Every transaction, categorised from day one

The hardest part of using a budgeting app usually isn't the budgeting. It's the categorising. It's one of the reasons we created Wealthra: to handle the hard parts so you can focus on improving your financial health.

Most personal finance apps get you part of the way. They sort the obvious things like groceries, fuel and your salary, then leave a pile of transactions for you to deal with. The pile is always the awkward stuff: money moving between your own accounts, credit card payments and loan repayments. Until someone sorts it, every total in the app is a little bit wrong.

In September we released a change to Wealthra that clears that pile. When you first connect your accounts, Wealthra now codes every transaction. That covers all of them, not just most.

What “every transaction” covers

The easy transactions include income, everyday spending, bills and subscriptions. Wealthra has coded these automatically for a while.

The difficult ones are what's new:

• Transfers between your own accounts. Moving $500 from everyday to savings isn't spending, and it isn't income either. Wealthra now recognises both sides and treats them as one movement of your own money.
• Credit card payments. Say you pay $2,000 off your card. That isn't $2,000 of new spending, because the spending already happened on the card. If an app counts both, your spending for the month looks twice as big as it really was.
• Mortgage and loan repayments. A repayment is two things at once: interest, which is a cost, and principal, which reduces what you owe. Wealthra now splits each repayment into those two parts. The interest shows up as a cost in your reports, and the principal comes off the loan balance. None of it gets lumped in with your everyday spending.
• Accuracy. Every transaction is coded through our multi-layer coding engine. There will be some transactions you want to recode, but the overall position is accurate and ready to review from the start.

We've written before about why transfer matching matters in a budgeting app. This release applies that same idea to every transaction from the moment your accounts connect.

How fast it runs

In our testing, more than 5,000 transactions for one person were imported and coded in under 15 minutes, with every transfer matched and every repayment split.

It runs in the background while you set up the rest of Wealthra: your budgets, your household sharing and your profile. How long it takes for you depends on how many accounts you connect and how much history your bank provides.

Why coding is the foundation

I'm a Chartered Accountant, and one idea shaped this release more than any other: a report is only as good as the coding underneath it.

Your budget, your Income vs Expenses report, your cash flow forecast and your net worth all read from the same categorised transactions. If a tenth of them are uncoded or miscoded, every one of those numbers is out. You can't tell by how much, and most people don't notice. The app still produces a tidy chart. It's just wrong.

That's why we cared about the difficult 10% as much as the easy 90%. Transfers and repayments are usually the largest amounts in anyone's accounts. Get them wrong and the error is large as well.

What this means when you start

• Your first look at your budget reflects what you actually spent. You don't have to sort a backlog first.
• Your reports read correctly from the first sync. That includes Income vs Expenses and the Cash Flow Statement.
• Your time goes on the numbers, not on data entry. You can spend it deciding what you want to do about your spending, saving and debt.

Coded isn't the same as set up

A fully coded set of transactions is the foundation, not the finished house. When the import finishes, Wealthra is showing your bank activity. It isn't yet showing everything you own and owe.

So be a little patient. Let the import run, then add your assets, such as property, shares and super, along with anything your banks can't see. Once those are in, the full picture comes together quickly, and you'll be using Wealthra properly soon after.

You're still in charge

Getting a category isn't the same as getting it right every time, and we won't pretend otherwise.

Every transaction in Wealthra shows where its category came from and how confident the app is about it. You'll sometimes see one you'd have coded differently. Change it, and Wealthra learns from the change. You can also set your own rules, like “anything from this merchant goes here”, and they apply automatically from then on.

The difference now is that you're reviewing a complete set of coded transactions rather than filling in gaps. See how expense coding works

Why this matters to us

A personal finance app is only as useful as the data inside it. For most people, the setup work is where they give up, because it's tedious, open-ended and has to happen before the app shows anything useful.

We've been working towards removing that step. Coding every transaction on first connection puts in place the foundation that the rest of Wealthra is built on: budgets, reports, forecasts and goals. The rest of our roadmap builds on it.