Article Series: Discover the Best Australian Personal Finance App for Your Finances!

MoneyFormula App

PART 1 - Entering Bank Accounts and Debts into the Personal Finance App

Personal Finance App Bank Accounts & Debts.

Personal Finance App Bob & Jill Finances.

Bob & Jill's Story

In this article series we will follow Bob & Jill's story from financial crisis to savings of over $195,000.

In PART 1, they discover how easy it is to set up their accounts, debts and buckets in the Personal Finance app.

Personal finance app topics covered in this MoneyFormula article:

Bob & Jill's Financial Crisis

Account types available

Adding an account

Adding a money flow

Your bucket percentages

Realistic bucket amounts

New to MoneyFormula? Find out how to supercharge your personal finances and unlock the thousands of dollars you are missing out on: Personal Finance App Overview.

Article Series: Discover the Best Australian Personal Finance App for Your Finances!

OVERVIEW - Personal Finances + MoneyFormula App

PART 1 - Personal Finance App Bank Accounts & Debts

PART 2 - Personal Finance App Wealth Goals

PART 3 - Personal Finance App Emergency Fund

PART 4 - Personal Finance App Budgets & Buckets

PART 5 - Personal Finance App Savings Goals

PART 6 - Personal Finance App Net Worth

PART 7 - Personal Finance App Paying Down Debt

PART 8 - Personal Finance App Mortgage Free

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If you've read barefoot investor or would like to manage your money like a pro, MoneyFormula will make your life easy and help you save! My experience has been fantastic, and any questions I had, Matthew was able to answer efficiently. Could not reccomend MoneyFormula enough!

Bob & Jill's Financial Crisis and the Personal Finance App

Bob & Jill are in a financial crisis and recently took out a high interest rate personal loan to cover expenses, they can no longer pay down their credit card debt and their mortgage repayments and the cost of living are putting a huge stress on their monthly budget.

However, within just 10 minutes of using MoneyFormula they discovered savings of over $73,000. Then after reviewing their spending and budget they increased their savings to over $85,000.

And finally, after trying the different MoneyFormula debt repayment strategies they have now locked in to cut 10 years of their mortgage & debt and save over $195,000.

In this article series we are going to look at all the ways you can save money as you manage your personal finances using the MoneyFormula App.

We will do this by following Bob & Jill's journey, from crisis to success, so you can see exactly how they did it!

TIP - You can also find out more about Bob & Jill by watching the MoneyFormula roadmap to success video series, available from the dashboard in the MoneyFormula App.

Bob & Jill's Story

Let's start by meeting Bob & Jill (not their real names). They have two kids and some pets. Jill works full time and Bob looks after the kids and does some contracting on the side.

Personal Finance App Accounts & Debts - Bob & Jill Save over $73,000.

A few years ago they purchased a house and like most of us they have a mortgage.

They also have two credit cards they like to try and pay off each month, but recently they took out a personal loan to help deal with a financial crisis and now can no longer to pay off their credit cards.

They are trying to get back on track and what they want to know is if they put $50 extra towards their debt will it make much of a difference?

And they also want to know what it would take to set up an emergency fund so they are ready any future financial crisis and don't end up in this position again!

Using the MoneyFormula personal finance app we are going to enter their details and find out.

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Account Types Available in the Personal Finance App

The first thing we are going to do is set up some of Bob & Jill's accounts in MoneyFormula.

MoneyFormula lets you track everything you own and everything you owe, in the one convenient location.

Personal Finance App Accounts & Debts - MoneyFormula lets you track all of your assets and debt in the one location.

All Asset Types include

Bank Accounts

Properties

Shares & Funds

Cryptocurrencies

Superannuation

Other Assets (cars, boat)

All Debt Types include

Credit Cards

Buy Now Pay Later

Personal Loans

Mortgages

Investment Loans

Other Debt (tax debt, hecs-help)

All Savings Types include

Wealth Goals (emergency fund)

Rewards Savings (holiday, new car)

Adding an Account to the Personal Finance App

Let's start by selecting the Manage My Accounts section to add an account.

Personal Finance App Manage My Accounts.

Personal Finance App Accounts & Debts - Manage My Account module.

MoneyFormula Adding Assets

We'll start by adding a bank account. From the account list simply pick the account type you want to set up (e.g. Bank Accounts) and select + Add.

Personal Finance App adding a bank account.

Personal Finance App Accounts & Debts - Adding a bank account.

To start with we will keep things really simple and there are just two pieces of information you need to enter, the description and the current balance.

Personal Finance App bank account details.

Personal Finance App Accounts & Debts - Entering the bank account details.

Select save and that's it. We can see the bank account has been added to the All Assets account list.

Personal Finance App bank account created.

Personal Finance App Accounts & Debts - New account listed under All Assets.

MoneyFormula Adding Debts

Adding debts is just as easy. Let's go through and add Bob & Jill's four debt accounts, starting with their mortgage.

Personal Finance App adding your mortgage.

Personal Finance App Accounts & Debts - Adding your mortgage.

As before we add the mortgage description and the current balance, however for debts we can also enter the Debt Repayment details including the current lender minimum repayment and interest rate.

Personal Finance App Accounts & Debts - Entering your mortgage details.

Once we have created the mortgage, we will repeat the same process for the two credit cards and the personal loan and when done we can see all four have been added to All Debts account list.

Personal Finance App four debt accounts created.

Personal Finance App Accounts & Debts - New debt accounts listed under All Debts.

MoneyFormula Net Worth

As we continue to add all of Bob & Jill's accounts, the MoneyFormula Net Worth is automatically updated to give us our overall position by comparing all our assets and debt.

Personal Finance App Accounts & Debts - Your Net Worth compares your assets and debts.

MoneyFormula Debt Profile

The MoneyFormula Debt Profile automatically groups up our individual debts under different categories so we can instantly see our debt types including bad debts, our mortgage, investment loans and other debts.

Personal Finance App Accounts & Debts - The Debt Profile instantly identifies your debt types.

MoneyFormula Wealth View

Within the Net Worth, MoneyFormula also lets us set up a Wealth View that excludes personal use assets, like cars, home contents, etc. and just focuses on assets that go towards creating income and wealth.

If you are following the Barefoot Investor this is known as your Grow Bucket and we will cover the Wealth View in more detail, along with two screens above, in PART 6 - MoneyFormula Net Worth & Debt Profile.

Adding a Money Flow to the Personal Finance App

Now that we've set up the accounts we are going to look at how MoneyFormula uses money flows to help you save part of your income each month and allocate it to your different buckets, so that it doesn't just flow straight through to your expenses, and, well ... get spent!

To start, let's select the Control My Spending section and enter our income into our current budget.

Personal Finance App Control My Spending.

Personal Finance App Accounts & Debts - Control My Spending module.

MoneyFormula Adding Income

Looking at our current budget we can see the income and all our money flows & buckets are currently set to zero.

Personal Finance App Accounts & Debts - Current Budget with zero income, money flows and buckets.

So let's edit the budget income and add Jill's salary (of $7,500 per month) and Bob's contracting income (of $6,000 a quarter).

Personal Finance App add income salary to budget.

Personal Finance App Accounts & Debts - Adding salary and income to the budget.

MoneyFormula Wealth Goal Bucket

We will also put a small amount towards their Wealth Goals bucket to pay down debt; the $50 they can currently afford.

Personal Finance App budget wealth goal bucket.

Personal Finance App Accounts & Debts - Adding income to the Wealth Goal bucket.

MoneyFormula Updated Budget

Looking back at our current budget we can see that it now has the monthly income of $9,500 and we have a $50 money flow to our Wealth Goals bucket.

Personal Finance App budget income and buckets.

Personal Finance App Accounts & Debts - Updated budget with income and wealth goal bucket.

MoneyFormula Income & Expenses

You will notice on the MoneyFormula budget that by default all income flows through to our expenses, unless we allocate it to a money flow.

Personal Finance App budget income and expenses.

Personal Finance App Accounts & Debts - All available income flows to expenses, unless we put it in a bucket.

The simple idea behind MoneyFormula is to allocate money to your three buckets before you spend it (this approach is also sometimes referred to as "pay yourself first").

Your 3 Money Flows & Buckets

There are three Money Flows we use to put the money into Buckets, each with its own job in helping you manage your personal finances.

Wealth Goals Bucket

This first bucket is for those grown up goals we have to complete like paying down bad debt, creating an emergency fund, paying off our mortgage or saving for a home deposit.

TIP - If you are following Barefoot Investor this is your Fire Extinguisher bucket.

Reward Savings Bucket

The second bucket is to help save for those slightly longer term nice things we want, like a holiday, a new car or a new TV where the end date is just over the horizon.

TIP - If you are following Barefoot Investor this is your Smile bucket.

Fun Spending Bucket

The third bucket is a small amount you put aside each month to spend on fun things, guilt free, and it is a good way of protecting your budget and staying sane!

TIP - If you are following Barefoot Investor this is your Splurge bucket.

MoneyFormula Customised Bucket Names

Within MoneyFormula you can customise your money flows, buckets names and emergency fund name.

From your User Profile simply edit the money flows & bucket names and choose one of the pre-defined options (MoneyFormula or Barefoot Investor) or you can manually customise the names to anything you want.

For example, if you were to choose Barefoot Investor then throughout the app it would use the terms Fire Extinguisher, Smile, Splurge, Daily Expenses, Mojo and Grow Bucket.

Personal Finance App customise bucket names.

Personal Finance App Accounts & Debts - Customise your money flows and bucket names.

Your Bucket Percentages in the Personal Finance App

A question that often comes up is "how much should I put towards each money flow and bucket?" and unfortunately the answer is "it depends!"

If you are following Scott Pape's Barefoot Investor approach then the default set of percentages are 20% Fire Extinguisher, 10% Smile, 10% Splurge and the remaining 60% on Expenses.

MoneyFormula Bucket Percentages

By default, MoneyFormula uses Target percentages of 20% Wealth Goals, 10% Rewards, 10% Fund Spending and 60% on Daily Expenses.

The actual bucket amounts you need are automatically calculated for you based on the latest income you have entered into your budget.

Let's take a quick look at Bob & Jill's Target percentages by heading over to the MoneyFormula Track My Progress section.

Personal Finance App Accounts & Debts - Track My Progress module.

MoneyFormula Target Percentages

On the Money Flows screen we can find a summary of the Target percentages and the income amount required to be allocated to each of the buckets (based on the latest income entered into the budget).

Personal Finance App calculated target bucket percentages.

Personal Finance App Accounts & Debts - MoneyFormula target bucket percentages and amounts are automatically calculated.

We can see above based on Bob & Jill's currently income of $9,500 a month and a 20% target money flow to the Wealth Goal bucket they would need to allocate $1,900 a month towards their goal of paying down debt.

20% of income at $1,900 a month? How?

And this is the problem with set percentages, because if someone told me I had to put aside 20% of my income starting tomorrow to help set up an emergency fund, crush bad debt or pay down my mortgage, I would hope they were joking.

Personal Finance App 20 Per cent to long-term savings?

I'm sure I'm not alone. To go from 0% to 20% on day one is a big ask!

It's almost like you fail before you start and why giving everyone the same percentages might be great in theory but doesn't always work.

MoneyFormula Current Percentages

MoneyFormula has a unique way of solving this by letting you start out with ANY bucket amounts you can afford, which is what Bob & Jill are doing with their $50 a month, and in MoneyFormula they are referred to as the Current percentages.

The Target percentages are seen as something MoneyFormula will help you work towards as you get started and improve your finances.

Realistic Bucket Amounts in the Personal Finance App

So let's go back to Bob & Jill's example where they have put $50 a month towards their wealth goal bucket, something they feel they can afford at the moment.

From the Money Flows screen if we select Current % it will show us their current percentage of income going to each bucket based on the amounts entered into the budget.

Personal Finance App Realistic Bucket Amounts.

Personal Finance App Accounts & Debts - Using realistic bucket amounts.

For Bob & Jill, the $50 a month from their $9,500 monthly income is half a percent (0.5%).

While 0.5% is a long way off from their Target 20.0% it is an amount they can afford and an amount they can commit to. We will also see how it ends up saving them thousands and thousands of dollars of their debt.

Keep Adding to Your Buckets

When you start out, if you can't put the target amount towards your buckets (i.e. the 20%) then it's important to keep adding to the amounts as your finances improve.

As you use MoneyFormula to help pay down debt you will free up money, as you review your spending and track your budget you will free up money; and over time you can move some of it to your buckets.

To help you track your progress from Current to Target percentages you can use the Both option on the Money Flows screen compare your two sets of numbers, which is a great was to see how well you are doing.

Personal Finance App bucket percentage comparison.

Personal Finance App Accounts & Debts - Compare your current and target bucket percentages.

MoneyFormula also gives you a rating based on the Current percentage allocated to your Wealth Goals, along with a progress chart.

We can see above that Bob & Jill starting position of $50 a month and half a percent (0.5%) gives them a "Level 1 - Motivated" status.

Personal Finance App bucket percentage progress chart.

Personal Finance App Accounts & Debts - Track you bucket percentage progress.

As they continue to increase the amount of income they allocate to their wealth goals over time the chart will show their progress, with the MoneyFormula approach trying to help you get to 20% target and becoming Unstoppable.

What Next?

In this article we've covered the basics of setting up accounts, discovering our net worth and reviewing our debt profile.

We also looked at setting up our first budget with our income and the importance of money flows and allocating a realistic amount towards our wealth goals bucket.

TIP - For full details on Bob & Jill and their journey from crisis to success, tune into the Roadmap to Success video series available from the MoneyFormula App dashboard.

PART 2 - Achieve Your Wealth Goals & Save Thousands

In PART 2 - MoneyFormula Wealth Goals we'll use wealth goals to line up Bob & Jill's four debts and use their $50 extra a month to see how quickly they will pay them down and how much they will save. We will also look at debt snowballing the minimum repayments from goal to goal and see how much quicker it will crush their debt.

Article Series: Discover the Best Australian Personal Finance App for Your Finances!

OVERVIEW - Personal Finances + MoneyFormula App

PART 1 - Personal Finance App Bank Accounts & Debts

PART 2 - Personal Finance App Wealth Goals

PART 3 - Personal Finance App Emergency Fund

PART 4 - Personal Finance App Budgets & Buckets

PART 5 - Personal Finance App Savings Goals

PART 6 - Personal Finance App Net Worth

PART 7 - Personal Finance App Paying Down Debt

PART 8 - Personal Finance App Mortgage Free

For more information on how to supercharge your personal finances and unlock the thousands of dollars you are missing out on refer to the Personal Finance App Overview.

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PLEASE NOTE: The information in this article is general in nature. It does not take into account your personal objectives, financial situation or needs. Please speak to a qualified financial adviser if you need specific advice on your finances.