The Budget section is where you will plan for your monthly expenses. Keep reading to understand how budgeting works in Monarch and how to customize your budget. 

Monarch offers two types of budgeting: category and flex. In category budgeting (the more traditional method), you'll assign every expense category a budget, and track your spending at the category level. In flex budgeting (the default in Monarch), you'll focus instead on tracking your flexible spending - a high-level bucket that contains all the categories containing expenses that tend to vary more and are less predictable. You can read more about each type of budgeting here: Flex vs. Category Budgeting: How to Choose What's Right for You.

• How Budgets Work in Monarch
• Connecting Accounts & Categorizing Transactions
• Organizing Your Categories
• Excluding a Category From Your Budget
• Editing or Resetting Your Budget
• Viewing Actual & Remaining on Mobile
• Using Flex Budgeting

How Budgets Work in Monarch

To get started with a new budget - or to restart the process - you can go through our budget walkthrough.

Regardless of whether you choose category or flex budgeting, your Monarch budget is built around a monthly cash flow system. Your total monthly budget figure is based on how much income you expect to receive that month, and expenses and savings are subtracted from the income in order to create a balanced budget.

Monarch uses a cash flow–based approach rather than an account balance–based system.
Account balance systems look at money after it’s already been received and often require tracking every dollar across accounts. In Monarch, your budget focuses on planning future cash flow: how income will be allocated to expenses and savings each month. Account balances are used primarily for long-term goals, not daily spending.

You can still follow an envelope or zero-based budgeting style in Monarch, as long as it’s based on cash flow: income = expenses + savings.

Monarch helps you balance your budget by alerting you to how much you have left to budget - this number shows how much of your income is left over after subtracting your budgeted expenses from your budgeted income for the month:

As you spend money throughout the month, Monarch automatically helps you categorize transactions into appropriate categories (like mortgage payment, restaurant, etc.), letting you plan for the amount you wish to spend in each of those categories. 

Connecting Accounts & Categorizing Transactions

The first step when setting up a budget is making sure all your financial accounts are connected to Monarch and the transactions are categorized accurately. In particular, you will want to ensure your income transactions are correctly categorized as paychecks, interest, bonuses, business income, etc. Since the budget is based on income, these are the most important transactions to categorize correctly.

Organizing Your Categories

Once your income is categorized, it's a good idea to take a look at the approximately 60 category options and decide which ones you want to keep or deactivate. The system categories use machine learning to automatically recognize merchants and will get better over time at categorization. 

Deactivating default categories will hide them, so you won't see them anywhere.  However, they will still appear greyed out in the categories settings page if you ever need to re-activate them. We recommend disabling any of the system categories if they don't apply to you. For example:

• Children (if you don't have kids)
• Auto (if you don't own a car)
• Business (if you don't own a business)

There are 3 layers to the category system. From top to bottom, they are:

• Type (Income, Expenses, Transfers - these can't be changed)
  • Group (Housing, Food, etc. - customizable)
    • Category (Rent, Groceries etc. - customizable)

Ideally, the Income type has groups and categories with mostly positive transactions and the Expenses type will mostly have negative transactions. The Transfer and Credit Card Payment categories are excluded from budgets and cash flow, so they are good for tracking money moved between your own accounts that aren't inflows or outflows.

Custom categories and groups can be created as well! 

Pro tip: If you are using category budgeting, the order in which you sort the categories on the settings page will be the order they appear in all lists throughout the rest of Monarch. 

Excluding a Category From Your Budget

You can pick and choose which categories you would like to contribute to your overall budget. 

To stop an existing category from being included in your budget (from desktop):

• Navigate to your Budget or your Categories settings page.
• Find the category you want to stop contributing to your budget.
• Hover over the category name and select the settings gear icon.
• From here, you can toggle Exclude this category from the budget. This category and any transactions linked to it will be hidden from your budget. 
• Select Save. The change will be updated immediately. 

Note that this will only exclude the category from the budget; transactions associated with an excluded category will still appear in your cash flow and spending totals.

Editing or Resetting Your Budget

The first time you visit the Budget page, it will use a monthly average from the last 6 months to set a planned budget amount for each category. However, you can edit any of these estimates by clicking into the text box and updating it manually. You'll see a pop-up providing historical spending figures for that category to help you pick the right number.

If you don't want to plan a budget amount for a category, you can set it to $0, which will hide the category at the bottom of the group. Clicking it will still show how much was spent in that category, even without a budget set.

If you want to completely reset your budget, there are three ways to do it in the Budget Settings:

1. Recalculate default budgets: Use this to allow Monarch to automatically calculate new budget numbers for each category and override existing information.
2. Clear all budget values: Use this to clear all budget values, both historically and in the future, and set them all to $0.
3. Budget Walkthrough: Use this to go through Monarch's step-by-step walkthrough of setting up a budget. This won't override or clear your existing data, but will help ensure you have it set up correctly.

Viewing Actual & Remaining on Mobile

While the web version shows three columns on the budget page (Budget, Actual, Remaining), the mobile view defaults to just two columns: the budgeted amount and the remaining amount available. However, you can toggle the last column between Remaining and Actual by long-pressing on any of the numbers or by tapping the column header (the underlined word Remaining or Actual). 

Using Flex Budgeting

In flex budgeting, rather than tracking each category individually, you'll instead focus on tracking your flexible spending number - a high-level bucket containing all the categories with expenses that tend to vary more and are less predictable. This allows you to zoom out from the category-level budgets and keep track of your spending at a higher level. You can organize your categories into fixed, non-monthly, and flex buckets. 

Learn more here: Understanding Flex Budgeting.