Hi @alexs, thanks a lot for your question! The spending warnings work in the following way:
Red - if you have spent more than your monthly budget
Amber - if you are "going too fast"
Green - if you not “going too fast”
Now what does too fast mean? Ones spending is as you say not linear (you don’t go grocery shopping every day e.g.) so we wanted to make an algorithm that took this into account while still being very simple. Let me explain how it works with the following example:
Say you have a monthly budget of £300 - that gives you a daily allowance of £10. But spending £12 on the first of the month is not a strong indication that you are spending too fast. It is probably down to the fact that you spend a little more on some days and a little less on others.
Two things are important here:
- How many days are left in the month to make up for what you have sent to far
- How much can you save on your daily allowance if you are trying to spend less. This number we set to 20% so in our example, we guess that you can save £2 per day or your £10 allowance.
So. on the 1st day of the a 30 day month, you can potentially save 29 days * £2 per day = £58. Your allowance is 1 day * £10 so you have to spend more than £58 + £10 = £68 before it goes amber.
On the 10th day of the month, your allowance will be 10 days * £10 = £100 but your potential for saving is now only 20 days * £2 per day = £40 and the limit for when it goes amber is £100 + £40 = £140. And so on. On the last day of the month, the potential saving is 0 and the limit is now £300.
This model is clearly too simplistic - there are bigger fluctuations in some categories that others (holidays vs grocery shopping e.g.) - but it is a start and already a bit complicated to explain.
But how it works for our users is what really matters so please let us hear your feedback and help us tweak the algorithm and make Targets a better tool! 