of this post).

Enter in Your Budget Items

Regular Income and Expenses

Now we’re going to set up our budget on the calendar. Click on a day where you have a recurring event. For example, the 1st of the month and enter in a name (e.g. “Pay”), amount, and whether it’s income or expense. You can label the event (e.g. green for income) and enter a description, plus select whether you want it to repeat daily, on weekdays, weekly, monthly, etc. Have an oddly repeating event or one that needs to end at some point? Click the “More repeat options” link for more options. You can also set a transfer event here, e.g. move $200 from your Day to Day calendar to your Savings calendar every other week.

Don’t forget:

• Utility bills (electric, gas, etc)
• Rent/housing payments
• Mobile phone bills
• Credit card payments
• Groceries
• Petrol
• Dining out
• Childcare/school payments
• Monthly membership fees

After trying to enter in all those individual bills/events, you’ll likely have more than the eight events allowed for the free account. One way to get around that limit is to gang similar bills together. So instead of entering the electric bill on the 3rd of every month and the gas bill on the 13th every month, just add them both and enter an overall utilities bill on the 13th. The same goes for multiple credit card bills or even web services.

Tip: You can drag events to other days, instead of editing them, and also adjust the daily balance by clicking on the balance label at the bottom of the day.

Enter Your Irregular Income and Expenses

Here’s the most useful aspect of the service: Accounting for irregular income and expenses. On any day you can add unusual financial events, like that end of year bonus (go you!) or that costly, yearly car servicing (sorry!).

Click on each month in the calendar and think about all the irregular expenses you’ll have for that month. Christmas holidays are a prime example; right around the end of the year, enter in a gift expense amount so your financial forecast is accurate. If you tend to take holidays in the last week of August, enter the expected cost on the calendar. Other examples include: a concert or special show, anniversary, gifts for others (e.g birthday presents), car maintenance, vet bills, dentist visits, new clothing needs, smartphone upgrade, new computer hardware or software.

The ability to see irregular income is a boon for freelancers and others who have less regular pay periods. Maybe you’ll make some tips or some extra money here or there that can change your financial picture. You can also use the calendar to account for things like monetary gifts you can bet on getting around your birthday.

Track Your Goals

Besides seeing your cash flow and managing your budget on a calendar, you can also plan for financial goals in PocketSmith and see how you’re doing on those goals on a timeline.

For example, you can use the Goals feature to monitor your savings for your emergency fund. Other goals include saving for: a new car, a new computer, a holiday, university, getting rid of debt, new house and even retirement.

Click on the “Add a goal” button under “My Goals” to put some money aside, figuratively speaking (you still have to set up the transactions between your accounts in the real world). Give it a name, description, total and deadline, and PocketSmith will tell you how much it will cost per week. If you have a repeating income event (like regular pay) to tie it to, PocketSmith will use that event to trigger and create a new savings event, transferring the monthly amount from your main account to your new Goal calendar.

Note that setting up a goal means you’ll be using up one calendar. So, if you’re on the free plan, you can have your main checking calendar and a goal-based calendar and those will count for your two included calendars.

Use the Financial Forecasts

So now you’ve entered in your recurring income and expenses, accounted for irregular expenses and planned for your financial goals.

The payoff? You can see at a glance when your accounts dip into the red, when you’ll have $X amount of money for any of your goals or a semi-impulsive buy, and know when you might need to transfer money from one account to the other.

In PocketSmith, click the timeline above the calendar view to see your balances by date and how your money is either accumulating or plummeting. You can also check only those accounts or calendars you want to see at once and more finely monitor your bottom line for a specific account.

There’s a lot more you can do to track and evaluate your finances in Pocketsmith besides the calendar. The best part of the app is how it gives you a more in-depth and clear look at how much money you have now and how much you’ll have in the future.