In my 11 years in the financial services industry, I have noticed an interesting phenomenon when it comes to spending plans (aka budgets – those terms will be used interchangeably in this post). Most people I coach understand the importance of tracking their spending to ensure they are spending less than they make. Despite that understanding, many people do not actually have a spending plan in place.
I hear a lot of reasons for this like, “it’s too much work,” “I don’t know where to start,” or “I’ve started to make a budget, but just never stuck with it.” Luckily in today’s age of technology, we no longer need to write out our expenses or plug them into a spreadsheet. There are a slew of apps that will help us see where we are spending our money and make sure that we don’t spend more than we make.
Let’s look at several of the more popular ones out there to see how they work and who they work best for (in no order of preference):
How it works: After you link them, Mint automatically syncs with all your bank, credit card, and investment accounts. The automatic syncing feature makes it easy to track spending by account by providing balances, transactions, and bills due. Mint automatically assigns categories to all transactions – you will need to double check this regularly, and correct them if necessary.
Mint will also create a budget (that you can customize) so you can track your spending and easily see when you are over budget in a category. You are also provided free credit score information. Heads up, as a free service, it does use targeted ads that recommend products and services.
Who it works best for: Folks new to budgeting and those preferring a hands-off approach to tracking their spending and budget.
YNAB or You Need A Budget
Cost: $6.99 per month after 34-day free trial
How it works: YNAB is a pure budgeting solution – it does not offer other features like investment tracking or bill pay. Previous versions of YNAB were a desktop-based app, but the latest version is web based. This means you can automatically connect your bank and credit card accounts to import transactions versus uploading files from your bank, and you no longer have to manually enter transactions to make sure they are all captured.
Because budgeting is all YNAB does, they provide a strategy using three rules to help you spend less than you make, pay off debt, and stop living paycheck to paycheck.
Who it works best for: Those looking for a more hands-on approach and who resonate with the three rules YNAB applies to their budgeting strategy. Also, those “budget purists” not looking for other features like access to credit scores and investment tracking will enjoy the quality of the budgeting resources.
How it works: PocketGuard connects to all your financial accounts and creates a simple budget. Itfocuses on what you have available for spending – aka what is “left in your pocket” for the day, week or month. It does account for bills, spending, and savings contributions as well. PocketGuard also allows you to dig a bit deeper to track certain spending categories like groceries, clothing or eating out.
Who it works best for: Those looking for a simple, bare-bones budgeting app.
How it works: Wally is a mobile-only app (there is no website login option at this point) that does not require you to connect the app to all your accounts. Users input a starting total and then add expenses as money is spent. Wally uses the income and expense information you enter to give you your remaining budget for the day and month. Note that you will need to enter upcoming expenses to get a true sense of how much you have left for the month. The app also allows you to categorize expenses to track where you are spending your money.
Who it works best for: While it does not have as many features as Mint or YNAB, Wally does offer a solution for those who don’t like the idea of having to link all their accounts to the app.
Cost: Free version or $6 per month ($50 per year) for an upgraded version
How it works: GoodBudget is a digital version of the old envelope system. Instead of carrying around an envelope with cash for each spending category, this app allows you to do that digitally. Each time you spend in a certain category, money is removed from that envelope. Once the envelope is empty, you can’t spend any more in that category.
It is not required to link accounts to GoodBudget, but you can upload a CSV file from your bank to populate transactions. You then create your envelopes and add money you earn or is already there. Then you fill your envelopes and track your spending from those envelopes. Not overspending becomes easier with the envelopes and allows you to save for other goals.
Who it works best for: Those who like the envelope system (it has been around for a long time because a lot of people have had success with it) and are looking for a digital way to use it. You can use the free version across two devices, so couples can stay on the same page. Remember, it only works if you stick to the philosophy of the envelope system – once an envelope is empty, you must stop spending!
Many banks also have budgeting tools and apps to help you track your spending and save for your financial goals. Some have internally developed apps, while others have acquired platforms (KeyBank purchased HelloWallet for instance). These apps generally integrate with your bank account automatically. Check with your bank to see what tools they offer and test drive them to see if they work for you.
The bottom line
As you can see, there are a lot of tools out there to help you with your spending plan (this list is not exhaustive either). Each one works a bit differently, offers unique features, and different pricing as well. Finding the right tool for you is critical in helping you develop your budget, and most importantly, stick with it!
Having a spending plan is so important to your financial well-being because it allows you to live within your means, avoid debt, and save for the things that are most important to you. If you have struggled to put one in place in the past, hopefully this will help you renew your commitment to your financial goals. Happy budgeting!