Managing finances can sometimes feel like a juggling act, especially when you’re moving money between 2 linked accounts or paying off credit cards. In the world of budgeting and expense tracking, these movements are known as "Transfers," and handling them correctly is crucial to ensure your financial reports are accurate. Here's a simple guide to understanding and categorizing transfers within Fina.
What is a Transfer?
Imagine you have two piggy banks: one for savings and one for spending. Every now and then, you might move money from one piggy bank to the other. In the world of Fina, we call this a "Transfer." It’s not spending (like buying candy) and it’s not earning (like getting allowance money); it’s simply moving money you already have from one place to another.
Why Categorize Transfers?
Now, let's say you get $10 for cleaning up your room (that’s your income), and you decide to buy a toy for $10 (that's an expense). If you move that $10 from your savings piggy bank to your spending piggy bank and don't tell Fina it’s just a transfer, Fina might think you spent that $10 on something else, like more toys! We don’t want Fina to be confused and double count that as an expense otherwise your reporting will be off!
Categorizing transfers helps Fina understand that you’re not spending or earning extra money, just shifting it from one spot to another.
How to Handle Transfers in Fina
Inside Fina, you will notice that we make 3 distinct sections on your categories page for Expenses, Income, and Transfers. This means that for any of those 3 areas you can create and manage your categories just like you would for your normal expense-related categories. We always aim to provide as much flexibility as possible.
Let’s walk through this step-by-step, with a really easy example:
Example 1: Paying Off Your Credit Card
You Buy a Toy: You use your credit card linked to Fina to buy a $10 toy. Fina sees this and says, "Aha, that’s an expense!"
Time to Pay the Bill: Your credit card bill comes, and you use $10 from your checking account to pay it off.
Mark It as a Transfer: In Fina, you find that $10 credit card payment and mark it as a "Transfer." This tells Fina, "Hey, this $10 is just moving to pay off the credit card bill, it’s not a new expense."
Fina Understands: Now Fina knows not to count that $10 twice. Your reports show you spent $10 on a toy, not $20.
Example 2: Shifting Between Bank Accounts
You Move Some Money: You have two accounts in Fina, a checking and a savings account. You move $20 from checking to savings.
Tell Fina What's Happening: When you see this $20 move in Fina, you tell it, "This is a Transfer."
No Double Counting: Fina now knows that this isn't new money or an expense. It’s just your money doing a little dance from one account to another.
Tips for Smooth Transfers in Fina
Monthly Checkins: We recommend that you head to the transactions tab and ensure that at least each month you review your transactions and mark all your transfers appropriately. Keep an eye out for credit card payments or money movement between your own linked accounts. This will keep your reports accurate and up to date.
Set Rules: If you notice your credit card payments have a similar cadence to them or similar description; its a great idea to set some rules to automatically categorize those transactions as transfers anytime they occur. We aim to auto-categorize these on your behalf, but sometimes we get it wrong so a manual check is always wise.
Double-Check for Mistakes: Sometimes we all make mistakes, like marking something as an expense when it’s a transfer. Take a quick peek at your Fina reports or your categories page to make sure everything looks right.
Use Descriptions: When you make a transfer, you can leave a little note in Fina, like “Paying off credit card” or “Moving to savings.” This can help you remember what each transfer was for.
By following these simple steps, you’ll make sure that Fina is always up to date with where your money is and how much you really have. This way, you can spend more time thinking about what treasures to buy, and less time scratching your head over confusing numbers.
That’s all! Now you know how to best deal with transfers and ensure your reports are always correct 😄.
Love, the founders of Fina
-Clay, Shawn, Xiao