budgeting

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# Personal Budgeting

## Tool Mapping

| Task | MCP Server | Key Tools |
|------|-----------|-----------|
| Transaction history, balances, budgets | actual-budget | `transaction(operation="list")`, `account(operation="list")`, `budget(operation="months"|"month")` |
| Category breakdowns | actual-budget | `analytics(operation="spending_by_category")`, `category(operation="groups_list")` |
| Investment balances and allocation | ghostfolio-mcp | `get_portfolio_summary`, `get_portfolio_positions` |
| Net worth calculation | Both | Actual (cash/debt) + Ghostfolio (investments) |

## Spending Analysis

### Category Breakdown

1. Pull transactions for the target period using `transaction(operation="list")` with date range filters
2. Group by category — report both absolute amounts and percentage of total spend
3. Flag categories that exceed their budget allocation
4. Present results as a ranked table: Category | Budgeted | Actual | Variance | % of Total

### Month-over-Month Trends

1. Pull 3-6 months of transaction data
2. Compute per-category monthly totals
3. Calculate month-over-month change (absolute and percentage)
4. Flag categories with sustained increases (3+ consecutive months of growth)
5. Distinguish between recurring/fixed expenses (rent, insurance, subscriptions) and variable expenses (groceries, dining, entertainment)

### Anomaly Detection

- Flag individual transactions > 2x the category's average transaction size
- Flag categories where current month spend exceeds the trailing 3-month average by > 25%
- Flag new payees not seen in prior months (potential new subscriptions)

## Budget vs Actual Variance Analysis

### Monthly Variance Report

1. Pull budget allocations via `budget(operation="month")` for the target month
2. Pull actual spend by category for the same period
3. Compute variance: `actual - budgeted` (negative = under budget, positive = over budget)
4. Present as table: Category | Budget | Actual | Variance | Status (Over/Under/On Track)

### Status Thresholds

| Status | Condition |
|--------|-----------|
| On Track | Actual within +/- 5% of budget |
| Under Budget | Actual < 95% of budget |
| Over Budget | Actual > 105% of budget |
| Critical | Actual > 120% of budget |

### Year-to-Date Tracking

- Accumulate monthly variances to show YTD position per category
- Some categories (e.g., auto maintenance, medical) are lumpy — flag these and compare YTD to annual budget rather than monthly

## Savings Rate Calculation

### Formula

```
Gross Savings Rate = (Total Income - Total Expenses) / Total Income
Net Savings Rate   = (Total Income - Total Expenses - Taxes) / (Total Income - Taxes)
```

### Procedure

1. Pull all income transactions (identify income categories/accounts in Actual)
2. Pull all expense transactions
3. Exclude internal transfers (account-to-account moves) — these are not income or expenses
4. Calculate both gross and net rates
5. Track monthly trend and rolling 3-month average

### Investment Contribution Context

- Use ghostfolio-mcp to pull recent contributions to investment accounts
- Include these in the savings rate numerator if they are not already captured as "transfers" in Actual
- Report: Savings Rate (cash) vs Savings Rate (including investments)

## Cash Flow Forecasting

### Short-Term (Next 30-60 Days)

1. Start with current account balances from `account(operation="list")`
2. Identify recurring income (salary dates, rental income, dividends)
3. Identify recurring expenses (rent/mortgage, subscriptions, loan payments, insurance)
4. Subtract known upcoming one-time expenses (if any flagged by user)
5. Project daily balance and flag dates where balance drops below a user-defined threshold

### Procedure

1. Analyze 3-6 months of transaction history to identify recurring patterns
2. Categorize each recurring item: weekly, biweekly, monthly, quarterly, annual
3. Build a forward calendar of expected inflows and outflows
4. Present as a week-by-week projection table: Week | Expected In | Expected Out | Projected Balance

### Seasonal Adjustments

- Flag categories with known seasonal variation (utilities, holiday spending, insurance renewals)
- Use same-month-prior-year data when available for seasonal categories

## Tax-Aware Financial Planning

### Tax-Relevant Transaction Tagging

Ensure these categories are properly tracked in Actual for tax time:
- Business expenses (Schedule C — use `categorize_schedule_c_deductions` from household-tax-mcp)
- Health insurance premiums (self-employed deduction)
- Retirement contributions (SEP-IRA, Solo 401(k))
- Charitable donations (Schedule A itemized deductions)
- Home office expenses (simplified or actual method)
- Professional development and education
- Travel and business meals (50% deductible)

### Quarterly Estimated Tax Payments (1040-ES)

1. Pull YTD income from Actual (self-employment, W-2, investment income)
2. Pull capital gains/dividends from ghostfolio-mcp

From hvkshetry/StewardOS, MIT.

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