How to add expenses to a client plan **AdviserGo, all regions**

In AdviserGo you can enter expenses as either an expense or a goal. A goal is essentially a trackable expense. You can find out more about goals here. If you don't need to track progress in meeting a particular expense, you should add it as an expense rather than a goal.

How to add an expense

1. Open the existing client record, if it is not already open. 

2. Click/tap the plus button in the bottom right of the Dashboard screen.

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3. Click/tap Expenses in the Finances and Accounts section of the menu which appears:

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4. In the next screen click/tap the relevant option. 

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  • Basic Expense should be used for essential expenditure such as food and utility bills. These expenses will show in the blue need line, click here to read more about the need line.
  • Leisure Expense and Luxury Expense should be used for discretionary expenditure such as entertainment expenses and holidays. These expenses will not be shown in the blue need line but will be included in the black need line.
  • Milestone Expense should be used for a one-off expense such as wedding costs.
  • Legacy Expense is a special category of expense for gifts to individuals or charity. Use this category to enable the software to apply the correct tax treatment according to your jurisdiction e.g. tax credits on charitable donations, inheritance tax/capital acquisition tax on gifts (UK/Ireland). Click here for more detail about legacy expenses.
  • Education Expense is a special category of expense for school, college and university fees. These would usually be input with the child as the owner of the expense.

5. Complete the data entry fields which appear in the Basics screen (those marked with an asterisk are mandatory fields).

  • Change the owner dropdown to whoever the expense belongs to (default is joint).
  • In the name field enter a description of the expense. This is what will show on reports. 
  • In the amount box input the amount of the expense and select the frequency. Alternatively, you can input the amount as a percentage of income or an itemised list, using the Details screen. See step 6 below. 
  • Tax deductible is an optional setting which can be set to Yes for tax deductible expenses such as maintenance costs on rental properties.
  • Set the inflation rate to an appropriate figure. The inflation rate will escalate the figure in the amount box from the start of the plan to when the expense starts, and thereafter.  This box will show the default rate from the Inflation assumption shown in Plan Settings.  You can amend this growth rate by clicking Edit. Amending the inflation rate here will only affect this expense item, it will not affect any other items in the plan.

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6. Optionally, you can use the Details screen to input the amount of the expense as a percentage of income or an itemised list. 

To set the expense to be a proportion of income, click Details then click Based on Income. Use the slider to set the percentage of income you wish the expense to be, the default is 50%. Moving the slider automatically recalculates the monetary amount of the expense.

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Note that this sets the initial level of the expense. Future increases in the expense use the Inflation Rate set in this screen. Therefore, if you want the expense to rise in line with the income, ensure you set the Inflation Rate here to match the rate used to escalate the income.

 If you want to enter an itemised list of expenses which the software sums for you, click Details and then click Itemised Expenses. Input the details of the first item in the list (name, amount and frequency), then click Add Expense to input the next item in the list. Repeat until all items have been entered. You should see the amount increase as each item is entered. You can input the items with different frequencies and the software will calculate the overall annual total.

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7. By default recurring Expense items usually to start at the start event for the plan and end at the owner of the income's mortality event (last mortality for joint expenses). Education expenses linked to a child in the plan, default to start at their expected university start date and end at their expected university graduation.

If you would like to amend the timeframe for the expense, click/tap Timing on the left hand side of the screen to edit the start and end event for the income.

You can edit the start and end events by dragging and dropping different events into the item's Starts and Ends boxes.

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For one-off Milestone expenses you will only need a start event. 

You can set the start event by dragging and dropping an event into the Milestone Timing box. If an event does not exist, double-click on the relevant bar of the timeline to add a new event.

7. Optional step for recurring expenses: if the recurring expense will increase/decrease in future (other than inflationary rises), you can click Steps on the left hand menu and schedule a future change to the amount of the recurring expense.  For  example, school fees which rise when the child moves from primary to secondary education.

Click Add Step. In the Basics screen input the new amount of the expense and set the inflation rate.

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Click Timing in the grey bar, click on the event on the timeline at which the change will occur (this must be an event in between and start and end event for the recurring expense). If an event doesn't exist yet, double click on the bar of the chart for the year when you want the expense to change to create a new event. Click Set as Step Timing. Then click Save.

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7. Optional step if you wish to specify which account should be used to pay the expense: By default the software will use its usual expense fulfilment logic and use income, then cash, then liquid assets according to the liquidation order in Plan Settings (see further reading below for more detail on this). If you want to over-ride this logic and specify a particular account(s) to be used to pay this expense, click Payment Sources on the left hand menu. Click and drag the account(s) you want the software to use from the Available Payment Sources list to the Preferred Payment Sources list.

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Tip: the Only Use Preferred Payment Sources option should be used very sparingly, if at all. When ticked, this setting can create artificial shortfalls if the preferred source is inadequately funded to pay the linked expense. These artificial shortfalls can prevent the software’s Insights from returning results. 

When might you tick the “Only Allow…”option?  In most cases, we recommend only using this setting in a what-if scenario. For example, your clients want to make a future gift to their children from a particular asset and you want to run a test to determine if they are saving enough to a particular account to cover this. Even if the account is set as a preferred payment source, income and other assets sources will be used if the account does not have the funds to meet the linked expense. However, by selecting the Only Use Preferred Payment Sources option, you could in this scenario test the account for adequate funding. Again, we recommend using this setting sparingly and normally only in scenarios.

 

8. Click the Save button, top right.

9. Repeat steps 2 to 8 for any other expenses you wish to add to the plan.

 

Where can I see the expense in the plan?

The expense can be seen in the Cash Flow chart or the Expenses chart in either the Dashboard or the Let's See screen.

In the Cash Flow chart you should see the black Total Need line has increased in the year(s) of the expense. Click the Detailed View button to see the categorisation of the income/assets used to fund the expenses. Click on a bar of the chart to see the headline numbers for that year.

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In the Expenses chart you will see a breakdown of the expenses between the different expense categories. A detailed view is not available in this chart. This chart is useful to see how much of the expenses is made up of taxes, and also to highlight where expenses have been stepped up or down.

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Whichever chart you are viewing, you can see more detail by clicking on the Year View button, top right of the chart. Move the slider to the year you want to look at and click Expenses. Click Expand All to see the payment source for the expense.

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How to edit an expense:

In the Dashboard click Expenses then click the name of the expense you wish to edit. 

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This will open up the expense item and you can then edit any of the details by clicking on the relevant data input field. See further reading below for more detail on editing items in AdviserGo.

 

Further reading:

How are expenses are fulfilled

Editing items in AdviserGo