This is probably the easiest and hardest thing to do for most people. While 83% of Americans say they budget month to month, over 70% of people are living with debt, with credit cards rising (Over $1 Trillion). Why? Because there are just too many options, and too many choices, while simple it is not an easy task.

The goal of this page is to give you a view of the tools and get you started on your journey. Don't worry though, if you read this and still struggle that is what I'm here for, because simple does not mean easy. Finding what works for you is key.

The focus is called a Zero Based Budget. This means everything coming in (income) is assigned to everything going out (expense or savings), so at the end of the month your cash on hand is 0. Cash = Income - Expenses - Savings. I purposely put savings in there because we must build the muscles to save.

The easiest way to get started is with a pen and paper, just write out what you know and see. Do not worry about going back to past statements, that will send you into analysis paralysis. I simply want you to sit down and write.

Income: Everything coming in the upcoming month. That includes paychecks, gifts, money from others, money pulled from other areas (savings), etc. Account for all income.

Expenses: What are you PLANNING to spend this coming month? I always start each month with my tithe/giving for me. As a Christian, we are to give God our first fruits. Then, go to your NEEDS! Shelter (Rent/Mortgage), Food (Groceries only), Utilities, and Transportation (gas/tolls/maintenance). Now, if you have Consumer Debt (Student Loans, Credit Cards, Personal Loans, HELOC, etc.), total up your payments to those (for the first time I recommend putting the minimum payments down we will come back to that. Now from there, you can move to the nice to haves or wants (Miscellaneous, Restaurants, Internet, Cell Phone, Allowances, Travel, etc.). These will vary from person to person and this is where you make trade-offs. If you have debt, what is and is not negotiable for you and your family?

TOOLS

Now you need tools to help you manage your budget on a day to day basis. So let's dive in to the many tools out there. I'll break down a few pros/cons of things I have learned over the last several years of budgeting, and which tool may be best for your needs.

Before I get started, this is not promotional in any way. I do not get free access to any of these tools based on the reviews. I have free premium access to EveryDollar from being a coordinator of FPU, but I don’t use it anymore. This is just my honest feedback to give you some thoughts on what may work for you.

Cash System

This is by far the no-frills approach to budgeting. Get your paycheck, cash out the money you need for discretionary money (Groceries, Gas, Misc., etc.) put them in envelopes and spend as needed within your cash for the month.

Pros:

Real-time, you see the cash as it leaves each envelope. Immediate knowledge of what is and is not there. You cannot overspend.
By far the best way to control spending that you struggle with because you cannot go over your budget allocation
No worries about over-drafting your account, assuming you are only taking out the cash you need. The rest that works on direct debit (mortgage, utilities, etc.) should just be left in your account to come out as needed.

Cons:

Can be tough with a partner! If you are married, you have to make sure to either split up the cash accordingly, give primary responsibility to one person, or keep it at home until needed, which means sometimes an extra trip home. On the positive side of this, if the money is not in your hand, the rule is you don’t spend it, so it can force you to make different decisions
Potential for loss! This is real and if you are not good at carrying cash around, then please don’t do this. You will be carrying 100s with you, so you have to keep a hold/guard and protect your cash. If you lose it or it gets stolen, chances are it is gone. Like the movie “It’s a Wonderful Life.”
No reporting. At the end of the month, your cash is out and unless you are tracking some other way, there is no way to see what you spend during this month in prior years or anything like that.

Overall, the cash system is what I recommend to any client who is struggling in some areas. This is the best way to dial in your expenses and force you to think about what you are buying. I’ve never had to do this myself, because I hate carrying cash around.

EveryDollar

Note, there are 2 versions of this one. Free and Premium. The free version is what I recommend to most. The premium version links to your bank accounts, which is nice, but I ran into issues with this about a year ago and others have reporting issues with some banks. Let’s get into it because this is the simplest app for budgeting.

Pros:

Simple! Set your income and set up your expenses. It is really that simple, run this monthly, adjust it each month, and see what you will have leftover or moving into savings, towards debt, or whatever step you are one.
Links to Banks: This is a nice feature of the premium version and ensures that you don't miss a transaction. Otherwise, you will need to be sure you are checking that with your bank statement regularly
Great color coordination to see what you are doing, where things look good, and where you are looking to have potential issues.
Reporting is available which is not robust but gives you some basic functionality and allows you to look back to other years and see what your budget was a year ago in a given month, or how much you are spending on a given category.

Cons:

Bi-Weekly Paychecks/Payments: If you get paid every 2 weeks, this can be a challenge, one month you will be up, another month down, etc. I tried to budget just 2 paychecks a month, which worked okay, but on months where I got 3, this became confusing and threw my budget for a loop, because those bi-weekly payments (tithe) were off altogether. I could never quite dial this in.
Paycheck Planning: Great idea so you know when payments are coming and can plan how much you fund out of each paycheck a month, but it can be very confusing.
Bank connection failures: This was my biggest issue as my bank (Ally) disconnected almost weekly causing me to go through the setup over and over again.
No Reconciliation to the Bank: If you are manually tracking expenses, you will need to check with your bank statements and match on your own. There is no way to track what came in and what did not. If you enter a transaction manually and then it brings it over from the bank, you need to delete one otherwise you will have duplicate transactions.
Buffer in Account: I often recommend people keep a $500 to $1,000 buffer in their account since what is in your budget is not necessarily what is in your account since it is not tightly tied to your account.

Quicken Tools: Mint Mobile (Removed 2023, replaced with Credit Karma)/Quicken Simplifi)

I was a Quicken user for years and always used it to reconcile my accounts. This goes back to my iPaq days when I would enter transactions this way and sync it via cable to my PC. Quicken bought out Mint and just recently shut it down. While a lot is going on out there about it, the real truth is the move was to switch people back over to Quicken online. So really Quicken Online is now Mint and Quicken combined.

Cost

Quicken Simlifi ($4/mo) or Quicken Classic ($7/mo)

UPDATE: January 2024

I tried this for a solid 14 days. The initial setup was a pain, but I worked through it. This is the budgeting app alternative to Mint. But in reality, it can be very complex. My least favorite of the ones I have tried.

Pros: (I'm really struggling to find some)

Full view of all accounts
Manages loans and payments well (from what I can tell)
Does an analysis of your transactions help you assess your budget
Transactions come in quickly and smoothly from all accounts.

Cons:

Pre-set categories that are not easily manipulated
The desktop version has everything really big, not separated (so you see your Mortgage halfway down the list, mixed with others) It is much easier when you have your frequent categories at the top
No Miscellaneous category, I ended up using Cash/ATM for this since there was no other way to categorize, everything had to go somewhere, which is a good and bad thing. In my view it overcomplicates it.

YNAB: You Need A Budget

I'll preface this by saying this is the one I settled in on. It is the only one of the tools that does not have a free version, you can get a free trial, but after that, it is $99/year. With the way my mind works, this one gives me the most control, but it can be complicated.

Pros:

Plan as you go: This is a plus and a minus for some. As noted I get paid every 2 weeks, so when I get paid I assign that money to parts of my budget, either in the current month or future month.
Reconciliation: You can manually enter transactions and when they come over from the bank daily, it checks to see the match. Matching is super easy and makes my daily budget check effortless. I like to enter transactions as they happen as this forces me into the habit of checking my budget before spending.
Easy to Move Around: If a month is higher in one area and lower in another, it is fairly simple to move money between categories, something that none of the other digital tools provide. A simple +/- adds and subtracts as needed.
Aligns to Accounts: If it is in your budget the money is in your account. That is a big plus for many, it does not require you to have a buffer in your account to spend against your budget. I have my budget setup in such a way I know what money is in my savings, what is in my checking and the balances so everything matches up. All my bill savings move over to savings and I can reconcile my budget with my account.
Works well with Credit Cards to keep you on budget, if you prefer to leverage credit, but only do this if you have control over your spending overall. You set the budget and it comes out of there. You have to be diligent not to spend more than what comes in, else you now have debt. They do a good job of calling out your debt, but again this can be complicated for the non budget nerds.

Cons

Monthly Budget Review: There is no monthly budget report for my spouse and me to sit down and look at the planned spending. Right now it is set and we make the necessary adjustments throughout the month as needed, but it would be nice to have a monthly budget plan reports to aid in our discussions.
Expense Planning: I pay my tithe based on my paycheck schedule, not based on a monthly, quarterly, or yearly plan. A few months a year I will pay it 3 times, but most times it is 2 times. I have not figured out an easy way to handle this other than to just assign money to my tithe first before anything else, or setup a yearly budget, but this gets complicated with raises and bonuses.
Reporting: Better than the cash system and better than the others, but overall many limitations that could be much better. The reports are fairly basic.
Complexity: It probably took me 3 months to get it locked in and working for me. I move money around a lot between different accounts so that adds to my complexity, but getting into the rhythm keeps things in check. I still spend about an hour once a month just to make sure my Emergency Fund, Bill Savings accounts, and checking accounts all line up with my budget.

There you have it, that is my slightly unbiased review of all tools for budgeting that I'm familiar with (I get nothing from YNAB or EveryDollar for this) . If you have questions or want to talk about any of the tools I've used or need help with anyone in particular I would love to talk, let's connect. Everyone has their preference, so what is a con for me, may be a pro for you. Find what works for you and stick with it. The key is just working on it and keeping up with it regularly.

If you have any feedback, I would love to hear from you - brian@coachbw.com

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