Top Budgeting Systems You Can’t Live Without
If you want to get rich but have a cavalier attitude about spending, chances are you’re going to have a hard time reaching your goal.
Take my word for it: If you don’t get your spending under control soon, you’re going to wind up paying for it down the road.
By putting together a personal budget as soon as you can, it’s possible to get your financial house in order — putting yourself on a path to long-term financial independence.
Here’s everything you need to know about budgeting, including some of the top budgeting systems you can use every day.
Best budgeting software for 2021
Now that you have a general understanding as to why it’s important to keep an eye on your spending, here are some budgeting systems that you can use to make the planning process easier.
Mint is a service from Intuit that you can use for daily budgeting, among other things. The service is free to use and can help you achieve your savings goals.
Why we love Mint
Mint lets you create budgets based on spending patterns. You can see where your money is going over time and form budgets that fit your lifestyle. Mint also provides free credit scores.
2. Personal Capital
The Personal Capital app is one of the most comprehensive mobile financial services on the market. Its budgeting service lets you organize spending and savings by specific categories, dates, and merchants.
Why we love Personal Capital
Budgeting is just one of the many things you can do with the Personal Capital app. You can also track your net worth, see your savings, and monitor your cash flow.
Personal Capital is truly a one-stop-shop, and what it’s selling is financial freedom. Give Personal Capital a try and thank us later.
3. You Need a Budget (YNAB)
If you’re looking for a dedicated budgeting app, you really can’t go wrong with YNAB. Unlike many other budgeting services, this one is only for budgeting purposes.
Think of it like Quickbooks — but for yourself.
Why we love YNAB
This program doesn’t just let you track spending and stay under budget. It also attempts to educate you and help you understand your financial position. YNAB also comes with goal tracking features and a shared budgeting mechanism for budgeting with a family member or friend.
Quicken has emerged as one of the most trusted names in personal finance management, helping customers with a variety of needs. And one of its best offerings helps with personalized budgeting.
With Quicken, you connect your accounts, and the software automatically categorizes your spending and presents the information in a friendly, easy-to-understand way.
Why we love Quicken
The budgeting software integrates with more than 14,000 financial institutions, delivering unparalleled flexibility. You can create personalized budgets and receive recommendations based on your personal lifestyle.
Dave Ramsey’s EveryDollar app makes budgeting super easy. If you’re looking to stay on track with your monthly budgeting, this is a great choice that you’ll love using.
Why we love EveryDollar
It’s counterintuitive to spend money on a budgeting app when the whole point is to save money. This is another great free service, with a robust mobile app and online platform. It’s quick and easy to get started with EveryDollar.
Everyone loves movies. They’re great. But do you really need to own access to all the movies in the world by subscribing to three or four streaming services? Probably not.
Try a service like Trim, which integrates with your financial services and identifies areas of wasteful spending. It then cancels or negotiates bills on your behalf. It’s similar to the Truebill platform.
Why we love Trim
It’s one thing to know that you’re overspending and want to change your habits. It’s another thing to actually sit down and do it. Trim goes beyond budgeting by helping users take action.
7. Money Patrol
Money Patrol is another budgeting app that’s loaded with features designed to make budgeting easy. It provides access to daily, weekly, and monthly spending trends and allows you to see which merchants you’re spending the most money with.
Why we love Money Patrol
Aside from having the coolest name of all the budgeting apps, Money Patrol has one of the most feature-rich offerings. You can use apps to track and monitor spending and even add tags and descriptions to your transactions right from the app.
Why you have to use a budget
Very simply, a budget gives you more control of your money and financial accounts. Not only does this make it easier to achieve your financial goals, but it also gives you more insight into what you need to do to create an emergency fund.
But the benefits of budgeting don’t stop there.
Money is hard to obtain
As you already know, money is hard to come by. It doesn’t grow on trees. To make money, you have to sacrifice time and labor. And it can take months, or even years, to recover from something like serious credit card debt.
In this light, budgeting is a form of self-respect. It’s a way of recognizing that your time is valuable and making sure you don’t waste the hard-earned money you produce.
Save for retirement
Most people are eager to pay others and make good on their debts. Yet, they fail to hold themselves to the same standards when it comes to saving and investing for retirement.
Budgeting will help you break down your income and expenditures so you can more easily set money aside for retirement.
Budgeting gives you more
Budgeting may not seem like a fun or rewarding activity because it can feel restrictive. But if you think about it, budgeting ultimately gives you more money in the long run.
By breaking down your cash outflows into spending categories, you can figure out which particular category is eating up too much cash — and you can rein in spending accordingly.
This allows you to preserve your capital and avoid going broke. It also gives you better forecasting capabilities and enables you to perform what-if analyses (think: What if I cut cable? How much would I save over the course of a year?).
The better you budget, the more you save — and the easier it is to do the things you love.
Key tips for budgeting
Here’s some tough news: Budgeting is hard work, and an app is just an app. You have to change your behavior and stick to a plan if you actually want to start saving money.
Despite the fact that the above-mentioned apps can make your life easier, there’s no getting around the fact that budgeting requires a tremendous amount of personal responsibility about your financial decisions.
Here are some tips to make budgeting easier.
You’re not a robot. You’re human, with wants and needs. If you continuously deprive yourself of things and live an ultra frugal lifestyle in the name of budgeting, you’re probably just going to resent it over time.
By being flexible, I mean spending a little more on a nice dinner once in a while. Or taking a short vacation to get away. Just spend wisely and use budgeting to guide your decisions and daily habits.
Update your budget from time to time
Over time, your financial situation is bound to change. Hopefully, you’ll bring in more money, and you’ll probably rack up some new expenses along the way. At a certain point, your budget may not fit anymore — just like an old pair of jeans.
Revisit your budget a few times a year to make sure it’s still aligned with your current monthly income and your changing lifestyle and needs.
Be smart about allocations
When budgeting and slashing expenses, you may find that you have far more money on hand than you originally anticipated. For example, you may clear upwards of $500 or more to put to work in savings and investment accounts.
Spend some time figuring out where you want to put your newfound money. Consider diversifying your bank accounts by putting some cash in high interest-bearing savings accounts, some in brokerage accounts, and some in tax-friendly retirement accounts.
Frequently Asked Questions
What is the envelope system?
The envelope system is a budgeting method touted by financial wizard Dave Ramsey.
Simply decide which budget categories apply to your situation, such as groceries, entertainment, gas, and healthcare. Figure out how much you need to spend on each of those categories, and whenever you get paid, put that amount of cash in the corresponding envelope. For example, you may choose to allocate $400 to food for the month — put it all in your food envelope when you get paid, and only use the money from that envelope for food spending throughout the month.
The whole point of the envelope method is to limit your spending. If you only have a certain amount of cash to work with, you’ll get better at planning and make smarter decisions.
What’s more, you can see how taking money out of one area impacts another. For example, if you realize you need to spend more on food, it leaves less for entertainment expenses.
Following this method is a great way to build discipline over time. And keep in mind that it doesn’t have to be actual envelopes, either. You can do this digitally if you have the self-control.
What is the best budgeting process?
No budgeting tool is better than another. Each platform is different, and what works for one person may be a disaster for another.
So the “best” budgeting system is all about personalization and customization. Find what works for you and run with it.
For example, if a budgeting app is going to be just another app on your phone that you never open, consider the cash envelope method and take the process offline. It could work wonders, and who couldn’t use another excuse to stop staring at screens?
How can I improve my spending habits?
The top reason why people struggle with spending is that they lack visibility into where their money is going.
For example, it’s easy to get into the habit of ordering dinner when you’re tired and hungry at the end of a workday.
It’s hard to look at your bank account at the end of the month and try to figure out where all your money went.
The only way to actually improve spending and make smarter decisions is to track every expense as you make it.
The Bottom Line
There are many tools you can use to figure out different budget categories and to automate budgeting. However, at the end of the day, budgeting is your responsibility. Nobody else can do it for you.
It doesn’t matter if you use cutting-edge apps, a simple Excel spreadsheet, or even a financial advisor. You’re the one calling the shots about your personal spending. And until you accept responsibility for your actions, you’ll keep throwing money away.
If you want to keep more money in your bank account, you have to stick to a budget. When you set realistic goals and work hard to stick to them, you’ll be well on your way to building up a stockpile of cash.