Build A Better Budget Part 4 – Budgeting Software

This is the fourth post in a series about how to build a better budget. You can check out the other posts here:

Build A Better Budget Part 1 – The Mindset
Build A Better Budget Part 2 – Creating Categories
Build A Better Budget Part 3 – Tracking Methods
Build A Better Budget Part 4 – Budgeting Software

 

Now that you’ve got your budget set up and ready to run, what’s the best way to track all these numbers? If you’re like me, you have more than 4 or 5 spending transactions each month (heck, you may have more income transactions than that!)

Budgeting SoftwareYou’re probably aware that there are tons of budgeting software options available for tracking your money. But how do you know which ones actually help you be productive, and which ones are just extra work to maintain? When I started tracking my money 10 years ago with a computer I was asking the same question. Here’s a list of the software packages I’ve either tried out or used extensively, as well as my quick review of the pros and cons of each.

Please remember that I’m a proponent of the forward-looking method of budgeting, which you can read about in the first few posts of this series. My experience with each of these titles has been from that perspective, which I hope is more helpful to you than a “whatever you want to do with it” kind of review. Personally, I prefer hands-on reviews that try to compare things apples-to-apples.

Without further ado, the software titles:

 

Quicken by Intuit (for Windows or Mac)

Quicken is a titan in the financial software world, and has been around FOREVER. A new version of the software is released every year and I remember my dad using Quicken when I was “just a boy” in the early nineties. One of the best parts of quicken is the ability to quickly download all your transactions from your bank, using just a button on the toolbar. Almost every piece of budgeting software can do this at some level now, but for years this was a big deal!

I used Quicken for about 8 years, and I would describe it as the jack of all trades, but master of none. The software didn’t change much during those 8 years, and no new features of consequence were added to the product during that time. I could track what I had spent recently, I could track investments and their performance, I could enter savings goals. I could print reports to PDF and create custom reports, once I figured out what I wanted to see. It was the Chevy truck of software for me. Rugged and reliable, but not terribly efficient or innovative.

This year (2013) marks the first time that Quicken has been able to sync your account to a smartphone app. This is a huge step in Quicken’s evolution, which should tell you a lot about how slow the development of the software is.

Pros:
  • Ability to download transactions from financial institutions
  • Lots of built-in tools
  • Ability to totally customize categories
  • Investment tracking
Cons:
  • Strictly rear-looking (see tracking methods for more details)
  • Slow to innovate
  • Not easy to track long-term savings categories

 

Microsoft Excel (for Windows or Mac)

Don’t laugh! Excel may be simple, but it has a lot going for it. For the last 7 of the 8 years I used Quicken, I also used Excel to track the transactions that I made in my “savings” categories. The problem with Quicken was that there was not way to “store up” money from month to month, so that spending 3 times your budgeted amount didn’t penalize you if you’d been saving that money for the last 3 months. It was infuriating to see red numbers on reports when there should have been none.

So, to track things properly I set up a simple transaction spreadsheet in Excel (you can download it here if you’re curious: savings register sample) that allowed me to enter a transaction for money transferred into savings, then split that money up into my savings categories. It was simple and effective, and for 7 years it worked perfectly for me.

Pros:
  • Very simple and flexible
  • Cheap – lots of templates out there for budgeting
Cons:
  • No transaction downloads, everything manually entered
  • Excel skills are required
  • No user manual for budgeting in Excel

 

Mint.com (Website)

Owned now by Intuit, Mint.com started out as an incredible offering– free online money tracking! I tried to use Mint for about a month, and have revisited the site several times in the last few years just to see if anything has changed. My initial impressions were great! The service automatically downloads your transactions from your bank or financial institution, then attempts to categorize them for you, to the best of its ability. The interface is clean and modern, and there’s an app that allows you to view all your account data on your phone or tablet.

After using the service for a bit I started to understand how the service makes money. They want two things from you: statistics on how you spend your money, and the opportunity to present you with ads that they think are suited to your financial situation. Everybody’s got an angle, and online services are no different. Now, the ads I can deal with, because they are mostly financial in nature, so it’s easy to refuse services and institutions that you don’t have any plans to switch to. But the statistics are what drove me nuts.

See, in order for them to give you stats on how you compare to other households in your income and spending habits (and in order for them to collect statistics for themselves) they need to standardize the categories that you use to track your budget with. This means that you can’t remove or modify the categories that are built into the software, you can only add more subcategories of your own. Think this is nit-picky on my part? Check out the category list that you are required to wade through each time you want to properly categorize a transaction: Master Category List

There’s no way, in my mind, that I could ever properly track a budget using Mint, until they allow folks to modify the category list. Too many transactions could go missing or unaccounted for and you’d never know it! What I’ve discovered in talking with folks is that Mint is kind of like a crutch for folks that don’t keep a budget, or at least folks that keep a loose budget. They just use Mint to view their own financials, like an aggregator for multiple bank accounts. Mint has a large user base, but I would bet that it’s a low percentage of folks that actually keep an accurate budget on the site.

Pros:
  • VERY simple and user friendly
  • Automatically downloads transactions and attempts to categorize them for you
  • Smartphone/tablet app available
Cons:
  • Very limited in terms of flexibility
  • Ad supported
  • No ability to remove categories in order to properly track your budget
  • Like Quicken, no way to save up money in some long-term categories

 

Mvelopes, Yodlee, Microsoft Money, MoneyDance, Wesabe, Personal Capital, others

For various reasons these offerings didn’t help with my budgeting needs, so I typically tried them out for about an hour and then dropped them. Believe me, I’ve looks at a LOT of budgeting software over the years. Mvelopes probably is the best that I’ve tried out of these, since it has an envelope method of budgeting as it’s base.

Personal Capital is kind of a different animal, because it’s more of an investment tracker and asset allocation tool than a budgeting software. It’s worth a look if you’ve got some investments though, it’s very insightful and free!

 

You Need A Budget (for Windows or Mac)

I’m not going to lie, this software was like a breath of fresh air after using all the other titles out there. It’s the first forward-looking software offering that I’ve found, and it helps me think through details that are needed to keep our budget humming. The cost is similar to Quicken, and they have free smartphone/tablet apps available that use Dropbox to sync your data.

I have a full review of YNAB here that you can read if you’d like, but here are the biggest pros and cons that I’ve found in the last year or so of using it.

Pros:
  • Fully customizable categories
  • My wife and I can view our data quickly, from two laptops and two phones
  • No ads or interruptions
  • Custom budget amounts month-to-month, instead of the same budget every month like others
  • Sticks to what it does best, no investment tracking or other side-features
Cons:
  • Not free?
  • Requires you to log into your website to download transactions (this is by design, you can read about why here)

 

I hope you found these quick reviews helpful, and please ask me any questions you have about their functionality! I’m happy to share what I know. What I want to make sure to communicate is that keeping a water-tight budget doesn’t have to be difficult, or even hands-on! There are plenty of software solutions available to help.

In the next post of this series we’ll talk about reporting. What reports are helpful to look at in order to track your budget properly, and what aren’t?

 

Photo courtesy of freedigitalphotos.net

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