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What online tools can you recommend to create and/or stay on track with a personal budget?
It's the New Year and I've made a resolution to be better about organizing my budget and how I spend my money. What online tools have you found to be helpful for creating a budget, sticking to it, and spending money more wisely? Are there any features you've found particularly helpful? Are there other tips you can recommend for creating a budget and staying on track with it?
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5 Answers
While some choose traditional methods like a paper, pen and notebook or Excel to track their spending and keep a budget, I prefer using online tools. I've had great success with Mint.com.
What is Mint.com?
Mine is a free web based financial program that pulls all your financial accounts into one place. This includes your bank accounts, any loans, credit card accounts, and even your investment accounts.
Setting up an account is fairly simple. Once you’ve created your login credentials, you are prompted to enter in your financial accounts. At this point, you can see all your recent transactions for each account in one place.
Why I like Mint.com
Information in regards to each of my financial accounts is in one place. I can also set up email and text alerts based on different parameters. Keeping tabs on all your accounts is crucial for those like me who are concerned about security and identity theft. The email and texts alerts automate this for me.
The user interface is easy to use and doesn’t require one to have a PhD. Mint creates pie charts and bar graphs for you based on your transactions and identifies categories like groceries, food and dining and health and fitness. Here you can really see what percentage of your income goes toward each category. It is eye opening to see how the random lunch time Walgreens trips add up!
Mint also allows you to create your own personal budget and goals. My personal favorite is the Goal Tab. I’ve set up a Eurotrip 2011 goal and Mint allows me to set up the projected date of when I’d like to reach that goal, how much I estimate to be spending per day while traveling, how much transportation costs will be and any other travel related expense thus resulting in a final goal amount. Then it lets you know how much you should save per month to reach that goal. Too bad Mint.com tells me I’m currently 2 months behind. Oops.
Also, if you’re in search of a new credit card, Mint.com presents you with credit card offers and deals based on your spending. I’ve scored a great new American Express rewards card through Mint.com with a low APR rate through this Mint.com feature.
So while I’ve had success with Mint.com, I certainly would consider playing around with some other online tools. I’ve heard good things of yodlee.com but have never used it myself.
And as far as creating a budget and staying on track, I wish you the best of luck! I could use some tips myself. I know Mint.com is slowly guiding me in the right direction. I also like to keep up with personal finance blogs and posts such as what is found on http://www.getrichslowly.org/blog/.
Erica,
The first step to creating and sticking to a budget is truly finding out WHERE your money is going. I suggest starting off with keeping a journal of every single penny you spend from lattes to cable bills and rent. Why is this important? Our society is becoming increasingly cashless so, we don't have the same feeling of spending money when we swipe a credit or debit card.
Personally, I buy a small notebook which I can drop into my purse and write down every single expense for a whole month. Then, I categorize each item and put it into categories. This gave me a huge picture of where I was spending my money.
I am also a huge fan of automatic savings plans. Where you can simply set it up and then forget about it. For even more tips, check out http://FinanceDiva.com
Nicole
Hi, Erica
In 26 years of working with clients I have seen the best results only when you combine the use of software with a few other “pushing the pencil” exercises/activities. The biggest benefit to mostsoftware is the end result of having all your information organized and at your fingertips so you have access at all times on “The Big Picture,” from which all financial decisions should be made- a common pitfall with most folks I've encountered.
If your objective is to modify spending behavior, the software may help you figure out whether you're “deficit” spending or not - but you should rely on more than software to help you with behavior modification If you are looking to make changes. One critical activity is to view your expenses in two major categories – totaling your ‘fixed’ expenses in one, and totaling the rest in the “discretionary” one. Be very detailed about the discretionary ones to get a clear picture on costs you can possibly reduce in the quickest manner possible. We can change our fixed expenses but that usually includes things like moving – lowering rent or mortgage payment – which take longer to deploy.
Keep in mind that budgets usually fail because we (human nature) tend to not be completely thorough in capturing and recording our expenses. E.g. The behavior goes something like: "Well, since I don't pay my car insurance monthly and I don't know how to adjust that expense into a monthly figure … I'll just leave that amount off for now!" Unless we are completely honest with ourselves, the software itself can't make the results any different than the accuracy of the data that is entered. It's also part of the human nature to underestimate, when this is exactly the situation where we should lean towards overestimating --then there won't be a “shortfall” at the end of the day, and we might even be surprised at having more than we thought, instead of not having enough money because we didn't level with ourselves as to the true amount of our expenses.
The other most common stumbling block in staying on course with a “budget” is failing to account for emergency expenses that can and will arise. Big Mistake! Life is full of surprises and including a “phantom” expense number within your monthly expenses will help you be protected when the inevitable happens. For example, home ownership means at some point major maintenance is required - a new roof, a plumbing job and/or replacement of major appliances. One can learn to project an average monthly amount that will provide the cushion when it does actually happen. And there is no downside if “it” doesn’t happen because you'll have that much more surplus to invest or save for a specific goal. Online software might be helpful to keep track of “trends” in your spending (i.e. every year around April/May you paint your house), but having a written calendar can do the same job and keep you more “in touch” with your finances.
Remember, online software can only help you do so much!
Nicole I'm also a notebook user, but sometimes I need some extra help to keep all my numbers tracked. Mint as Patricia said is a great tool!
I agree with Corina and Nicole about using a notebook and using software. What's important to distinguish here is the goal: For behavioral modification i.e. spending, the act of writing with a pencil/pen to record your expenses as you go throughout your day has far greater impact than entering totals into a spreadsheet. (Studies have shown that manually writing creates a 'connection' on a learning level that doesn't occur with 'keying in' data.) If you're objective is to understand and change your spending habits you'll find this 10-Minute Plastic Rehab Plan guide extremely helpful. http://www.thefinancial411.com/registration.php
p.s. I've had many clients who had been entering their numbers into Excel tell me that it wasn't until they followed this guide that they actually began to become aware of what they were doing; where there money was going and how to go about making changes!
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