How to choose the best budgeting tool

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How to choose the best budgeting tool

You probably know having a budget is a good idea — but creating and sticking to one isn’t always easy. If you’re struggling with overspending or not making any progress toward your financial goals, choosing the right budgeting tool may improve your success.

No matter if you prefer a manual or an electronic system, there are plenty of options to track your expenses. Try one of these tools to manage your money more carefully and reach your financial dreams.

1. Envelopes

If you need a simple, manual system that works without having to track every purchase you make, try the envelope method. This cash-based system requires you to set spending limits for your expense categories — housing, food, transportation — and label paper envelopes for each one.

When payday comes, you cash it out and fill your envelopes with the allotted amounts. Once an envelope is empty, you must stop spending on that category or reallocate funds from another category.

Using envelopes as a money management tool may seem rudimentary, but it clarifies your budget in a tangible way other tools don’t. But the downside is paying with cash isn’t convenient. Some merchants and vendors may not even accept a cash payment, such as those that operate exclusively online.

While the envelope method may not be a long-term money management solution for most people, it’s a great way to reevaluate and reset your spending habits. It’s also a wise tool to master when you’re managing a budget for the first time.

2. Spreadsheets

If you’re familiar with spreadsheets, such as Excel or Google Sheets, they can be a simple way to stay on top of your money. You can subscribe to Office 365 for about $7 per month or $70 per year for Microsoft’s suite of products, which includes Excel. You can also purchase Excel for a one-time charge of about $130.

Google Sheets is a free cloud-based service with online sharing features. With Excel or Sheets, you can enter simple formulas to add up rows or columns, create charts and graphs for a customized picture of your finances, and export data to a variety of popular formats, such as PDF.

You can manually enter your spending categories and individual expenses to see their total dollar amount or percentage of your income. As your expenses add up, you can see how they compare to the budget limits you set.

If you prefer an automated entry, check out Tiller, which aggregates your financial transactions into Google Sheets. Tiller offers several free templates, such as an expense tracker and a build-your-own spreadsheet. You can try it free for 30 days and then pay $59 per year.

3. Personal finance programs.

Mint is one of the original free, web-based personal finance programs. It has a simple dashboard and app that connects to your financial accounts, such as banks, credit cards, loans and investments. As Mint aggregates your transactions, you can categorize them, create a budget and set goals.

The downside to using free financial programs is they show ads. If you want to avoid them, you’ll need to purchase software or subscribe to a personal finance program.

Quicken offers everything you get with Mint, plus more robust functions. Like many companies, Quicken uses a subscription model where you pay an annual fee and get automatic updates for new features and services.

The Quicken Starter version gives you a lot, including automatic expense categorization, limited budget tracking, and a billing dashboard, for $35 per year. Upgrading to Deluxe ($50) or Premier ($75) gives you the Starter features plus customizable budgeting, loan tracking, investment tracking and analysis, bill pay and online backup.

You can use Quicken Home & Business version for about $100 per year. It helps you manage a small business or freelance work by separating personal and business expenses, emailing custom invoices with payment links, and tracking business tax deductions.

You Need a Budget is a popular budgeting tool with a loyal following. It imports your financial transactions and helps you create a budget based on your goals, with flexibility for unexpected expenses.

You can use YNAB to generate charts and graphs to see your progress and where you might need to cut back. It offers tutorials and education on budgeting best practices, plus a great mobile app. YNAB offers a 34-day free trial and then charges $84 per year.

Each of these budgeting tools has pros and cons. The best one for you depends on whether you want a program that syncs with your financial accounts and offers advanced functions. At the end of the day, any budgeting tool you enjoy using and that helps you gain control over your money is a terrific choice.

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