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All Contents © 2017The Kiplinger Washington Editors
By Lisa Gerstner, Contributing Editor
| January 2017
We admit it: Budgeting is drudgery, a pain, the pits among personal finance tasks. But at the start of a new year, when people are brimming with resolutions to get organized, accelerate saving and all that, it’s a good time to talk about the B word. Maybe you already track income and expenses. More likely, you have followed a budget in the past and then let things ride (and maybe slide).
But it’s a good idea to put yourself through the budgeting paces periodically. Developing a blueprint for how you intend to spend and save money is an important step to reach your goals, both in the short term and in the distant future. It’ll also help keep you out of debt and give you a sense of control over your money.
Plus, budgeting doesn’t have to be painful if you take advantage of websites and mobile apps that help you get organized. No matter how you prefer to budget, you can probably find one to match your style and perhaps automate the task. Some sites cater to detail-oriented types who want to know “how much they spent on Coke versus Pepsi over the past six months,” says Steve Shaw, vice president of strategic marketing for the digital banking group at Fiserv, a financial-technology company. Others take a broader approach, providing simple expense and income tracking.
We offer options that fit a variety of users. Some require you to share user names and passwords for your bank, credit card and other online accounts for quick, automatic updates of where your finances stand. A few let you enter transaction data manually—a plus if you’d rather not share your log-in credentials with a third party. But all of them use security measures, such as encryption and password protection, to safeguard your information. They are free except where otherwise noted.
Screenshot via www.mint.com
Best if: You want to budget the easy way
Introduced a decade ago, Mint continues to be a go-to application because it offers attractive, easy-to-use tools for tracking financial accounts and creating budgets. Mint can link to your checking, savings, credit card, loan and investment accounts to let you see how your finances stack up, including a snapshot of your net worth. You can see estimates of your home’s value from Zillow and your car’s value from Kelley Blue Book. You can also set spending limits in various categories (such as shopping and entertainment), view how much you’ve spent in each area throughout the month, and receive alerts if you go over budget. Plus, you can monitor your progress toward savings goals, such as building a fund for emergencies or a vacation.
Mint will slice and dice your finances into graphs over periods you select, displaying how your net worth has changed over the past year, for example, or in which categories you’ve spent the most during the past month. You can also sign up to get a free credit score from Equifax and alerts of significant changes to your credit report. Mint recommends credit cards, brokerage accounts and other financial products, but keep in mind that many of the suggestions are from partner companies, so you may be able to get a better deal elsewhere.
SEE ALSO: Kiplinger's Household Budget Worksheet
Screenshot via www.ynab.com
Best if: You're up for a deep dive
With a philosophy of “give every dollar a job,” You Need a Budget is best suited for those who don’t mind wading into the weeds. YNAB charges $5 a month (or $50 a year) after a 34-day free trial. But you get a thorough plan and a lot of hand-holding as you prepare your budget, including a guide to setting it up and explanations of why you’re taking each step. Plus, YNAB offers live online workshops on financial management, such as reaching savings goals and paying down debt.
You can connect to your income and spending accounts, such as credit cards and checking and savings accounts, and customize categories. (You can also link to loan and investment accounts to track balances and see your overall net worth.) If you’d rather not provide direct access to your accounts, then you can enter balances and transactions manually or download statements from your bank and credit card websites and import them into YNAB.
At the top of your budgeting page, you’ll see how much cash you have to divvy up among the categories; you are directed to run that number down to zero by allocating all of it, both in the current month and in the future. In its “Age of Money” tally, YNAB calculates the number of days that passed between when money arrived in your budget and when you spent it. The goal is to spend money that is at least a month old, breaking the paycheck-to-paycheck cycle.
Screenshot via www.spendee.com
Best if: You're the hands-on type
Fair warning: Spendee does not sync with your online financial accounts yet, so keeping it up-to-date can be labor-intensive, and it currently operates only as a mobile app. But if you want to be mindful of every purchase and you prefer not to share your log-in credentials—plus you’re smartphone-savvy—Spendee is a handy tool.
Each time you spend or earn money, you choose or create a category for it (such as “Restaurants” for expenses or “Paycheck” for income) and enter the amount. You can upload photos of receipts to attach to each transaction, and you can set up recurring transactions so that, say, a $2,000 paycheck is recorded every two weeks. Spendee subtracts total expenses from available cash to display how much you have left to spend, and it generates graphs that break down your income and spending categories. For a single category, you can set a limit and track how much you’ve spent in it. But if you want to create budgets in multiple categories, you have to upgrade to the Premium level ($1.99 a month or $14.99 a year).
SEE ALSO: 11 Budgeting Skills Everyone Should Master
Screenshot via www.mvelopes.com
Best if: You budget the old-fashioned way
With the classic budget-by-envelope method, you label envelopes by expense category and stash cash in each. Once an envelope is empty, you’re done spending in that category until the next refill. Mvelopes updates that system for the digital era, allowing you to link your bank and credit card accounts. As income and expenses flow through your Mvelopes in-box, you assign transactions to customizable on-screen envelopes and set up rules to have recurring transactions directed automatically. If you like, you can attach photos of receipts to your transactions, as well as create a savings envelope.
You can earmark cash to an envelope up to a year in advance, applying the same monthly limit to the ones that hold regular expenses and individually marking the rest. If you find that one envelope is too low on funds to cover expenses or if you have extra money left at the end of the month in another, you can transfer money among envelopes. Mvelopes’ graphs are not as well executed as those in some other applications, but they clearly show your account balances, net worth and other measures.
You’ll have to stick with somewhat broad budgeting categories if you use the free version of Mvelopes, which comes with 25 envelopes and lets you link four accounts. For $95 a year, you get unlimited envelopes and can connect as many accounts as you wish, plus you get access to debt-management tools and other features.
Screenshot via www.personalcapital.com
Best if: You're an investor who wants the big picture
Personal Capital’s strong suit is monitoring your whole financial picture. Link bank, credit card, loan and investment accounts to Personal Capital (or enter data manually) to see a dashboard with charts and graphs that show your net worth, cash flow, portfolio balance and allocation, and best- and worst-performing stocks. You can drill down into each section for more analysis.
Within cash flow, for example, you can view how much of your income came from cash deposits, interest, investment income and other sources over a period of 30 days to a year, as well as a breakdown of expenses by category. The displays in each section are colorful, detailed and easy to navigate. And it’s broadening its budgeting capabilities; it will soon allow users of its web application (not just Apple users of the mobile app) to set a spending limit and track how they’re faring against it.
Its tools for tracking investments are especially robust. Along with digging into your portfolio to view it from different angles, you can use the Investment Checkup tool to get a suggested target portfolio allocation based on your goals and the Retirement Fee Analyzer to see an estimate of how much of your earnings in retirement accounts may be lost to fees over time.
SEE ALSO: 10 Financial Decisions That Will Haunt You Forever
Screenshot via www.prosper.com/daily
Best if: You have a fear of fraud
Detailed budgeting is best left to other apps, although Prosper Daily’s money-tracking component is useful for keeping an eye on overall spending. This tool’s strong suit is its ability to identify fraud.
Regularly checking your bank and credit card accounts for unauthorized charges is a task that can easily fall through the cracks. After you link it to your accounts, Prosper Daily (accessible only through a mobile app) pulls in your transactions and prompts you to verify whether you made them. The app highlights duplicate charges as well as those that occur in unusual locations. You’ll also get an alert when a merchant with which you’ve done business suffers a data breach, and you can choose whether to be notified when your credit or debit card is used out of proximity of your cell phone (under the assumption that you carry your phone with you most of the time). Free monthly credit score updates are available from TransUnion.
On the budgeting front, Prosper automatically splits transactions into such categories as travel and groceries and compiles the information into graphs, and you can see how your bank and credit card balances compare with a spending limit that you set. The app also provides alerts of upcoming payment due dates and new monthly recurring charges.
Screenshot via www.quicken.com
Best if: You like bells and whistles
With so many free and low-cost online options for budgeting and monitoring accounts, spending $75 on software that you have to download to your PC may not be on your radar. But if your finances are complex or you’d like extra help with taxes, investments and other knotty topics, you may benefit from the bells and whistles that come with Quicken.
Quicken offers several versions of its software for Windows, ranging from $30 to $155. If you want to manage investments along with your finances, spring for Quicken Premier 2017 (you can download it or buy a CD for $75 at Amazon.com). It connects to bank, credit card and loan accounts so you can download your transactions (you can attach photos of receipts to transactions, too). Then it uses the data to provide analysis and forecasting, in colorful graphs. For example, it displays how your bank account balance is likely to change in the next week, month, year or longer based on what it knows about your income, bills and other transactions. The Lifetime Planner draws on information about your age, income, family, tax rate, savings and other variables to determine whether your finances look secure in years ahead. With the Tax Planner, you can stay on top of capital gains and losses, deductions and other items to make tax season less of a headache.
As for investment tools, it evaluates asset allocation, performance and other key factors affecting your portfolio, and you can use the LifeYield Tax Optimizer to drum up investment strategies that minimize the tax bite. When it’s time to rebalance, for example, Premier suggests selling holdings that will minimize the tax impact. It also recommends how to distribute asset classes among brokerage and IRA accounts for tax efficiency.
If you don’t need all the investment tools, consider Quicken Deluxe ($55 on Amazon.com), which otherwise covers much of the same ground. Mac users have access to just one version ($55 on Amazon.com), which is comparable to Deluxe for Windows but with a different mix of features. The Lifetime Planner and Tax Planner, for example, aren’t yet included, but it has additional investing features. All versions come with a mobile app.
SEE ALSO: 10 Reasons You Will Never Be a Millionaire
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