“A budget is telling your money where to go instead of wondering where it went.” ~Dave Ramsey
Up to this point, we’ve discussed what are arguably the most basic of necessities. If you’re living within your means, you should be spending 50% or less on basic necessities. As discussed in previous chapters, you should spend no more than 35% on Housing Expenses, 5-15% on Food Expenses, and 5% on Clothing Expenses. Many people spend their money without knowing where it goes. It is imperative that you track your expenses. I’ve helped people over the last two decades with their personal finances and over half find ways to help themselves simply by tracking their expenses. I’ve compiled a list of the best budget tools to help track expenses. Before reading future chapters I highly recommend you start tracking your expenses now using these budget tools.
Create your own. Many people create their own budget tools to help track their expenses. I created my own using Microsoft Excel. The main reasons why people choose to create their own is 1) to have maximum flexibility and 2) for online security purposes. Many apps have great categories for tracking your expenses, but may not have all that you’d like. For example, when we discussed Food Expenses, I mentioned that in 2016 we spent more in dining out expenses than groceries. Most apps let you differentiate dining out and groceries, but maybe you also to track what kind of dining out you’re doing. Maybe you want to track fast food, lunch, and dinners to see where you could possibly cut. People also create their own budgeting tool because they’re concerned with a mobile phone app having access to all their financial accounts. If you’re making your own in Excel then you’re most likely having to manually input all the data yourself. The benefit of an app is having all your accounts automatically linked, categorized, and reported without manually having to do it yourself.
Mint Budgeting App. The most popular (measured by downloads) budget tool people use to help track expenses is the Mint budgeting app. The main bulk of the apps’ services are free; however, they have premium pricing as well. The premium package offers enhanced services like advice and TurboTax integration. I’ve personally heard nothing but good things about Mint. The only negative feedback I’ve heard is that it requires a little bit of financial knowledge and some people with no financial knowledge have a hard time navigating around. Again, I’ve only heard this from very few people.
You Need A Budget (YNAB) App. The second most popular budget tool people use to help track expenses is the YNAB app. It has a monthly fee, and like Mint, those fees help provide premium services. If you’re struggling with your budget, and you don’t want to make your own tracker, then paying a small monthly fee could save you quite a bit of money. The national Overdraft Fee is $35. YNAB only costs $6.99 a month. If you’re experiencing overdraft fees, then the small fee could save you 80% a month from escaping those overdraft fees. If you’re interested in YNAB, please use this referral link to benefit you and a contributor to this website.
Dave Ramsey’s EveryDollar app. This may not be one of the most downloaded apps, but Dave Ramsey is probably one of the most ubiquitous financial planners in the US. He’s created a whole empire helping people with their finances and his EveryDollar app is a free part of his toolbox, while also providing a premium service as well. I don’t necessarily 100% agree with Dave Ramsey, but his advice probably helps most low- to middle-income people.
There are many more apps that can help you track your expenses. Up until now, our spending chapters focused mainly on “fixed” basic necessities. You need shelter, food, and clothes. Your goal should be try to minimize these expenses. Most other expenses are variable, and there is a growing movement to disconnect from many of these other expenses like TV service, internet, cell phones, and cars. An even more important reason to track your expenses is to know how much discretionary money you have to save from each paycheck. Once you have shelter, food, and clothes, saving money should be your next “expense.”