How It Works
The most important thing you can do for your finances is to stop ignoring them. If it's overwhelming, start simple. You don't have to follow any rules or stern advice to have a working budget. Simply tracking what you're spending in a few broad categories will still give you profound insights on your spending. You'll save money just by watching your spending.
Over time you will learn more about how to save up for unexpected expenses, manage saving accounts, or anything else you need. For now, the following system is all you need to start tracking your finances with a robust budget. Let's get started!
Distribute Money Into Categories
Instead of budgeting whatever you think you will spend in the next month, Actual only lets you budget the money you already have. That means your budget is always an accurate reflection of your accounts — you've assigned every dollar to a category. Think of them like little funds that you're moving money into and spending from.
If you're just starting out, you'll see your entire account balance available to budget. After that, whenever new money comes into your account, that money becomes available to budget. This helps you think about where your money is actually going.
Available money to budget
Actual gives you a "To Budget" amount and tells you how it got that number. We'll go over how it calculated it later, but in this case the user has $1,200 available to budget.
This is known as "zero-based budgeting" and is similar to "envelope budgeting."
Categorize Transactions
The next step is to add transactions and categorize them, which will take money out of the selected category or add money to the budget.
Actual encourages you to manually categorize every transaction after importing them. It will not automatically categorize for you because we feel that you stay more in touch with your spending if you go through every transaction. Don't worry — the app is built to make this process very quick.
There are several ways to add transactions to the system:
Automatic transaction downloading
Connecting to your bank and automatically downloading transactions is not available in Actual yet. However, our first goal after launching is to enable it. It's already implemented, but we need to finalize some details and get everything ready.
Import financial files
A quick way is to download a file from your bank and import it. Actual supports QIF, OFX, and QFX files. Banks usually provide one of these formats. Check your bank online and look for a "download" link and Actual will be able to import all of your transactions quickly. It will reconcile transactions so don't worry about importing duplicate transactions.
Manually add transactions
If desired, you can manually add transactions. This is the most work but allows you manage accounts that may not work with any other importing mechanism.
On desktop, click "Add New" to manually add a transaction. On mobile, you can either tap the "+" icon in the top right of the account screen, or you can long tap the Accounts tab in the tab bar.
Import transactions by clicking "Import" or manually add new by clicking "Add New"
Review Your Spending
Once you have a budget, import new transactions, and categorize them, it's time to review your spending. Ideally you should do this often, but it's OK if you only do it every now and then. The more often you look at your budget, the more you will understand, but maybe a broad overview is all you need.
The budget page shows you a quick overview of all of your categories. You see how much you spent in each one and the current balance. If you overspent in any category, the balance will be negative.
Overall view for January
This example shows a budget at the end of January. They were under budget in Food and Bills (Flexible), and met the Bills and Savings budgets. However, they overspent in General. To keep the budget accurate, they need to make up for that overspending — they can't just ignore it. First, let's go over how income works.
You can add income by categorizing a deposit transaction to a income category. You can add as many income categories as you like. Let's say the user above added $2000 to the "Income" category in January. Their budget would look like this:
$2000 to budget
Their money is immediately available to budget. If you are living paycheck to paycheck, you can go ahead and move some of that into the current month's budget. Ideally you wouldn't do that except in rare circumstances. Usually you want to "save" any income for next month's budget. Here's how that works.
Holding money for next month
If you have money to budget but you don't need it that month, click the "To Budget" number and select "Hold for next month". You can specify how much you want to hold, and it defaults to the current "To Budget" amount. This will move the specified amount into a special buffer that will be available next month.
Notice how "For Next Month" in January now holds $2000 which is taken out of the "To Budget" amount, and it's available next month. Notice that not all of it is available for budgeting in February though! Let's talk about overspending.
When you overspend in a category, you need to make up that amount somehow. You spent that cash, so in your account it came from somewhere, and your budget needs to reflect that.
One way to do that would be to rollover the amount into next month's budget for that category, taking $91.87 out of the General budget in February. However, we find that to be too cumbersome and puts guilt on the you — you spent too much money on food last month so this month you can't buy as much food. More often you want to give yourself grace and simply take that amount out of somewhere else, like a fun or savings category.
Actual rolls over positive balances in each category, so in the above user's case they have leftover in Food and Bills (Flexible). However, when you overspend it resets the category balance to 0 and uses all the overspending in its "To Budget" calculation:
Since they overspent $91.87 last month, it shows up as "Overspent in Jan" and is taken out of the $2000 that would have been available to budget, leaving only $1908.13 available. At this point, they need to create a new budget for February similar to January, but with a smaller budget for one (or several) of the categories.
Redistribute again
It's time to visit step 1 again (Distribute Money Into Categories). Whenever you add money to the budget, you repeat this process. The most common time to do this is when a new month rolls around.
Notice how February's budget has all zeros. Actual never automatically creates budgets for you because setting a category budget is equivalent to moving money into it. You need to do every month, which also keeps you in touch with how thing are going. Actual provides quick actions to fill out a budget, like copying last month's budget. Click on the 3-dot menu for the month and select a method for filling out the budget.
This is the general workflow you will follow over time. However, there are still many details to figure out, like whether savings should be on the budget or not, how to manage credit cards, and more. Your lifestyle and opinions will affect the answers to these questions. We're here to help and recommend solutions, but we want to allow for you to set things up however you desire.
If don't have much experience tracking your finances yet, we recommend starting simple. For this reason, Actual only comes with a few basic categories by default. Don't worry about tracking things super closely. Simply tracking basic areas of your life will get you really far.
Join the Spectrum community for more in-depth discussion about handling various scenarios in Actual and ask any questions you might have!
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