Budgeting Tools 101

By Philip

If you are struggling to figure out how to best budget your money, like we were at first, let me share some helpful tools with you. I’ll go over 4 different tools that have a lot in common, but some have unique features that might appeal to you the most. The two that we are currently using are Every Dollar and Personal Capital.

Every Dollar

EveryDollar was created by Dave Ramsey to help make budgeting easier. I feel like EveryDollar is a good entry level budgeting tool. You can create an account and get a budget set in less than 15 minutes. The interface is very streamlined so there is no confusion. If you are new to budgeting there are suggested categories, but it also allows you to create custom ones as well.  

The idea of budgeting is that you are giving every dollar you make a job. With EveryDollar you don’t need to wait until the end of the month to see you spent too much money in a specific category. Each month you plan for how much money you think you will make and how you will allocate every dollar, get it? You can toggle between how much you planned, how much you’ve spent, and how much is remaining in each category so it’s easy to see where you are doing well and where you might be overspending throughout the month.

The free version of the service allows you to manually enter your income and your expenses, but if you upgrade to EveryDollar Plus ($129.99 annually) you can link your bank accounts for automatic tracking. They offer email support for the free version, and a helpline for the paid version. I also don’t feel like I’m bombarded with ads on the free version which is always nice. It’s available on desktop and mobile. Don’t feel like you need to sign up for the paid version, we have been using the free version and are very happy with it. 

Unlike some of the other tools we will talk about EveryDollar seems to be solely focused on creating and keeping a budget, that’s why I suggest starting with it if you are new to the world of personal finance.

Personal Capital

Personal Capital combines two different services in one tool. The first is a free financial tracker which allows you to connect all of your bank accounts, credit cards, and investments in one place. The second part is a paid financial advisory service which has both human personal consultations and computer generated advice. I haven’t tried the paid service yet so I will only be talking about the free services.

I’ll just say this, I love Personal Capital. Melissa might even say I’m obsessed with it. PC has a lot going on, and it might be a little overwhelming if you aren’t prepared. With no subscription fee you can link all of your accounts, track your net worth, watch your cash flow and expenses, and monitor your retirements savings. 

Let’s focus on budgeting. The one thing I love about PC when it comes to budgeting is that I have all my credit cards and bank accounts linked to it so all of my expenses are listed in one place. I use PC as a supplement to my EveryDollar app which is better suited for creating a budget and monitoring your progress. As hard as we try sometimes we forget to manually enter expenses into EveryDollar so it’s nice to have PC as a back up to refer to in order to make sure all our expenses have been accounted for each month. PC does a pretty good job of categorizing your expenses with no effort on your part, so you can see in general where your biggest expenses are each month without needing to check multiple websites of your bank and individual credit cards. PC will also show you how your spending compares to the previous month. Once a week I get an email showing me if I’ve spent more than last month at this time, if my investments are up or down, and how my net worth is trending. So if you are looking for a tool to help you set a budget within the tool, PC isn’t your best option. But, if you are just looking for something to track where you are spending with little to no effort on your part then it will do great for you. 

My favorite thing about Personal Capital is having all of my accounts in one place so I can not just track a budget but see how all of my savings and investment accounts are doing with one click. You can see how each individual account is doing or see graphs featuring all your investments as a whole. Just a word of warning, the stock market is fluctuating all the time so DO NOT look at it every day or you will get serious anxiety about the amount of money you could potentially lose or gain on any given day. PC has a mobile app that is pretty nice, but like I said, be careful not to look at it too much.

My main frustration with Personal Capital, and this is also the case with Mint, is that some accounts will not connect correctly. My HSA account is with a more obscure company so it recognizes it but does not update the way it should. PC can also have difficulty linking certain accounts with two step verification, but those usually get resolved over time. 

Personal Capital has a lot more features that I may cover at another time, but for now I will just say I highly recommend it.

You Need a Budget (YNAB)

YNAB is the OG of budgeting apps. It’s been around for 15 years and is probably the most popular one out there. The system costs $7/month, but they advertise that new clients will save $600 by month two and more than $6000 their first year. 

YNAB uses a spreadsheet format so it will look familiar and is easy to use and understand. It offers lots of reports and graphs so you can see where your money is going. 

The main difference with YNAB and other budgeting apps is that it encourages you to be proactive, not just wait for the end of the month and see where your money was already spent. They try to help you be more intentional and decide what your priorities are before you spend a single dollar.

If you are really struggling to get your finances in order YNAB is my recommendation for you. I don’t have personal experience with it, but everyone I’ve seen that has used it loves it. 

Mint

Mint is very similar to Personal Capital. You can track your income, assets, liabilities and net worth. Mint offers custom tips based on your spending habits to help you save. It has goal creating and managing features to help you with saving or paying off debt.

You can also have Mint send you alerts to prevent you from going over budget, remind you of bill, or alert you to late fees or rate changes.  Mint has lots of graphs, so if you like to see how you finances are being distributed in various ways you will like this a lot. You can also track your credit score through Mint. 

I tried Mint briefly but the two things that made me choose Personal Capital over it were that I was having more issues synchronizing my accounts to Mint and I didn’t like their investment tracking features as much as Personal Capital. Mint does allow you to add personal property such as homes, and vehicles to your net worth which is useful. You can also manually enter items that can’t be linked like personal loans.

But solely for budgeting purposes, I think Mint is just as good as Personal Capital and might even be a little better.

Wrap up

So you’ve got a little information about all of these tools. Try them all and see which one works best for you. They all have pros and cons so it is a very personalized decision. Or maybe you are old school and want to create your own spreadsheet on Excell. I must confess I still use a spreadsheet in addition to the other online tools. Let us know in the comments which one you prefer and why.

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