The FaithFi app has three system-type options for managing your finances. This article will help you decide which option is best for you.
- Track Only — simply track your income and expenses into specific categories (food, automobile, housing, and so on), run reports, and analyze income and spending throughout the course of a month.
- Monthly Spending Plan — set up a spending plan for a specific month and track against it.
- Envelope —resembles the cash envelope system and is the FaithFi-recommended solution to managing money.
We provide you with three unique system types because we recognize that everyone’s money management needs are unique. We want to meet you where you are on your financial journey. A great thing about these system types is that you can move between any of these systems at any time. Regardless of which system you decide to work with initially, if you decide at any time that you want to try a different type, we make it very simple for you to do that. You aren’t locked into any system type.
Let’s explore the three system types in more detail.
Track-Only This is an easy way to organize your income and expenses into categories. This method allows you to have all of your accounts connected (if you’re a FaithFi Pro user) or create as many manual accounts as you would like, to track across your entire finances. You can have all of your accounts in one place and organize them into specific categories.
The Track-Only option is best if:
- You are just getting started managing money. Maybe you're learning how to put together a budget or track your expenses. This option is a great place to start.
- You have struggled to use a budgeting app or money management system in the past. If you’ve tried other apps, Excel spreadsheets, a paper and pencil budget, or any other system and you’ve struggled to stick with it, the Track-Only system is a great way to get re-introduced to budgeting and to establish really good habits and behaviors that are essential to being a good steward.
- You need a really simple system to stay on top of your finances. If you aren’t looking for a sophisticated budget or advanced features and functionalities but you need a simple tracking application where all of your accounts can be seen in one place and your spending and income are consolidated into a single report, the Track-Only solution is for you.
The Track-Only system is the most simplistic, the easiest to set up, and the easiest to maintain.
Monthly Spending Plan
This extends the Track-Only functionalities because you’re still tracking your income and expenses, but we’ve added an additional layer. With this option, you’re able to create a monthly spending plan and track against it. The spending plan is for a specific calendar month. If you’re in the month of March, your spending plan represents the entire calendar month of March.
Your plan will automatically carry forward to future months, so when April arrives, it will use your March spending plan as a baseline to create your April spending plan. You can modify your April spending plan as you see fit, but it will use the previous month’s spending plan to move forward into the next month, giving you a great baseline from which to work.
When you move from one month to the next, the tracking will reset. For example, if you allocate $400 per month for groceries and you end the month of March with $50 left in groceries, the full amount will reset and you will have the entire $400 available to you for groceries in April.
The Monthly Spending Plan option is great if:
- You are familiar with Mint or Everydollar systems, and you want to use something similar. These systems are focused on a calendar month, and they reset the tracking each month. You can go back and look at your history through reports, but the spending plan is aligned with a specific calendar month and balances in your categories do not carry over from month to month.
- You’ve been using a monthly budget to track against, either in Excel or on paper. Typically with a spreadsheet, you have a plan and you’re tracking how much you’re spending in that calendar month. More than likely, you’re starting that over with each new month.
- You want more guidance and structure around how you’re using your resources, compared to Track Only.
Envelope System
This is our recommended system because it is inspired by the traditional cash envelope system of budgeting. In the cash envelope system, you basically have a pile of cash that you use to fund physical envelopes, on which you write “groceries,” or “restaurants,” or “entertainment” or “fuel.” You would then put actual paper money into each of those envelopes until you have distributed the cash that is available.
In the FaithFi app, the idea of taking a lump sum of money and assigning it into envelopes has been translated into a digital format. In this system, you use the money that is available in your bank balance to distribute the funds into your envelopes. The amount in your envelopes is always reconciled back to your bank balances, so it’s great for managing cash flow (the money that is coming in and going out of your possession).
Another great feature of the digital Envelope System is that it allows you to accumulate balances in your envelopes over time. For example, if you have $50 left in groceries at the end of a month, that money stays in your envelope, in addition to the new month’s allocation. This is helpful if you are trying to accumulate funds in certain envelopes.
An example of when this feature might be helpful is if you are accumulating funds for a semi-annual or annual expense, like a semi-annual or annual insurance payment, an HOA bill, or a vacation. If you want to accumulate money in a category until you’re ready to use it, the Envelope System will be the best for you.
The Envelope System is great if:
- You want to use a system similar to YNAB, Mvelopes, Money Matters, or any other envelope software. FaithFi is slightly different from these others, but once you understand it, we believe you will be pleased with how it functions and how easy it is to use.
- You have been using or are familiar with the cash envelope system of funding envelopes, waiting to spend until you have more money in an envelope, or transferring money between envelopes.
- You want to accumulate balances in your envelopes over time (set funds aside month after month to save for certain expenses).