The Short Answer
Once your budget is built, technology can make it dramatically easier to stick to it. Free tools like Mint.com connect directly to your bank accounts, automatically categorize your spending, and show you in real time how close you are to your monthly limits. Using a visual, automated system removes much of the daily mental effort that causes people to abandon their budgets. The goal is to spend less energy tracking and more energy actually following through.
Step #1: Determine Your Average Monthly Income
Step #2: Know Your Expenses
Step #3: Create a Balanced Budget
Step #4: Review Your Budget Regularly
Step #5: Use a Technology to Help You
Step #5: Use Technology to Help You
By this time you’ve completed the “meat and potatoes” steps (Steps 1 through 3) that allow you to create your budget and you should be reviewing your budget regularly (Step 4). Now, how can we make following your budget and gaining your financial freedom even easier? Let’s use technology!
I’ll admit it – I’m a huge technology guy. I use it in all kinds of areas of my life and I think we can leverage the power of technology to make our lives much easier. There are a ton of different pieces of budgeting technology. Here are a couple of our favorites:
Mint.com: This is probably my favorite of all of the online budgeting tools. Mint.com allows you to link your bank account to a budget. It uses 128-bit SSL encryption to protect your information – that’s the same security technology that banks use to protect your online banking. Mint.com will pull your bank account information and categorize what has been spent into different categories. You can then set goals (based on your budget) and it will track your progress towards reaching those goals. One of the best features is that you can look at your budget on any given day and see how much you have spent on each category (food, personal care, bills and utilities, mortgage / rent, etc.) and how much more you have to spend for that month. This is a great way to continually monitor your performance in a visual and easy to understand way. The best thing – Mint.com is free. You can sign up and get started in less than 10 minutes, and they also have iPhone and iPad applications.
Wesabe.com: Wesabe.com isn’t a whole lot different than Mint.com. I think Mint.com is a little bit better at being an overall budgeting package but what I really like about Wesabe.com is it ties in the presence of an online community. In other words, when you sign up for an account you can ask questions and discuss your budget with others. We have seen that people have a greater chance of success when they can voice their accomplishments and potential hurdles with others.
Another option is to create a Microsoft Excel template. This is easy to do and can be done in less than five minutes. However, I really like the way Mint.com and Wesabe.com show you what you are spending in a graphical format. It’s one thing to be told what you are spending money on but to actually be shown is a whole different ballgame.
In the future we expect the two tools discussed above and other online money management programs to use historical data and demographics, including geography, to show you what other people in a similar situation are spending each month.
Regardless, you can use online tools to simply the budgeting process. Do the legwork to put a great budget together then use one of these, or any other online tool to help you lower your expenses and increase your savings and the amount of money in your pocket at the end of each month.
Key Takeaways
- Mint.com is a free budgeting tool that links to your bank account, categorizes spending automatically, and lets you set and track financial goals visually.
- Seeing your spending in charts and graphs is more powerful than reading numbers in a spreadsheet — the visual format makes overspending impossible to ignore.
- Online budgeting communities, like those built into tools such as Wesabe.com, can increase your odds of success by giving you a place to share progress and ask questions.
- A simple Microsoft Excel template is a solid fallback if you prefer to keep your financial data offline and off third-party servers.
- The best budgeting tool is the one you will actually use consistently — pick one and commit to checking it regularly, just as you would review your budget in Step 4.
- Technology works best after you have already done the foundational work: calculating your income, listing your expenses, and building a balanced budget.
Attorney Insight
The mistake I see most often after a bankruptcy discharge is that clients feel the hard work is done — and they stop tracking their money closely. Within a year, some end up back in the same cycle because they never replaced old habits with a real system. A visual budgeting tool that shows you, in red, that you have already spent your grocery budget by the 20th of the month hits differently than a number in a spreadsheet. After nearly 30 years of doing this, I am convinced that the mechanics of a bankruptcy case are the easy part — building the habits to stay financially stable afterward is where people actually win or lose.
