Dealing with Manual Accounts in Monarch Money
When it comes to managing your finances with Monarch Money, manual accounts play a crucial role in tracking loan balances, investments, and other financial data that can't be automatically connected. In fact, about 50% of clients need to use manual accounts for various reasons. In this post, we'll explore why manual accounts are necessary, how to use them for loan balances and investments, and the benefits of using them in Monarch Money.
Why Manual Accounts are Necessary
Manual accounts are necessary when accounts can't be connected or transactions aren't feeding into Monarch Money. This can happen when you have a loan from a friend or family member, or when you have investments that aren't automatically imported into Monarch Money. By using manual accounts, you can track these balances and transactions, getting a more accurate picture of your net worth.
Using Manual Accounts for Loan Balances
Tracking loan balances is an essential part of managing your finances. You can use manual accounts to track loan balances, such as a loan from a friend or family member. To do this, add a manual account for the loan and specify the type (e.g. asset or liability). For example, you could create a manual account called "Loan to Friend" or "Loan from Friend" with a balance of $110,000.
Using Manual Accounts for Investments
Manual accounts can also be used to track investments, such as real estate or stock market investments. Add a manual account for the investment and specify the type (e.g. asset or liability). For example, you could track the value of a car or a property using a manual account.
Adding a Manual Account in Monarch Money
To add a manual account in Monarch Money, go to the "Account" section and click on "Add Account". Then, click on the "Add manual account" button and select the type of manual account (e.g. asset or liability) or choose "Other" to describe the account. Rename the account to make it easier to track.
Benefits of Using Manual Accounts in Monarch Money
Using manual accounts in Monarch Money provides several benefits, including:
- Getting an accurate picture of your net worth
- Tracking balances and transactions for accounts that can't be connected
- Keeping track of loans and investments in one place
Next Steps
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Tracking Transactions and Loan Repayments in Monarch
When you make a payment on a loan, the transaction will appear in your checking account, but it won't automatically update the loan balance in Monarch. To update the loan balance, you'll need to create a manual transaction in Monarch to reflect the payment. Mark the transaction as a "credit" to indicate that the payment is decreasing the loan balance.
Tracking Investments and Cash Wallets in Monarch
Manual accounts can also be used to track investment accounts, such as a 401K, that are not automatically imported into Monarch. To add a manual investment account, go to "Add Manual Account" and fill in the details, such as the account name and balance.
You can also use manual accounts to track cash withdrawals and deposits. Create a manual account for your cash wallet and update the balance with each withdrawal or deposit.
Best Practices
To get the most out of using manual accounts in Monarch Money, follow these best practices:
- Adjust investment balances regularly (e.g. every quarter) to track changes and get a trend of net worth growth.
- Use manual accounts to track cash withdrawals and deposits for better cash flow tracking.
- Split ATM withdrawal transactions to track specific expenses.
- Update cash balance regularly to ensure accurate tracking.
Tips and Notes
- Merchant name does not matter for balance adjustment transactions.
- Balances can be updated manually to reflect changes in investment or cash accounts.
- Regularly updating balances provides a clear history of changes and helps track net worth growth.
Transferring ATM Withdrawals to Cash Wallet
To transfer ATM withdrawals to your cash wallet, mark the ATM withdrawal as a transfer in your bank account. You'll have two separate transactions to track: one for the transfer from your bank account and one for the transfer to your cash wallet.
Categorizing ATM Withdrawals
If you're using a cash wallet, mark the ATM withdrawal as a transfer. If you're not using a cash wallet, categorize the ATM withdrawal as a cash withdrawal or whatever category makes sense.
Adjusting Account Balance
To adjust the account balance, click on the "Adjust Account Balance" button and enter the correct balance. Verify that the new balance is correct and make any necessary adjustments.
Marking Transactions as Debits or Credits
A debit decreases the account balance (i.e. subtracts from the balance), while a credit increases the account balance (i.e. adds to the balance). Use the correct type of transaction to accurately reflect the change in your account balance.
Viewing Historical Account Data
Changing the balance in the account settings will not update the historical account data. To see a historical view of your net worth, use the "Add transaction" feature and select a balance adjustment or transfer to update the account balance and track the trend.
Managing Manual Accounts
To manage manual accounts, click on the "Edit account" button to make changes to the account settings, name, balance, or other details. Be cautious when changing the balance, as it will not update the historical account data. Use the "Hide", "Delete", or "Get rid of it" options to manage accounts you no longer want to track.