Budgeting and spending tracking apps
Do you know how much you spent last week? What about yesterday? What about last month?
If you do, then you are better than most people. Most people struggle with their finances because of one major issue, they do not know how much they spend, and sometimes do not know how much they bring in. I don’t care what your financial goals are, I am telling you that It is going to be impossible for you to get your finances together if you do not track your spending.
Remember you can't change what you don't measure?
Your first step to any financial plan is to start by taking stock of where you are now so that you can make a plan on where to go next. Today, I'll share some budget tracking methods and some apps that are out there to help you keep track of your spending.
Budgetting
There are several ways to get started but they all start with collecting data. Let us start with tracking your spending. I separate the ways you can track your spending into “old school system” vs “new school system”, both have their pros and cons.
Old School Tracking
The old school system is to track all your spending by writing down your daily spending in a journal then enter it into an excel or spreadsheet software at the end of the day or month. This method is powerful because you actually have to write down the amount spent and this in itself can slow down your spending as you realize how much you are spending. The problem with this approach is that a lot of our spending these days happens automatically, and is deducted through subscription payments from your bank account. For instance, I know I pay for netflix every month, but I can not tell you what day of the month the payment clears my bank account. With the old school method, I would most likely not document this spending and therefore underestimate my monthly spending.
New School Tracking
I am a fan of the New School method and that is using an app that connects your bank accounts and loan accounts. This way you do not do the collecting, and the numbers will be more accurate. However, the ping that you felt writing down all your spending is now gone and all you get is a report of what was spent, but most importantly it is accurate and at this point that is what matters the most.
Over the past 20 years there has been an increase in available apps and each one does something slightly different.
According to NerdWallet
The best budgeting apps for 2021 are
As I said, each one does something slightly different. So you might want to check each one of them out.
Here is a summary of each app based on my research. I will share with you which one I use later on in the video.
I separate these apps into Free vs paid apps
Free apps
Mint and Personal capital- are similar in that you see spending and investment account information. It is good for those interested in a total picture of their financial standing.
Pocket Guard- great for those wanting to just focus on their spending.
Honeydue. This is for partners that want to share information with each other, but also want some privacy. You can choose which accounts to share with each other and which to hide.
Paid apps
You Need a Budget and Everydollar- Are paid services and everydollar has a free version that you have to manually enter your transactions...defeating the purpose.
Goodbudget is for those that like the “envelope method”. However, it doesn't include a syncing feature so once again you have to manually track.
If I were to start today I would either use Mint or Personal Capital.
I started using Mint in 2010. It is a bit clunky and traditional in the way it presents information but it works for me. Personal Capital seems to be a little more visually pleasing. As I was doing the research on this, I signed up for a personal capital account. The next day I received a call from them to set up a personal call with a representative of theirs. Not sure how I feel about that. This might be a plus for you, for me it felt a little too salesy.
With Mint, I am able to see all my accounts, bank, any loans, investment account, retirement accounts all in one place. This allows me to not only calculate my monthly spending but also keep track of my net income and net worth. This is especially important for folks that have multiple streams of income.
In Mint I can categories each transaction. They have a long list of transaction types and names. Which as I understand frustrates some because it is too many to pick through. It works for me because I like to be precise. I also like that Mint allows me to define my own buckets or categories of spending through the use of tags. Therefore if you are a user of the 50/30/20 budgeting rule and want to categorize things as needs, wants, and savings, you can do that using the tag function.
I am a Data Person
I am a data person so I love checking this information frequently. I also noticed that the more frequently I keep track of my spending the more likely I am to meet my goals. This is a personal preference, and you have to identify what works for you. I know for some checking their accounts often increases financial anxiety and reduces their quality of life. For others, avoiding checking your accounts allows you to “cheat” on your budget. Frankly, you have to know what is best for you and your overall well being. This is something we do not talk about often, the psychology of money and your personal relationship with it. So please take my approach as a personal approach. I would love to know what works best for you. Are you a daily, weekly, monthly, or yearlt tracker of your spending?
The other reason I like mint is it allows me to keep track of my net worth. Networth is the difference between how much you have accumulated in assets and how much debt you have outstanding. My goal is to accumulate monthly gains in savings to stack onto my net worth. To me, that's the game! And that is why I keep track of my monthly net worth.
The way I look at it is that tracking daily spending allows me to see the path I am on and tracking my net worth allows me to see the big picture.
After you track your spending, compare it to your budget. If you havent set a budget, make sure to do so. Check out the video in the description about budgeting. To me, your budget is the plan, and you want to compare your actual behavior to the plan you have set. This way, you can identify what changes you need to make.
Do you use an app to track your spending? Which one do you use and what do you like about it? Tell me in the comments.