Ring-fenced budgeting

(Christiaan) #1

What I’ve wanted all my 30 years of personal banking is the ability to have separate bank accounts for every category in my budget, so that money becomes ring-fenced, leaving only discretionary spending in the main account (“General” in Monzo speak).

This way budgeting isn’t just numbers on a page but a robust set of categories built directly into your mode of spending and depositing, requiring the shifting of actual money between categories if adjustments need to be made.

With Monzo this is actually possible. I think it would be great if we could optionally ring-fence money as it’s deposited into our Monzo accounts, leaving us with three sets of balances:

  1. Overall money in our Monzo account
  2. Amount in each ring-fenced budget
  3. Discretionary spending (“General”)

And it would be this last one that would be main one that we see when we open the app and spend money.

When spending money the budgeting feature would work the same way as it does now, except it would take money out of the relevant budgets as appropriate. If there’s not enough in a budget it would either put the budget in arrears and let the user manually correct it at a time of their choosing, or automatically pull money from the General/main budget.

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(Alex Sherwood) #2

That sounds good :heart_eyes:

It sounds like we might be able to use the virtual savings pots feature, which Hugo described as

emphasis mine

& are on the roadmap here, to do this sort of thing.

My guess is that rather than setting a Target for a particular Category, you could set a Target / create a Virtual Pot for each of your balances. When you retrieve Targets via the API, you can see that Categories are only one type of application for the Targets.

Again my guess is, just as; our transactions are categorised automatically now & we can change those categories for each merchant, we’ll be able to do the same for the Virtual Pots.
So we’ll choose a default pot for our payments to be made from (for me, my ring-fenced budget) & then we’ll be able to reassign discretionary spending to the dedicated pot that we’ve set up & when we do, our future transactions at that merchant will be allocated to that pot too.

Which could look something like this

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I could be completely wrong about the way that this will work of course :slight_smile: but does that sound the sort of thing that would work for you?

I’m slightly more skeptical about whether Monzo will enable us to automatically split a % of our salary (which Monzo will be trying to spot) between our pots when it arrives (at least, at first) because this hasn’t been mentioned before. But that totally makes sense to me & hopefully, we’ll be able to use an automation tool IFTTT, Zapier, Workflow etc. or worst case, code for this, once the API is ready.

(Christiaan) #3

Yes, virtual accounts/pots sounds very much like the sort of thing that would work for me, thanks for that. I particularly like that they’re talking about having shared ones too (e.g. shared expenses with flatmates, holidays with partner).

(Tim Stamp) #4

Is this something that could be added to the “Pots” feature? I have various incomings and outgoings from my existing current account, and it’s difficult to manage how much I have to spend throughout the month without manually pushing money between accounts and keeping a close eye on things…

If I could have a pot that was topped up to the same amount every month - then I know how much I have to spend for that month, and watch it go down throughout the month, safe in the knowledge that I’m (probably) not going to overspend accidentally.

Maybe I could also have any leftover money in that pot at the end of the month put into a savings account automatically…

This doesn’t sound like a feature that would only be useful on a prepaid card, and no other financial institution currently offers this kind of ability. :thinking:

(Alex Sherwood) #5

I’m sure that, that would be possible eventually. It sounds more like you’re describing Targets though, to me. Are you an Android user by any chance?

(Tim Stamp) #6

Targets seem a little more complex than what I need.

I use my Monzo card for day-to-day spending - groceries, online purchases, clothes, etc.

All my regular outgoings, like direct-debits, standing orders, bills, mortgage, etc. All go through my current account, and I need a separate account that I can keep for “flexible spending”.

This means if my Monzo card is stolen, or used without my permission, the most damage a criminal can do is prevent me from buying groceries and t-shirts. They can’t touch the money that is put aside to pay for my house, or my broadband.

It would be a really simple feature, basically a dynamic standing order, that just transfers a calculated amount of money into my “monthly spend” pot, to make sure that at the start of the month, it has the same amount in it, every month.

Having “targets” for spending doesn’t appear to let you segregate your money in the same way “pots” does - I see “targets” much more oriented towards certain types of spending - like I want to target that I spend £100 per week or less on take-away food, or a target of £100 on clothes each month.
/shrug

(Alex Sherwood) #7

I totally see what you mean. Since Hugo’s said that Pots will be an extension of Targets & you can see that Targets have been designed on the backend to be based on things other than categories, I’m optimistic that the functionality will get more flexible when the current accounts launch.

But whether it’s Targets or Pots that you end up using, I expect you’ll be able to achieve what you want to soon :smiley:

PS I’ve just spotted this topic & your ideas follow on nicely from the discussion that’s been had here so I’ve moved our posts over. I hope that’s ok.

(Keith) #8

Brilliant idea. Exactly what I’ve been thinking about! :blush: