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Understanding Flex Budgeting

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by Lara
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What Is Flex Budgeting?

Flex budgeting is a straightforward and adaptable way to manage your finances by focusing on your flexible spending. Unlike traditional budgeting, which assigns specific amounts to every category of expenses (we call this category budgeting), flex budgeting simplifies your financial planning by organizing your expenses into three high-level buckets: Fixed, Non-monthly, and Flex. This approach helps you track your spending more easily while still leaving room for life’s unpredictable expenses.

Using Flex Budgeting

To switch from category budgeting to flex budgeting, navigate to the “Budget” tab of your account, then click on “Settings” in the upper right-hand corner. From here, you can select to apply either category budgeting or flex Budgeting, as well as begin a “Budget Walkthrough” that will take you step-by-step through setting up your Flex budgeting (this is the recommended way of getting set up!). You can switch between budgeting types at any time, and any settings saved with one option will be preserved in case you decide to switch back.

With flex budgeting, you will group your expenses into Fixed, Non-monthly, or Flex buckets.

Fixed Expenses

Non-Monthly Expenses

Flex Expenses

Fixed Expenses

Use this bucket for predictable, recurring expenses that don’t change much month to month and can’t easily be reduced.

Examples:

        • Rent or mortgage
        • Utilities
        • Subscriptions of all kinds
        • Monthly insurance premiums

How it works:

Your overall Fixed expense budget number will remain the same month over month, though the actual amount spent may slightly (example: a monthly utilities cost that varies a bit from bill to bill based on usage). If you have historical data available, Monarch will auto-calculate this amount - just make sure it looks right and adjust if needed.

Non-Monthly Expenses

Non-monthly expenses are less frequent but predictable costs that occur at least once a year. Use this bucket to avoid surprises when these costs come up.

Examples:

        • Annual subscriptions
        • Car maintenance
        • Holiday gifts
        • Seasonal expenses

How it works:

You’ll need to make sure rollovers are turned on for any Non-monthly category, and set a target amount and a frequency for each expense. Monarch rolls over unspent funds in these budgets, so you’re prepared when these costs arise later in the year. Learn more about rollover budgets here: Rollover Budgets Guide. Note: To make the Non-monthly budgets work, make sure you have rollovers and a target amount set for each category.

Flex Expenses

This bucket is for costs that vary month to month and are hardest to predict — but also easiest to reduce if needed.

Examples:

        • Groceries
        • Restaurants
        • Entertainment
        • Shopping

How it works:

Instead of setting individual budgets for each of these categories like you would with traditional category budgeting, you’ll track your total spending for everything in this bucket against one number — your Flex budget. Monarch will suggest an amount for this bucket based on historical data (if available), but you can always update this number.

Updating Your Flex Budget

We know life can change fast, so we created Flex Budgeting to adapt right along with you. Once you have completed the initial Flex Budgeting setup, you can make changes at any time.

Changing Budget Amounts

To change the budgeted amount for your Flex spending bucket, simply click the text box and update the amount. For the Fixed and Non-monthly bucket totals, you’ll need to change the budgets for one or more of the categories within those buckets to update the total budgeted amount.

Moving Money Between Buckets or Categories

When using Flex budgeting, you'll notice that some "Remaining" amounts are shown within a "pill" icon, while others are presented as just the number:


By clicking on any number shown with the pill icon, you can move your budgeted money from one category to another. For example, in the screenshot above, we overspent on "Fitness" and are at $-17. However, we have an extra $59 in our "Education" category that we could move to "Fitness" to cover this negative amount and help balance our budget. To do this, you can click on either the -$17 or on the $59 and indicate which categories you want to move money to and from.

You can move money to or from the following sections:

        • Categories under "Income" bucket
        • Categories under "Fixed" bucket
        • Categories under "Non-Monthly" bucket
        • Overall "Flex" bucket (but not categories within it)

Updating Categories

You might also find that you need to update the categories under each bucket. To change the assigned bucket or make other changes to existing categories, simply hover your mouse to the right of the category name and click on the gear icon that appears. To add new categories to any bucket, visit your Settings page and click “Categories,” then select “Create Category” under the appropriate group.

If you need to re-order categories in the Fixed or Non-monthly buckets, go into your Settings page and click "Categories." The categories can be re-ordered here, and the update will be reflected in the budget page.

The categories in the Flex bucket will always appear in order of the actual amount spent, so the categories that you spend the most in will appear at the top to allow you to quickly visualize where your money is going. 

For even more insight into flex budgeting, check out our in-depth blog posts here: Flex vs. Category Budgeting: How to Chose What’s Right for You and Flex Budgeting: Simplify Your Spending With Just One Number.

 

Frequently Asked Questions

 

What's the easiest way to set up my budget?

We recommend going through our budget walkthrough, which will help you set up your Flex (or category) budget just right to fit your needs!

What do the colors and the tick mark mean in the budget lines?

The ticket mark shows where in the month we are, so at the beginning of the month, you'll see it far to the left, and at the end of the month, it will be all the way to the right.

Just like a traffic light, the colors in the bar serve as a quick visual cue to let you know whether you are good to go (within budget), need to watch out (on track to outpace your budget), or need to stop (over budget).  

      • Green: You're under budget! You currently have spent less than what you have budgeted.
      • Yellow: This only appears within the Flexible bar, and it means that you're on track to be over budget if you continue spending at the current pace. Ideally, your tick mark (the current place in the month) and the end of the colored line would be in line (although realistically it's not always possible, since you may have large expenses stacked at the beginning of the month that will even out over time). In the example below, the yellow is letting us know that we're only about halfway through the month, but we've spent over half of our set budget, and if we keep spending at this pace, we'll exceed the set budget!" The place in the bar where the color switches from green to yellow shows where you started outpacing your set budget.
         
      • Red: You have exceeded the budget set for this category or bucket. In the example below, we have a budget of $3,320 set for our Fixed expenses, but we overspent within those categories by $116.

What should I do if there’s an expense that falls into the Flex Bucket, but I want to keep a close eye on my spending in that category and know if I overspend?

The beauty of Flex Budgeting is that you can track categories under the Flex bucket as broadly or as specifically as you want — you can dial into all, none, or some of the individual categories! If there’s a certain area within the Flex bucket that needs extra attention — say you’re trying to watch your coffee spending — you can set a specific budget just for the coffee category. This allows you to see insights into your spending in that one category, while continuing to enjoy the overall benefits of Flex Budgeting. When you expand your Flex bucket to view all of the categories within it, you’ll see whether you are over or under your target spending for that individual category. However, as long as you’re still under your overall Flex budget number, you won’t get a notification.

Why doesn't my overall Flex bucket budget number change when I update the budgets of categories underneath it?

The Flex bucket number is not intended to be a sum of the categories below it. It's a completely standalone number — many people have no budget amounts set in the categories within the Flex bucket. While that number is initially estimated based on past spending for every category you have shown there, you can make that number whatever you want!

The categories under "Flexible" do not have to have any value. In the example screenshot, below, "Groceries," "Travel & Vacation," "Shopping," and "Furniture & Housewares" have a budget set. "Clothing," "Gas," "Pets," etc, have no budgeted value. If it auto-summed, it would auto-sum only the value of the set budgets, so the Flex bucket value would only be $3,800 — but as you can see, the actual Flex bucket number is $8,000, so much higher.

The beauty of the Flex Budgeting option is that within that Flex bucket, you don't have to set individual budgets for the categories. Rather, they're all counting against that overall Flex bucket number—without needing to set a specific budget for each category. So if you spend from "Clothing," for example, it would count against that overall Flex bucket number rather than a specific "Clothing" budget. If you DO have a budget set for a category under the Flex bucket, the number counts both against that individual category budget AND the Flex bucket number ("Groceries" in the example above debits $1,702 against the $2,000 groceries budget as well as the $8,000 Flex bucket number).

You certainly can have a budget set for each category within the Flex bucket, but for most people, that means that they may be better served staying with category budgeting. For most people, they will want to either set budgets for no categories in their Flex bucket, or just a few categories where they tend to overspend and want to keep a closer eye on them. 

Why can't I move money out of Flex Budget categories?

We recently updated how moving money between budget sections works to better reflect how Flex Budgets function. You can view more about how moving money currently functions by clicking here.

This change was made because the Flex Budget itself is the key number that matters for managing your spending. The categories within Flex serve as an informational breakdown rather than individual budget targets. Since the total Flex Budget is what you are actually adjusting throughout the month, allowing movement only at the top level ensures a clearer and more accurate budgeting experience.

If you need to adjust how much money is allocated to Flex overall, you can still move money in or out of the Flex Budget as needed.

What does “Unallocated Flexible Budget” mean under my Flexible Bucket?

You do not have to set a specific budget for every category under your flexible bucket - in fact, we recommend NOT doing that in order to enjoy the most benefits of flex budgeting! Instead, every category under your Flex bucket flows up to the overall Flex bucket number, rather than having to pay attention to your spending in each individual category.

If you have no budgets set for any categories, your budget will look like this:

However, some people like to have extra insight into certain categories, and prefer to have budgets set for some or all categories within their Flex bucket.  Once you have added a budget for any category under your Flex bucket, you'll notice a new line under the "Flexible" header, as shown here:

The "Unallocated Flexible Budget" (or just "Unallocated Budget" on mobile) shows how much of the flexible bucket budget number has not been allocated to a category yet. In this case, we have an overall Flex budget of $8,000, and have budgeted $2,000 of that to our "Groceries" category. This means that we have $6,000 left that can be assigned to other categories if we choose. Note that we do not have to assign all of the flex budget to categories - if "Shopping" is the only category that we want to pay close attention to, we can leave the remaining $6,000 unallocated and leave the rest of the categories with a null value. 

If you allocate too much to categories under the Flex bucket, and the total for each category exceeds the amount you've set for your Flex bucket budget, the number will turn red and you'll be prompted to fix it if you hover over it:

I have a category with expenses that are both Fixed and Non-monthly. How should I handle these?

You may find you have expenses that fall into one category, but some of the expense are Fixed and some are Non-monthly.

Examples:

      • You have “Child Activities” where certain payments are monthly (i.e. a monthly class charge) and some payments are non-monthly (i.e. a seasonal sport).
      • Under “Groceries” you have a monthly prepared meal service expense, but you also go shopping for pantry staples and snacks.
      • You pay a monthly pet insurance premium, but toys and food are purchased at different intervals with a different cost each time.

For these types of expenses, you’ll want to create additional categories so each type of expense can be correctly sorted. For example, you may have “Child Activities - Monthly” and “Child Activities - Seasonal.” You can then place each category into the appropriate Fixed or Non-monthly bucket.

I'm still confused about how Non-monthly expenses work. Help?

Non-monthly expenses are those expenses that don't occur every month, but occur more regularly than your Flex expenses, and are usually about the same each time. This might be an insurance premium you pay every six months, a yearly subscription, or a charity donation that you make every other month.

For Non-monthly expenses to work correctly, you will want to turn rollovers on and set the "frequency" to be how often the expense occurs, and "target amount" to be the amount you'll pay once that frequency hits.

As an example: if you have a $600 insurance payment that you pay every June and December, you'll turn on rollovers in that category, set the "frequency" to be every six months, and the target amount to be $600. The system will then automatically determine that you need to set aside $100 every month. Because that expense only occurs in June and December, the $100 will rollover from January and become $200 in February, then $300 in March, $400 in April, $500 in May, and then be the full $600 you need in June. The $600 expense will hit that category in June, use up that $600 you've saved up, and the rollover will drop down to $0. You'll then start that cycle over until you reach $600 set aside for again for the next payment in December.

What's the difference between a recurring expense and the Fixed or Non-monthly buckets?

The recurring expenses section provides a detailed, itemized view of specific upcoming expenses, including the payment dates and amounts, without grouping them into categories. It's a schedule view of your regular payments.

The Fixed and Non-monthly buckets, on the other hand, are part of the budgeting system. These buckets should generally contain the same expenses as the recurring section, but organized into categories and placed in a bucket based on frequency (whether they're fixed monthly costs or occasional non-monthly ones). Together with the Flex bucket, this section of Monarch offers a high-level view of your overall budget. 

While the recurring section is all about schedules and timing, the Fixed and Non-monthly sections focus on categorization and planning your overall monthly budget.  Combined, they ensure you have both the details and the big picture of your regular financial commitments.

How do rollovers work with Flex budgeting?

While rollovers should always be turned on for Non-monthly expenses, you can set any category to be treated as a rollover expense, regardless of whether the category is in the Fixed, Non-monthly, or Flex bucket.

Each bucket — and each category — will have a header showing the "Budget," "Actual," and "Remaining" amounts. Rollovers work differently depending on the bucket that the category is in:

      • For the Fixed and Non-monthly buckets, the rollovers will affect the "Remaining" amount on both the category and the high-level bucket.
      • For your Flex bucket, the rollovers will only affect the category-level "Remaining" amount and do not affect the overall Flex bucket amount. 

When rollovers are enabled, the remaining number is calculated from the actual amount spent during the month plus the total rolled over from the previous month.

How are Non-monthly expenses with rollovers different than Fixed expenses with rollovers?

Technically, you could set up your Non-monthly expenses within your Fixed bucket using rollovers. However, there are some differences.

For example, let's say you have a yearly expense of $1200 paid every December, so you are paying that amount every 12 months. When you enter this as a Non-monthly expense (with rollovers enabled and a target amount and frequency set), Monarch will automatically calculate it as a $100 per month expense, meaning that you need to set aside $100 each month to reach that $1200 at the end of the year. Your budget would be set as $100/month for that category. You would turn on rollovers so that the $100 you're not spending every month would eventually add up to become $1200, so when that $1200 expense did hit in December, you won't be over budget.

Theoretically, you could put your Non-monthly expenses within your Fixed bucket using rollovers as well. However, your Fixed expenses are about the same amount each month and are actually occurring every single month—meaning you have an actual expense hitting your account every month—versus Non-monthly, where that actual expense is only once a year (or however often they occur). You may still set up rollovers to account for small differences in your Fixed monthly charges (i.e. a gas bill that is usually $50, but might be a little cheaper in the summer and a little more expensive in the winter—setting rollover will help accommodate those small fluctuations).  

What does “variable” mean when determining frequency under the Non-monthly bucket?

Selecting "variable" as the frequency means that this expense doesn’t follow a regular schedule (unlike, for example, an expense that regularly occurs every 12 months). Instead of the system automatically calculating a monthly amount, you’ll manually decide how much to set aside each month based on your needs.

If I change to Flex Budgeting today, will my previous monthly budgets stay the same or will they also update?

Your historical views will also change to the Flex Budgeting view; however, your old category-specific budgets (as well as any overages or surpluses) will remain and you’ll be able to view these just like you always have.

I don't have a regular monthly paycheck - my income varies regularly. How do I determine what number to use?

If your income is variable, you’ll need to estimate your annual earnings. You can do that in one of two ways:

1. Project your annual income based on what you’ve made so far this year; this works best if you have a good sense of what you’ll make based on a longer work history, but you can always re-evaluate it quarterly or monthly to make sure it’s accurate. The more variable your income, the more frequently you’ll want to revisit and tweak.

2. Use your average spending across all your spending buckets to set a target for your net income (after taxes and any business overhead). This works best when you have control over how much or little you earn by taking on extra contracts, clients, or shifts. 

How are the categories in the Fixed, Non-monthly, and Flex buckets sorted?

Categories within the Fixed and Non-monthly buckets are sorted according to the sort order in your Category Settings page. Categories within the Flex bucket are automatically sorted based on the actual spending in that category, with the areas with the highest spending at the top. 

What’s the difference between Flex Budgeting and Category Budgeting?

Dive deeper into the differences between Flex and Category budgeting in our blog post: Flex vs. Category Budgeting: How to Chose What’s Right for You.

 

 

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