Quick question about Overfunded Need for Spending goals
I have a Need for Spending goal for auto insurance that should reflect the consistent monthly payment. Recently my insurance has been "refunding" a portion of the cost due to COVID, resulting in overbudgeting in that category. If I transfer that overbudget to another category for the month, the Need for Spending category turns yellow even though there is no additional spend planned for the category.
1. Does it make sense to transfer unused budget mid-month to another category?
2. Should I care that a Need for Spending goal is underfunded? The guidance I've seen suggests underfunded is bad, but in this case I've actually funded the right amount for the month, it's just a different amount than the normal recurring amount I have the goal set to.
1. If you need the unused budget for something else, transfer it out and don't worry about it! (Rule 3) If you don't need it for something else just yet, just leave it and you will have to budget less to fund the category next month.
2. No you shouldn't care. It's rule 3 again. The assumption is that you made a conscious choice to:
a) not fund the category in the first place for a good reason (i.e lack of funds/ don't need it to be funded right this minute)
b) needed the money elsewhere and moved it
I usually end up with a couple of yellow categories towards the end of the month as I move money around to roll with the punches.
One alternative you have is not to use the Needed for spending goal, but to set up the Auto insurance as a recurring payment. Once the date for the payment is passed I don't think the goal will turn yellow if you move left-over money out of the category.
Hello, Scott !
When it comes down to it, a goal is a reminder. An underfunded goal isn't bad! In this case, it just means circumstances changed.
I think there's always a tension with goals between being clear enough to actually remind you to do what you said you wanted to do, but also flexible enough to let you change your mind easily. We tend to err on the side of clarity over flexibility with goals, I think, and this is a case where I would do exactly what you're thinking: move the money and ignore the yellow number.
A scheduled transaction has an associated implicit goal in the month of the outflow. Hitting Underfunded will fill in the amount the category is short of the scheduled amount. Works well for monthly bills that you don't need to normalize.