My PocketSmith analysis: We buy a lot of eggs!

My PocketSmith analysis: We buy a lot of eggs!

So far, in 2019, we have spent exactly $240 on eggs. We buy them from a woman who lives up the road who has chickens (obviously) and every Monday she drops them (or places them gently) in my mailbox, then I jump online and pay her $5 a dozen. That means we have eaten 48 dozen or 576 eggs this year to date. I eat a poached egg on toast every single morning so that accounts for some and Jonny and our daughter hoover up the rest.

The moral of the story? PocketSmith can give you some detailed figures IF that is what you are looking for. Turns out that’s exactly what I’m looking for and I hit the mother lode when I signed up, but the beauty of it is that I can also get a more macro view of our financial life if that’s what I’m looking for too.

I received an email recently, which amongst other things said the following: “I've tried PocketSmith, but I have issues with it and find it cumbersome, so I think I will cancel it.”

I’ve also received many emails along the lines of “How do I do XYZ in PocketSmith Ruth?” They come from people just like myself who are working their way through learning the PocketSmith system and how they can create a USEFUL tool that reflects their unique and very individual financial situation.

In the beginning, I too struggled with inputting and analysing the information that the system was giving me, but I persevered and the purpose of this blog post is to encourage YOU to do the same. I want the people who have already signed up to not give up on it and the people who are thinking of trialling it to go-ahead to do so. I’ve been using PocketSmith for all of 2019 and I’ve decided that PocketSmith is a steep learning curve that looks a little like this:

Month 1 - Excited frustration

Month 2 - Confusion

Month 3 - Dawning understanding

Month 4 - Light at the end of the tunnel

Month 5 - AHA moment!

I’ve decided that PocketSmith is a powerful personal finance software tool, but it’s not for the faint-hearted!

If when you read the word “PocketSmith” you have no idea what I'm talking about you can go back and read my earlier blog post on it: REVIEW: PocketSmith Part 2

You won’t be attending a full-day seminar

From time to time, your workplace will send you on a course, the purpose being to make you more efficient and effective at your role. On the day of the course you get up early, pay a bit more attention to your appearance than you normally would, head along to the venue, awkwardly introduce yourself to the other attendees and then spend the day LEARNING a new product, a new system, a new component to your job. With that full-day under your belt, you head back to work and implement what you have learned, probably with one or two muck ups, but hey we all learn from our mistakes right?

Well, that’s what PocketSmith was for me, a new system that would make my financial life more efficient and effective, with the exception being that I had to teach myself at home, in my own time and because life is busy, it probably took me longer than it should have. Therefore instead of learning it all in one day, I’ve been steadily acquiring the knowledge over a couple of months, but I’ve actually come to understand that for myself, that was a good thing.

It took me years to create our financial situation, so it’s only right that I take a bit of time to input it into PocketSmith and tweak it to suit my needs and it turns out that this is the very thing I have enjoyed about it, inputting all of our household finances and crafting and moulding it to fit my needs. And that takes a fair amount of playing around and problem-solving. If you want an off the shelf, one size fits all personal finance accounting package, I don’t think you are going to find it here. And the one thing I’ve learned from talking to Kiwi’s about their money for three years now is that there is actually no such product.

Having to help people who read my blog with their own PocketSmith has been a very useful tool because what I have discovered is that we all use it for different reasons and when I help someone out, they are generally asking me something I have not yet worked out how to do, so we learn together and the system PocketSmith have created manages to adapt itself. It took a while, but with perseverance, I have created a really useful tool for carrying out my day to day work, i.e. managing all of the money that comes in and out of our lives.

Customised

As I blogged about recently, we wanted to take a holiday this year but the holiday bank account was looking a bit skint. However, I knew that if I could work out a budget for our holiday I could work back from there and make sure I set enough money aside each week so we could afford to do it, paying cash of course.

I used “Organise Accounts and Scenarios” to plan how much money we needed for our holiday and I set up a weekly bank transfer into our holiday account that means I will hit my savings goal because the system allows me to forecast ahead. I could use this for ANY savings target (house renovations, school fees, new car) and it is so handy for breaking down a big expense into smaller and more manageable chunks. Our daughter is going to need some phenomenally freaking expensive dental work, I’ve already asked for a price for how much this will cost plus the timeframe to complete the work and each week I’m setting aside a sum of money to make sure we can meet this bill when it arrives and being organised like this is going to stop me reaching for the emergency fund instead.

You know how Christmas happens every year on December 25th? If you know you always spend $500 on presents, you can set up a scenario for Christmas that will tell you how much money you need to divert into a “Christmas Fund” each year, starting on January 1st if you are really keen. Being able to forecast and plan gives me such peace of mind.

Paying off debt

Thankfully I’ve moved out of that phase of life but I know that tracking mortgage payments in PocketSmith is a big reason that many use it. Unfortunately, this is one of the areas I’m not too hot on using, BUT they have a help desk that can talk you through the process for inputting this information, so just drop them a line help@pocketsmith.com. They respond between 9 - 5 Monday to Friday.

Running a Business

Before I had my daughter I used to work for some big companies and did a lot of travel around New Zealand. Apart from flights, hotels and rental cars, which the company always booked and paid for directly, I covered all other expenses related to travel and working with clients. I was reimbursed for all of this but I do remember that cash flow was always a bit tricky if big purchases were made, or my record-keeping was a bit shabby, which back then it definitely was.

I can see now how PocketSmith would be awesome for dealing with this. You could set up a bank account for “work expenses”, put say $1,000 in there and then anything work-related comes and goes from this account only - it never gets mixed up with my own accounts. I could then have subcategories for that account where I differentiate between my expenses, say fuel, and client expenses, such as dinner out. The same setup could easily apply for small businesses and would enable you to keep it quite separate from your other accounts and you could work out if you were making a profit or a loss. I know I’ve heard it mentioned a number of times that people account for their rental property expenses and income in this way using PocketSmith.

Chasing down transactions

School fees are something that I always seem to forget to pay. The school newsletter prompts us to do it, but often it gets missed. This is where having used PocketSmith since the start of the year, having a record of every single bank transaction really comes into play. I can easily search for “school” in the Transactions tab and it shows me all the payments I’ve made:

PocketSmith Transactions

Turns out I was more organised than I thought this year and I just paid them all in one lump sum. It would have taken me ages to trawl back through bank records to find this one transaction. A friend worried recently that she was being asked to pay twice for some firewood that she had delivered, a search in PocketSmith showed she had never paid for it in the first place!

Mapping Income, Expenditure and Investments

I now have 40 categories which encompass income, expenditure and investments. With some but not all of those categories I have budgets, 34 in total where I allocate a specific sum of money to each per month. These have taken some refining, but now I know for example that allowing $250 a month for fuel is about right.

PocketSmith Your Active Budgets

Correctly setting up my budgets took time and I did have to persevere but I settled on a budget period of Jan to Dec with most budgets starting on the first of each month. So, in many different screens I can see how much I have allowed and also how I’m tracking towards that budgeted event. If I know that we have a road trip coming up, then I’ll allow more than $250 for that period because everything is adjustable.

I had a friend stop in the other day and I was quickly explaining it to him how it all works, his face lit up when he saw the home screen and the colourful pinwheel and then all the sections breaking down earning and spending, my accounts, my budgets etc. During our catchup he had mentioned that he had investments and ventures going on all over the place, plus he runs a business. He didn’t realise this sort of software was available for use at home and I couldn’t help but think that this would be a good way to combine all of the different things he has got going on in life into this one central “hold all” so he could keep track of things more easily.

Day to day effectiveness

When I first started using PocketSmith and started importing and categorising all of my transactions I was really focused on each individual expense. Because I now have so many months of data in there I can now use it to pull out specific information WHICH I LOVE. For example, we have an ongoing battle of trying to reduce our grocery spending. I have created a (overly optimistic) budget of $750 a month and can see this simply by clicking on the New World segment of the pinwheel on the home page but then also by looking at my Income and Expense statement. In July we spent $866.83 compared to June where we spent $1,045. Using this information, tied in with real life, the general consensus is that when I go shopping we always spend more. Even our daughter pointed this out! So, I don’t mind being banned from grocery shopping in order to keep costs down, I don’t mind at all!

My favourite screen

I think my favourite screen has become the Net Worth screen because it’s so definite! For those who don’t like the daily detail, you will like this feature because it gives you a big picture and you can clearly see if you are moving forwards and slipping behind financially:

My favourite screen is the Net Worth screen because it’s so definite.

As well as showing the balances of the bank accounts I have, I have also been able to manually load each of our investments into here, including our KiwiSaver funds. Whereas my bank account balances are being continually updated automatically into PocketSmith, I update my investments manually on the last day of each month, which in turn gives me a total net worth figure. I have also added other assets in there such as our home and cars. The house is going up in value and the cars down, so I adjust these as appropriate each month to give an accurate figure. The numbers don’t lie and whereas you can look at individual expenses and justify why you purchased something that you know you probably shouldn’t have, when you look at your overall net worth the effects of your spending and investing are there for you to see in red and green.

I rarely visit my bank's website these days

I used to log onto my internet banking daily to check balances and transactions, but now I only go there if I actually need to pay a bill or move money around. Because I can see my current bank balances in PocketSmith and so much more besides, whereas my bank gives me a snapshot in time, PocketSmith gives me an overall picture.

You can’t break it, so just try stuff out!

If you are currently signed up with PocketSmith but are not yet finding it USEFUL, I encourage you to keep using it and to also commit to learning it. Each time I go there, I find out another tip or trick. My life is ever-evolving and I like how I can adapt my money management to fit these changes. The closed Facebook group “PocketSmith Pals” is there to help you and you can ask any questions you like and the community will help you solve it. Seeing the questions others raise has encouraged me to expand the way I use the software. I can’t break it and I’ve tried many things that I’ve ended up just deleting, but each time I try something new, I learn something.

Even just preparing for this blog, I went and read many of the posts on the group and have taken on board the suggestion of someone in the group and colour coded my pinwheel. Ah, look at the beauty of this! Why did I not think of this sooner? That’s the beauty of being part of a community, shared knowledge.

My colour coded pinwheel.

  • Turquoise is money sent to investments

  • Yellow is insurance

  • Red is non-negotiable expenses

  • Orange are things we could do without if we needed to

  • Green is income

How we use it is ever evolving

As you can hopefully tell from my rambled musings, using PocketSmith has been an evolution for me and it has taken me time to learn it. Initially, I just wanted a system to help me sort out our day to day living costs and also keep a record of our investments. But as the months have gone on it’s become a whole lot more than that and is integral in my planning now. At about month five I had my “aha” moment where suddenly my months of categorising transactions and creating budgets made sense to me and I’m so pleased I stuck with it.

Jonny and I are probably representative of many couples. Despite growing up and believing that I was no good at math, no good at numbers, I actually love the detail that PocketSmith offers me. I’ve changed the narrative in my head now and I can understand and interpret the information I’m seeing. Show me and income and expense report and you’ve got my full attention! If I could track down my old math teacher Mr Robinson I could let him know that I got there in the end! Jonny’s not interested in that detail, he is more visual and when I show him a graph or the pinwheel of our spending for the month, he understands that better and relates it back to real life. While I’m back costing the holiday so I can break it down into a weekly savings goal he just wants to know if there is enough money available so we can book a holiday yet! While I’m surprised at how many eggs we buy and the price of eggs, he simply says, we like eating eggs! Who cares!

It is so hard to create a one size fits all package and I think that we actually both show that PocketSmith can cater to both the “numbers geeks” and the “just tell me if I’m winning or losing” crowd.

Now, although I didn’t write this post as an advertisement for PocketSmith, it’s pretty obvious that I do use it and I do like it. If you are already a member, do commit to learning it, you too will have your moment of clarity, your AHA moment. If you want to check it out for the first time you can use my link to receive 50% OFF their Premium Plan for the first two months. To redeem this offer, CLICK HERE and then set up a FREE account and apply the coupon code - 50OFFPREMIUM-F4RG - in the app via Settings > Subscriptions and Upgrades > Enter coupon. Then enter your payment details, and you are set to go.

Right, that’s me done. I’ve finished this blog post at 6.58am Saturday morning. I’m off to cook up a delicious free range poached egg on toast!

Happy Saving!

Ruth

Index Funds - Where, Who and What one?

Index Funds - Where, Who and What one?

Sharesies: Detour Ahead

Sharesies: Detour Ahead