In a recent poll on PocketSmith Pals, 48 people responded to the question "Why did you stop using PocketSmith?" Overwhelmingly, people stop using PocketSmith because the admin was too much effort (43%) or it is too complex (30%). (Remaining reasons were limited capability [10%], cost [8%], switched to a different platform [3%], and other[6%]. )
On the face of it, this poll result would indicate that PocketSmith is overly complex and demands an unreasonable amount of time to manage. But is this actually the case?
I will not invalidate the experiences of those who have used PocketSmith and been overwhelmed by it. But let's look at some ways we can prepare for and overcome the complexity of PocketSmith, and get that admin under control.
Overcoming complexity
Getting rid of admin
Expect a steep learning curve from the start
We have become so accustomed to mobile apps and online services being so simple that the learning curve associated with PocketSmith can be a bit of a shock. In some ways it's like learning Microsoft Excel. At its most basic it's easy to use but the more you try and do with it, the more you realise what it's capable of, the deeper the rabbit hole goes.
When starting out with Pocketsmith, it's important to go in with eyes open so you don't get a shock. It's going to ask for your time and brain power.
Simplify your finances before setting up PocketSmith
I suppose it's no surprise to say that the more complexity you bring to PocketSmith the more complex it is to set up and use.
Let PocketSmith do the work.
Over the years your may have developed a sophisticated set of accounts and transfers between those accounts to manage your budget and gain an understanding of what's happening with your finances. This might be a bold statement, but when you come to PocketSmith you can give all that up. Of course PocketSmith can accommodate all your accounts and transfers, but it will be so much easier if you consolidate your accounts to as few as practical, and then use budgets and reporting in PocketSmith to provide the clarity on what's happening.
A friend recently described to me their struggle using PocketSmith. It turned out they had a bank account for each budget category and their partner was pinching money out of the wrong accounts when the correct account had run out of money. Their two budgeting systems were fighting against each other. The solution was to simplify down to a couple of accounts and put the PocketSmith app on their partners phone. Now they're happy with PocketSmith.
Start simple and grow your use of PocketSmith as your understanding grows
At its most simple, PocketSmith is just bank feeds, transactions, categories, and budgets. Within these areas there is enough complexity to fully engage your brain. Take some time to become accustomed to these before diving into assets and liabilities, bill budgets, the calendar, safe balance, and scenarios. (I was tempted to add rollovers to that list but they're just so good, I'd hate to discourage you from giving them a go.)
With accounts, you'll be deciding which accounts sync and which to ignore. With transactions, you'll be doing the initial categorisation of 90 days of historical transactions, whilst setting up rules. You will need to decide what categories to have, and strike the right balance between too many and too few. And with budgets you will be choosing an amount, period, and rollover option for each.
Be gentle with yourself. Eventually you will become a PocketSmith superstar.
How to create effective transaction categorisation rules
You want PocketSmith to automatically categorise as many of your transactions as possible. The more it does, the less often you have to do it yourself.
When creating a categorisation rule, PocketSmith will suggest the merchant's name but often that's too specific to be as effective as it could be. Consider using broader terms rather than a specific merchant's name. But be mindful to not be too broad, or you'll end up automatically categorising the wrong thing and causing yourself more admin on the clean-up.
If you shop at a chain of stores but in different locations (E.g. Gas stations), don't set a rule for "Gasco Springfield" , when just "Gasco" will catch your transactions wherever you shop.
You could even consider broader terms like "restaurant" that are unique enough to not get confused with other categories of spending but will catch most transactions in that category.
Share the burden if you can
It is so common it's almost a cliché that only one person in the relationship does the finances. Come on ladies, come on men, share the burden - not just of the work but of the cognitive burden that decision making and responsibility constantly demand.
Sure you can share the login details for the PocketSmith website and both download the app, but the real key is to share the goals. This means having a robust discussion about what you hope to achieve financially together and how you might achieve it. You cannot force someone to contribute to, or even follow, a budget if they don't own the outcome.
What routines to add to your life to manage PocketSmith effectively
Budgeting with PocketSmith is not a set-and-forget activity. There are certain rhythms to adopt as part of your life that will help prevent the admin associated with PocketSmith from getting out of hand.
Categorising transactions
When you're starting out you'll need to check in regularly to categorise new transactions and set up rules. You could do this when you're sitting on the toilet, every other day, when you have some time to yourself. After a while your rules will pick up most transactions so you might only need to check in ever week or two to categorise your irregular transactions.
Tracking your budgets
Once you're comfortable your expenditure is under control, you won't have to check your budget progress very often. If things are volatile (or your partner is a rampant spender), you may want to check your budgets more often. Weekly budgets require more attention to keep on track, than monthly ones. If you're struggling to remember to check in, consider booking an appointment in your calendar or a recurring reminder, with a glass of wine (not two glasses - you need a clear head).
The annual review
When you've set long-term financial goals you'll know that the best way to achieve them is to break them down into medium-term and short-term goals. Stick to the monthly budgets and achieve it year after year.
The annual review is an opportunity to look back over the year, evaluate how well you did and what you can change going forward, to reset your goals for the next year, with your long-term goals in mind.
Consider aligning your annual review with the tax year. In New Zealand this is April to March, so in March I book-out some evenings and spend some quality time digging through PocketSmith reports, mining those nuggets of gold that help me understand my progress.
If your tax year runs from January to December, you could perform the review in January, to avoid the Christmas rush. You can make any budget adjustments retroactive from January 1st simply enough.
What reports to use and when?
For decisions on spending, consult the Budget page. Have you overspent on groceries and need to dial it back a bit? Is there enough money in the home improvement budget to fix the leaky roof? The Budget page gives you quick answers.
If you're using rollover budgets, you'll may need to consult the Trends report to fully understand where you have over and under spent. Especially if you fall more than a full period behind, as the budget page will not show a negative available budget. It will show zero.
You will want to know more about how to read the Trends report when using rollover budgets. Check out my "everything you want to know" guide to rollover budgets for more.
The Trends report is also the report of choice for those irregular monthly check ins on your budget progress. How are your actual expenses tracking against budget? Where do you need to pull back, and where can you relax?
Your annual review will involve a little of all the available PocketSmith reports, but the Income and Expenses report will give you the clearest view of the year as a whole. You will see your annual budget vs actual expenses, and what you achieved overall. You can use this and the Trends report to identify what changes you need to make to your budget for the coming year.
I wish you all the best as you work through how to make the most of PocketSmith. It's a fantastic tool, that with the right approach can make managing your personal finance a joy rather than a chore.
Have I helped?
I hope you have found this article useful.
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Cover image attribution - Free Stock photos by Vecteezy