monarch money 30 day trial: How to Set Up a 50/30/20 Budget in Monarch Money: A Step-by-Step Guide

monarch money 30 day trial: Learn how to create a 50/30/20 budget setup in Monarch Money with this easy-to-follow guide. Follow these steps to organize your finances, set financial goals, and track your progress.

October 16, 2024 at 03:20

Creating a 50/30/20 Budget Setup in Monarch Money

Setting up a budget can be a daunting task, but with the right tools and guidance, it can be a breeze. In this article, we'll walk you through the steps to create a 50/30/20 budget setup in Monarch Money, a personal finance management tool.

Step 1: Accessing the Settings

To get started, navigate to the "Settings" section in Monarch Money and click on "Categories." Take note of the default categories in the demo account, which may be customized in your own account.

Step 2: Creating Budget Groups

Next, create two budget groups: "Needs" (50%) and "Wants" (30%). To do this, click the "Create group" button next to the "Expenses" header and enter the group names. Click "Save" for each group.

Step 3: Organizing Categories

Now, move categories one by one into their relevant groups. For example, consider charity and gifts as "Wants." Move these categories to the "Wants" group and click "Save." Delete the empty category group.

Step 4: Using Monarch's Built-in Savings Category

The built-in savings category is already present in the "Transfer" section. We'll discuss this more when we move to the "Budget" page.

Tips and Variations

Consider using a third category, such as "Wealth," to reserve for specific wealth-building activities like loan payments and extra debt payments. You can also bulk move categories by editing the budget group and deleting it to move all categories within it.

Setting Up Budget Categories and Goals in Monarch

Needs Categories

All categories are grouped under the "Needs" category. Some examples of categories under "Needs" include:

  • Utilities
  • Groceries
  • Rent/Mortgage
  • Transportation
  • Insurance
  • Minimum debt payments

Wants Categories

All categories are grouped under the "Wants" category. Some examples of categories under "Wants" include:

  • Entertainment
  • Hobbies
  • Travel
  • Giving
  • Fun money
  • Miscellaneous

Built-in Savings Group in Monarch

The built-in savings category is located on the "Budget" page, under the "Contributions" section, followed by "Goals." Goals are savings goals that need to be created to show up on the "Budget" page.

Creating Goals in Monarch

To create goals, go to the "Goals" section and click "Get started." Create two savings goals: "Emergency Fund" and "Vacations." Enter desired amounts for each goal: $1,000 for Emergency Fund and $1,000 for Vacations. Skip adding accounts and click "Save." Confirm goals by clicking "Next" again.

Adding Goals to the Budget Page

Go back to the "Budget" page and scroll down. The goals created will now be visible under the "Contributions" section.

Adding Budget Amounts to Categories

Go to the "Budget" page and scroll down to the bottom. Add desired amounts to each category:

  • Needs: $1,000 (utilities), $500 (groceries), and so on
  • Wants: $100 (giving), $50 (fun money), $50 (miscellaneous)
  • Use the tab key to quickly jump between categories

Viewing Budget Progress

The "Left to budget" amount will update in the top right corner based on allocated amounts.

Budget Closeout and Reconciling Transactions

At the end of the month, review transactions and categories to ensure accurate budgeting. Identify categories with remaining funds and consider allocating excess funds to savings or other goals. Adjust budgeted amounts accordingly to reflect actual spending and remaining funds.

Reconciling Transactions and Updating Budget

Review transactions and categories to ensure accurate budgeting. Identify transactions that did not match budgeted amounts and adjust budget accordingly. Use reconciled transactions to make more informed budgeting decisions.

Using the "Cash Flow" Tab for Budget Analysis

Review the "Cash Flow" tab to see actual percentages of spending. Use the Sankey Diagram view to visualize spending by category or group. Filter view by "Category" or "Group" to see percentages for specific categories or groups. Compare percentages to the 50/30/20 budget or other budgeting structures to identify areas for improvement.

Budget Options and Adjustments

Consider alternative budgeting structures, such as the 70/20/10 budget. Use the Sankey Diagram to identify categories or groups that need adjustment. Make adjustments to budgeted amounts as needed to align with spending habits and goals.

By following these steps, you'll be well on your way to creating a 50/30/20 budget setup in Monarch Money. Remember to review and adjust your budget regularly to ensure you're staying on track with your financial goals.

In addition to budgeting, it's also important to consider the role of emotional intelligence in personal finance. Emotional intelligence refers to an individual's ability to recognize and understand emotions in themselves and others, and to use this awareness to guide thought and behavior. It involves a combination of skills, including self-awareness, self-regulation, motivation, empathy, and social skills.

Emotional intelligence plays a crucial role in personal and professional success, as it enables individuals to navigate complex social situations, build strong relationships, and manage stress and conflict effectively. By developing emotional intelligence, individuals can improve their relationships, communication, resilience, and decision-making.

By combining budgeting skills with emotional intelligence, individuals can make more informed, empathetic, and effective financial decisions that align with their values and goals.