Principle

<aside> 💡 Nova uses a "Reverse budgeting" approach, also known as "Pay yourself first".

</aside>

The traditional way of budgeting doesn't work: 75% of people fail to hit their budget. It's hard to stay motivated to save a random amount without a clear purpose. That's why Nova works in reverse: you set your goals, and then Nova works out your monthly budget. If you want to save more, just increase your goals.

The pros of reverse budgeting are:

• You’ll pay yourself first and hit your financial goals every month
• This allows you to spend what's left rather than save what's left
• You reduce the risk of impulse purchases

See:

How to manage your monthly cash-flows?

The reverse budgeting methodology

Nova calculates your budget based on your goals, using the Wealth Equation:

Your transactions are divided into 4 categories:

• Inflows: sum of the money you receive
• Recurring Expenses: sum of all your fixed costs (rent, utilities...)
• Variable Expenses: sum of all your variable costs (anything not fixed)
• Wealth: money you gain. It can sit in your current account, savings account, investment account or be used to repay debt.

The 3 Steps monthly planning