Budgeting Tools

by Kevin on March 3, 2008

You’ve decided you want to budget, but have no idea where to get started. Here’s a handy list of some tools you can use.

Free, Not Online:

  • Microsoft Excel (or other spreadsheet software such as OpenOffice)
  • Paper
  • Envelopes

Software ($)

  • Quicken
  • Microsoft Money

Online (free and $):

We use Excel. I’ve tried Quicken, Mint, and Wasabe in the past.

Why Excel?

  • It’s “free”. Available on nearly every computer you can find (work, home, library, school…). If Microsoft isn’t your bag, try OpenOffice. (OpenOffice is a free, open source software package similar to Microsoft Office.)
  • Data security. My bank information and logins are not sent to and from varying servers as with some of the online programs like Mint and Wasabe. True, our spreadsheet is on our home computer so someone could get access to it. We don’t keep any of the account information (numbers, passwords) on the spreadsheet. The largest risk we have here is I keep it on my thumbdrive that I carry with me everywhere. If someone stole it, they would be able to see how much money was in our accounts. Again, it wouldn’t show the account numbers or logins or passwords, so I think it is pretty safe.
  • I can make Excel do whatever I want with the data. I don’t have to stick to Quicken’s “plan” based on my spending. I can say this charge for lunch was a work expense, and this one was me just eating out. In short, it can be simple, complex, full of charts and graphs, whatever I like — very flexible.

Why Not…?

  • Quicken or MS Money — these are essentially the same program with different titles. For the most part they do the exact same thing like tracking your accounts, generating reports on your expenses, etc. I used Quicken in 2006 and was generally disappointed. There was no simple way for me to say Transaction A at Retailer A should go in one category (groceries) and Transaction B at Retailer A should go in a second category (household). Plus, you have to upgrade every year which further adds to the cost. I can generate some of those pretty reports if I wanted to with Excel and not pay a dime for it.
  • Paper — Paper? I lose paper. End of story.
  • Envelopes — People sometimes switch to an envelope system for budgeting. They will set aside $X for this month’s expenses and stick the money into categories within the envelopes. Once the money is gone in that envelope, you can’t spend any more money in that category. Before I bash this idea, let me say for some people this is a great first step. It forces you to control your expenses — or at least think before taking money out of your grocery envelope to pay for dining out. Otherwise, I hate these systems. Money in envelopes can be stolen and not tracked. Money in an envelope also does not generate interest. Money in an online savings or checking account can be tracked, earns interest, and is difficult to steal. The way we track expenses in categories is similar to the envelope method, but we just use a spreadsheet to show us where the money is at.
  • Online tools — Wasabe, Mint, and Yodlee Money Center all require you to input your account numbers and login information so that their systems can access your financial institutions’ accounts. Instead of you inputing every transaction, they can just pull the data from your bank’s server and categorize those transactions for you. This makes me nervous. I’m sure they have security systems in place, but still things can happen. I don’t want my accounts to be compromised. I ran into the same problem with these systems that I did with Money and Quicken. They categorize things incorrectly sometimes, or in a way that I don’t think is correct. I end up going back in and moving stuff around anyways. I have used Wasabe and Mint, but not Yodlee or YNAB. Let me also note that You Need a Budget costs money and I believe it is either just a spreadsheet, or also some simple software. You can develop the spreadsheet yourself — I can show you how.

In the end you need to use what you are comfortable with. You will notice I use a lot of spreadsheets around here. Some people are intimidated by Excel, and I hope to dispel some of the mystery around the program. It really is easy to use.
I’m sure there are a multitude of other systems out there. What do you use?

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JB March 3, 2008 at 12:41 pm

I agree with you 100% – Excel all the way. It’s tailored to your needs, it does exactly what you want it to do, you know exactly what’s going on. It’s perfect.

I’ve tried Quicken before – what a hassle.

I am signed up for Mint – I like to look at it now and again, but it too is a hassle if it doesn’t know how to categorize things, but it does have rules that you can set which makes it easier. But in the end, it’s nothing more than some graphs to look at. And you also can’t have loans included in Mint yet.

Money Maven March 3, 2008 at 3:01 pm

You might want to also try Billeo.com. Billeo is a free service that keeps track of your online transactions and passwords. I use Billeo for every online payment or purchase i make. They keep records of every transaction online with one click, so you don’t have to print out pesky confirmation e-mails. I was able to use these records for my taxes this year too – as i pay most of my monthly bills online.

JB March 4, 2008 at 2:39 pm

I just checked out the Billeo web-site and looked at the tour – I’m definately going to have to try this out. Thanks for tip Money Maven!

Future Millionaire March 4, 2008 at 7:53 pm

Personally I’m a Wesabe fan. I used to use an excel sheet until discovering Wesabe and now I’m sold. I love being able to set the rules so every thing’s already categorize, I love being able to access if from any computer, I like being able to re-categorize in a second and look at the same info sliced and diced ten different ways, and I really like how you can keep track of how much money is left in each of your budget categories.

As for the safety concerns about your financial data being accessed, I was really worried about that too, and did a lot of research before signing up. Wesabe unlike the others (mint etc) don’t access your financial institute, you manually create the data for import and it does not retain your account numbers, your passwords or any other personal data. It only keeps track of your transactions.

Mr. Debtbeater March 18, 2008 at 10:38 pm

I’m definitely an Excel guy too, but I’m not opposed to eventually getting on board with one of the online sites as a secondary tool. I mostly like Excel because I’m pretty good at formulas from using it for so many years, but I’ve also had a couple of multi-day Internet outages that would have made exclusively online budgets very annoying. I think at best I’ll end up looking at reporting that they can do and/or look for things I can mimic in my spreadsheets. 🙂

Wilbert van Bakel February 17, 2012 at 10:10 am

I liked MS Money for it’s ‘cash flow forecasting’ feature. I used that feature to calculate how much extra payments I could make before the next paycheck. This is how I got out of debt years ago and I haven’t paid any consumer interest since.

Recently I discovered http;//balanceforecastingapp.me and I like this website a lot. It does NOT track your past expenses (instead of entering each transaction and categorizing it, you simply update the balance to your current information), but it shows you the outlook of your balance this month and in the future.

It shows you how much your save or when you risk an overdraft. And you may be able to avoid problems by rescheduling your bills. (late fees on bills are much lower than credit card interest!)

There is also an iPhone app that offers you a view of your data on the website.

I strongly believe that a budget means financial planning for the future and not expense reporting, like so many applications offer.

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