Sometimes people find themselves overspending when they use plastic because they can’t feel the money leaving. One of the remedies to overspending is to pay for things with cash. It’s a lot harder to overspend on clothes and groceries when you have to fork over cold, hard cash.
That said, following a cash budget doesn’t work for everyone. Take our dear Jane, for example: Jane sees cash, Jane spends cash. She actually gets a rush from spending cash! What she doesn’t get a rush from, though, is logging her purchases into Quicken.
Strange as it may sound, Jane feels her non-cash purchases. Perhaps she’s just been using plastic for too long. It’s a lot easier to use than cash. In fact, until Jane put a “Cash Account” in Quicken to force herself to keep up with where her cash was going, she treated her cash like it was free money! After all, she had more in the bank!
So, here is the best way to feel your money, however you’re spending it: PAY ATTENTION to it. Paying attention isn’t logging into your bank to see what’s cleared. Paying attention is following a budget.
And how exactly do we follow a budget? Simple. Make a purchase. Log it. See how much you have leftover in that category. When you have no more money left in a category, STOP spending money in that category! See? Simple.
Let’s start off with comparing a couple of pay models.
Quicken is great for record keeping! I have records going back as far as 2007! You have the option to do your record keeping manually or connect to your bank or both. Whether or not it’s good for budgeting really all depends on exactly how you like to budget. Since I don’t pre-assign a category for “fun/blow/frou-frou” money, I find that I don’t really pay attention to my Quicken budget all that much. I mostly use Quicken to see exactly where my money is going every month, whether it’s a category I’ve budgeted specifically for or not. Because I still want to see how much money I’ve spent at the end of the month or year on clothes and movies and other things specifically, I much rather keep this as an overall picture of my finances and use something else to actually help me stay on budget.
The cost ranges from $40 to $165, unless you have a Mac, then it’s $75 for the same features you get with the $105 version for Windows! Speaking of Windows, If you don’t care to keep up with years and years of transactions like I do, the $40 version is fine, otherwise the $75 version should fit most people. The $105+ versions are targeted to people who do a lot of investing or own businesses or own a lot of rental property. The app for Quicken gets the job done, but there isn’t much going on. It lets you enter transactions and snap pictures of receipts, and it will sync with the desktop version the next time you log on, but it doesn’t show your investment accounts or your mortgages, and it doesn’t let you transfer funds between accounts.
Next up is You Need A Budget (YNAB). The entire YNAB application is pretty much just a fancy spreadsheet. You add your accounts. You set up your budget. You log transactions. That’s pretty much all there is to it. When you set it up, it uses your existing account balances to budget your money for the next month because it’s goal is to have you eventually living off the previous month’s income. That’s all well and dandy, but I don’t want to do that. And no, they don’t give you a choice. So, naturally, most people will be in the red right away. I will admit that I didn’t spend a lot of time with this, but there isn’t much flexibility here, and it doesn’t really fit with how I like to manage my finances.
The cost is $60, but they do offer a 34 day full-feature trial. They won’t force you to upgrade to a new version every few years like Quicken, but all you’re really getting is an automated spreadsheet, so you may or may not find this worth the sticker price. The only way to sync your transactions from the bank is to download your statements from online and manually import them. The mobile apps use Dropbox to sync your budget between the apps and your computer. The phone app, itself, is rather simplistic. It will only allow you to log transactions. The iPad app will let you manipulate your budget, but it won’t let you add accounts. This is pretty much all that is missing from the iPad app except for some graphs. I hear the forums on this site are the biggest reason why people love YNAB so much, but you don’t need to buy the software to read or sign-up to post on the forums.
If you don’t want to fork over money for something like Quicken or You Need A Budget (YNAB) software, there are a number of great and free that tools you can use to keep up with your budget.
One of the most well-known tools available is Mint.com. The online interface tracks your budget and your savings goals and keeps up with your property values, as well as provides you with your Equifax credit score, updated every 90 days for free. The application will automatically categorize purchases downloaded from your bank so you can see exactly where your money is going and how close you are to each category limit that you set in your budget. You can also add Cash Transactions and categorize ATM Withdrawals so you know exactly where your cash is going each month, as well. I think it’s probably best to set your Mint budget up on the computer as you can’t add custom categories via the apps and changing the amounts for each category can be a little annoying within the mobile interface. One thing I don’t like about Mint is that I am constantly having to tweak the categories they put my purchases in. For the longest time, for whatever reason, my electric bill was categorized as fast food! Also, I have to say, about 100% of the “advice” they offer isn’t advice insomuch as advertising, but it’s not intrusive, so I can’t complain too much. One thing I do love about them though is how quickly they diagnose a problem and get to work on it. They usually fix the problem within a few days, sometimes a little longer, but they keep you updated on their progress, either via email or online or both.
The only features really missing from the phone app are the savings goals (something I wish they would add!) and graphs. You do get access to graphs on the tablet app, and both applications give your free range to add accounts and build and manipulate your budget from their interfaces, minus adding custom categories, of course. Fun side note: This company is owned by Quicken.
Another online tool available is at LearnVest.com. The only thing missing from the mobile apps is access to the “Must Reads” tab that takes you to their online mini classes and the knowledge center, which is full of helpful and highly organized articles. This means you can link all of your accounts or add them manually, set up and edit your budget categories, as well as create custom categories, and set up savings, retirement, and other kinds of goals, right from the app, and it works great! Like Mint, it will also automatically categorize purchases downloaded from your bank, as well as let you categorize ATM Withdrawals and let you manually enter cash purchases into your budget. The automatic categorizing is a bit more intuitive than Mint, and the app updates a little faster, but the sync times are still around 25 seconds to a minute, again, sometimes longer. The interface is beautiful and unique, and while their aim is to get to you to sign up to work with one of their Certified Financial Planners (CFPs), they don’t shove it down your throat. One of my favorite features of this app is that it categorizes your budget categories into these little colorful folders that are fully customizeable.
Out of all the apps, this is probably my favorite, but the biggest downside to LearnVest is that you can’t see pending transactions. They say it’s because their technology won’t allow transactions to show up until they have been “fully processed.” While your available account balance does show up within the app, this is still a disadvantage for people wanting to stay right on top of their finances. I also find it strange, because their CFP’s recommend this thing called a “Daily Money Minute” where you swing by the money center and check on your finances, and I don’t see how you can do this when transactions aren’t showing up. I understand, but if there was a fraudulent charge and this was my only app, I wouldn’t know it until it posted to my account. All this said, if things ever change, this could easily become my go-to financial app, and I still love it..
One of the newest online tools available is EveryDollar.com. Like with most new things, there are features to add and kinks to iron out, but it is rapidly improving, and not only it is by far the easiest budget app to set up and get going on, I haven’t wrecked my budget since I’ve been using it! All of the categories are fully customizable, and you can call them whatever you want – things like “blow money” and “new car fund.” And if you do set up a “fund,” it will keep track of how much you’ve saved up in your fund from month to month automatically. This is the quickest way for me to see exactly how much money I have left in each budget category, followed closely by LearnVest. You do have to set up your budget on the computer, and if you need to add a category throughout the month, that has to be done on the computer as well. But after it’s set up, which only takes a few minutes, you can manage and manipulate it 100% from your phone. As of now, the application itself is still very simplistic. It has everything you need to keep up with where your money is going and nothing more, but that is not necessarily a negative thing. Outside of setting up your budget, the only thing the desktop application adds is information on how to find a locally endorsed adviser, if you want one, and information on where you are in Dave Ramsey’s Baby Steps. Something unique to this app that is missing from the others is the ability to split transactions across multiple budget categories.
Basic use of the software is completely free. There is a fee to connect with your bank, to the beat of $8.25 a month or $99 a year, after the free 15 day trial. But that feature is separate – it’s called EveryDollar Plus. As far as I can tell, the only feature EveryDollar Plus adds is the ability to download transactions from your bank. From there you can manually edit each transaction or drag and drop it into the right category. He says they haven’t found a way to make this free yet. Maybe one day. I haven’t tried EveryDollar Plus as of today. There is also not a tablet app as of this posting, but I think they are working on one.
Lastly, here are some less techie options.
The most classic way to budget is with a spreadsheet, either via computer or, if you like, by hand. Dave Ramsey has budgeting worksheets on his website, and I’m sure they’re not too hard to find elsewhere or make up yourself, either. Most computer-based budgeting spreadsheets will update the amount of money you have left over in a category automatically. Numbers by our friends at Apple, Inc. has a really nice budgeting spreadsheet that you can customize right from your phone. I find the EveryDollar app faster when it comes to entering in transactions and tweaking the budget from month to month, so I don’t use this anymore, but it works quite well for helping you stick to your budget.
The last thing I’m going to mention is for people who like to use cash: The Envelope System. This is where you use cash to pay for anything that isn’t a monthly bill, like your rent, cable, and utilities (though some people do make the run to the cable company and electrical department to manually pay these bills). If you’re going to make an online purchase, it’s just as simple as depositing the exact cash in the bank that you need for the purchase before you make it, which you have time to do, because you’re not acting irrationally and thinking before you buy. What goes in your envelopes is anything from groceries to car repairs. Dave Ramsey is a big fan of the envelope system, and it’s been used by people for many, many years. I tried this for about ten months once and completely wrecked my budget. I didn’t do well with having money left-over in an envelope, like in my clothing envelope. It might be months before I spent it, and I didn’t do well having cash just lying around that I couldn’t use for something else. It does, on the other hand, work great for me when it comes to groceries and dining out.
ANYTHING you use consistently and USE period will help. But it has to be interactive! If it’s just a list of your bills or just a copy of your budget that you tack to your fridge, it’s not going to work. You have to interact with it. In order to make your money work for you, you have to pay attention to it.
Keeping track of your expenses helps you to really feel your money, and it goes a long way in helping you reach your financial goals. 🙂
This is by no means an all inclusive list of finance software applications. And neither is the list below, but here are a few more finance and budgeting applications available. All of the apps are available for both Apple and Android, unless noted, and are free or free to try, unless otherwise noted.
Other Finance & Budgeting Apps
1 – Pocket Expense
Free w/ Advertising/Upgrade: $4.99
Features: Calendar Tracking, Clean Interface, Itemized Budget
2 – Budgets for iPhone
Free w/ Limitations/Upgrade: $1.99
Features: Very Cool Interface, Itemized Budget with Category Specific Icons, Charts & Graphs, Expense Tracker
3 – Toshl Finance
Free w/ Reduced Features/Upgrade: $1.99 a month or $19.99 a year
Features: Fun & Attractive Interface, User-Friendly, Automatic Backups, Itemized Budget, Money Back Guarantee, Desktop Application
4 – Mvelopes Personal Finance
Free to Try/Upgrade: $95 a year (25 envelope limit for free version)
Features: Smooth Interface, Account Syncing, Virtual Envelopes, Desktop Application
5 – Wally
Cost: 100% Free and Ad-Free
Features: Beautiful Interface, Receipt Scanner, Detailed Expense Tracker but No Itemized Budgeting
6 – Level Money
Cost: 100% Free & Ad-Free
Features: Account Syncing, Spending Trackers but No Itemized Budget, Highly Attractive Interface, Spending Insights, Transaction Search, Interesting & Fun
7 – Personal Capital
Cost: 100% Free & Ad-Free with an Optional Percentage-Based Portfolio Manager Upgrade
Features: Account Syncing, Asset Manager, Desktop Application, Detailed Expense Tracker but No Itemized Budgeting, Cash Flow Chart, Investment Portfolio, Clean & Uncluttered Interface, Net Worth Tracker, Transaction Search
8 – Hello Wallet
Cost: $100 a year billed annually (or free from participating employers) – No trial available
Features: Account Syncing, Reports, Tips & Guidance, Financial Wellness Score, Spending Insights, Itemized Budget, Account Snapshot Dashboard, Nice Interface, Desktop Application
click on the application name to be taken to their website for more information