> ## Documentation Index
> Fetch the complete documentation index at: https://docs.timetracker.in/llms.txt
> Use this file to discover all available pages before exploring further.

# Hours vs money budgets

> Should your project budget be in hours or in dollars? Compare what each one measures, when unapproved time counts, and see a worked example of both.

Every budget is one of two kinds. An **hours** budget caps time. A **money** budget caps cost.

They measure different things, and one of the differences matters a lot: an hours budget counts time the moment it is logged, while a money budget waits for approval.

## The comparison

|                          | Hours budget                                | Money budget                                |
| ------------------------ | ------------------------------------------- | ------------------------------------------- |
| Amount is                | A number of hours                           | An amount of money                          |
| Carries a currency       | No                                          | Yes – your workspace base currency          |
| Measures                 | Every hour logged against the project       | Approved labour cost                        |
| Counts unapproved time   | **Yes**                                     | **No**                                      |
| Updates when             | Someone logs, edits or deletes time         | A reviewer approves or rejects time         |
| Needs cost rates to work | No                                          | **Yes**                                     |
| Best for                 | Retainers, capped scopes, capacity planning | Fixed fees, cost control, margin protection |
| Alert copy says          | "Time budget reached 75%"                   | "Budget usage reached 75%"                  |

## How to choose

<CardGroup cols={2}>
  <Card title="Choose hours when you sold time" icon="clock">
    A retainer of 40 hours a month, or a build capped at 600 hours. The client bought a quantity of your team's time, so the ceiling is time.
  </Card>

  <Card title="Choose money when you sold an outcome" icon="dollar-sign">
    A \$40,000 website. The client bought a result at a price. What matters is whether delivering it costs you less than the price.
  </Card>

  <Card title="Choose hours when cost rates are incomplete" icon="triangle-exclamation">
    A money budget needs cost rates on everyone who works the project. Without them, cost stays at zero and utilisation never moves.
  </Card>

  <Card title="Choose money when approval discipline is good" icon="check-double">
    A money budget only counts approved cost. If your team submits and your managers approve weekly, it is the sharper instrument.
  </Card>
</CardGroup>

## Worked example – an hours budget

**Harbor Logistics – Mobile App. 600 hours.**

Priya sets **Budget type** to **Total hours** and **Total hours** to `600`. There is no currency field, because an hours budget has no money unit.

Utilisation is:

```
utilisation % = hours logged ÷ 600 × 100
```

The alert ladder maps to these points:

| Rung | Hours logged | Why it matters                                  |
| ---- | ------------ | ----------------------------------------------- |
| 50%  | 300 hours    | Halfway. Worth checking scope against progress. |
| 75%  | 450 hours    | Time to confirm the remaining work fits.        |
| 90%  | 540 hours    | Only 60 hours left. Decide now.                 |
| 100% | 600 hours    | Budget consumed. Health goes red.               |

**A month in**

The team has logged 312 hours against the Mobile App.

* Utilisation: 312 ÷ 600 × 100 = **52%**
* The 50% alert has fired. Priya and the workspace owners have been notified.
* The 75% rung has not.

**What counts here**

All 312 hours count, whether Priya has approved the timesheets or not. Jonas logged 8 hours this morning and they are already in the number. Capacity is used up the moment work happens.

**Note there is no cost figure.** An hours budget does not need cost rates. If Northwind has never set a cost rate for Ana Ferreira, the hours budget still works perfectly. Her hours count like everyone else's.

## Worked example – a money budget

**Bluebird Coffee – Website Redesign. \$40,000.**

Priya sets **Budget type** to **Total money** and **Total amount (USD)** to `40000`.

Utilisation is:

```
utilisation % = approved cost ÷ $40,000 × 100
```

The ladder maps to these amounts:

| Rung | Approved cost |                 |
| ---- | ------------- | --------------- |
| 50%  | \$20,000      |                 |
| 75%  | \$30,000      |                 |
| 90%  | \$36,000      |                 |
| 100% | \$40,000      | Budget consumed |

**Where the project stands**

Approved time to date:

| Person        | Hours   | Cost rate | Cost         |
| ------------- | ------- | --------- | ------------ |
| Sarah Lin     | 150     | \$45      | \$6,750      |
| Jonas Bergman | 50      | \$60      | \$3,000      |
| Ana Ferreira  | 50      | \$55      | \$2,750      |
| **Total**     | **250** |           | **\$12,500** |

* Utilisation: $12,500 ÷ $40,000 × 100 = **31.25%**
* No rung has fired yet. The 50% rung needs \$20,000 of approved cost.

**What does not count here**

Sarah tracked another 12 hours this week that Priya has not approved. At $45 an hour that is $540 of cost sitting outside the number. The Financials panel shows it separately as hours awaiting approval, with a tooltip: submitted time is excluded from spent and margin until a manager approves it.

Once Priya approves, cost becomes \$13,040 and utilisation moves to 32.6%.

## The same project, both ways

It is worth seeing how differently the two frame the same work.

Suppose the Website Redesign had been budgeted at 400 hours instead of \$40,000.

|             | 600-hour equivalent view                  | \$40,000 view                                      |
| ----------- | ----------------------------------------- | -------------------------------------------------- |
| Work done   | 250 hours logged, 250 approved            | 250 hours approved                                 |
| The measure | 250 ÷ 400 = **62.5%** of the hours budget | $12,500 ÷ $40,000 = **31.25%** of the money budget |
| The story   | Nearly two thirds of the time is gone     | Under a third of the money is gone                 |

Both are true. The hours view says you are running out of time. The money view says the work is cheap relative to the price, so there is room. Which one is the right alarm depends on what you sold.

<Note>
  A cheap team on an hours budget looks worse than it is. An expensive team on a money budget looks worse than it is. Pick the unit that matches the promise you made to the client.
</Note>

## What each one needs to work

<Tabs>
  <Tab title="Hours budget needs">
    * The **Budgets** app switched on
    * The **Time tracking** app switched on
    * People logging time against the project

    That is all. No rates required.
  </Tab>

  <Tab title="Money budget needs">
    * The **Budgets** app switched on
    * The **Time tracking** app switched on
    * A **cost rate** on every person who works the project
    * Timesheets being **approved**

    Without cost rates, approved cost stays at zero and the bar never moves. Without approvals, the same. See [cost rates](/rates/cost-rates).
  </Tab>
</Tabs>

<Warning>
  Setting a **cost rate** needs the Pro `profitability` feature. On Free you cannot set a new cost rate, so a money budget on a Free workspace cannot start measuring from scratch. Existing cost rates and figures stay readable. Billing rates stay free to set. See [plans and features](/concepts/plans-and-features).
</Warning>

## Switching kind on an existing project

You can change **Budget type** and save. The budget is replaced rather than duplicated.

Be aware of what carries over and what does not:

|                         | What happens                                                                                                                |
| ----------------------- | --------------------------------------------------------------------------------------------------------------------------- |
| Utilisation             | Recalculates from scratch against the new kind and amount                                                                   |
| Health                  | Recalculates                                                                                                                |
| Already-fired alerts    | Do **not** re-fire. Each rung fires once per project per pool                                                               |
| Task caps               | Stay, but a cap must match the project budget's kind – an hours cap under an hours budget, a money cap under a money budget |
| Historical time entries | Untouched                                                                                                                   |

If you switch from money to hours, any existing money caps no longer match the new denomination. Remove and re-add them in hours.

## Permissions

| Action                                       | Capability                         | Roles                         |
| -------------------------------------------- | ---------------------------------- | ----------------------------- |
| Choose the budget type                       | `budget.manage`                    | Owner, Admin, Project Manager |
| See hours utilisation                        | – (workspace member)               | Any member                    |
| See money utilisation                        | – (workspace member)               | Any member                    |
| See the cost figure behind money utilisation | `time.viewCost` or `rate.viewCost` | Owner, Admin                  |

A Project Manager sees the money budget's **percentage** but not the underlying cost amount. The percentage is a progress signal; the cost figure is internal.

## Common questions

<AccordionGroup>
  <Accordion title="Can a project have both an hours and a money budget?">
    The Budget card sets one budget per project. Choose the unit that matches how the work was sold.
  </Accordion>

  <Accordion title="Why does my hours budget move faster than my money budget?">
    Because it counts unapproved time and the money budget does not. On a project where timesheets are approved weekly, the hours figure runs up to a week ahead.
  </Accordion>

  <Accordion title="My money budget shows 0% and everyone has been working. Why?">
    Either nobody has approved the time, or the people working have no cost rate. Check both. Approval comes first – no approval, no cost.
  </Accordion>

  <Accordion title="Does an hours budget tell me anything about profit?">
    Not directly. It tells you about capacity. Profitability needs both revenue and cost, which come from rates. See [profitability and margin](/budgets/profitability-and-margin).
  </Accordion>

  <Accordion title="What if my workspace has no base currency set?">
    Your workspace has one – USD by default. The money amount field is labelled with it.
  </Accordion>

  <Accordion title="Can I budget in hours and still invoice by the hour?">
    Yes, and it is the natural pairing. The hours budget caps the scope; invoicing bills the approved billable hours at each person's billing rate.
  </Accordion>
</AccordionGroup>

## Troubleshooting

| Problem                                                   | Cause and fix                                                                                                                                 |
| --------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------- |
| A money budget rejects the save                           | An hours budget must not carry a currency, and a money budget must have one. The form handles this, so check the amount is a positive number. |
| Hours utilisation counts time you expected to be excluded | It counts every logged hour. That is by design. Use a money budget if you want approval to gate the number.                                   |
| Money utilisation never moves                             | No approvals, or no cost rates.                                                                                                               |
| A task cap is refused after switching kind                | The cap's denomination no longer matches the project budget. Remove and re-add it.                                                            |
| You cannot set a cost rate                                | Cost rates need the Pro `profitability` feature.                                                                                              |

## Related guides

<CardGroup cols={2}>
  <Card title="Set a project budget" icon="pen-to-square" href="/budgets/set-a-project-budget">
    Where the budget type is chosen.
  </Card>

  <Card title="How budgets work" icon="gears" href="/budgets/how-budgets-work">
    Utilisation, forecast and health.
  </Card>

  <Card title="Recurring retainers" icon="rotate" href="/budgets/recurring-retainers">
    An hours budget that refills every month.
  </Card>

  <Card title="Cost rates" icon="dollar-sign" href="/rates/cost-rates">
    What a money budget measures against.
  </Card>

  <Card title="Budget alerts" icon="bell" href="/budgets/budget-alerts">
    The ladder, in both units.
  </Card>

  <Card title="Plans and features" icon="credit-card" href="/concepts/plans-and-features">
    Where the profitability half-gate sits.
  </Card>
</CardGroup>