Thanks to my friends over at Decluttering the Stuff for suggesting I write this post.
In July, I decided to take a break from old-school budgeting (via an Excel spreadsheet) and join the 21st Century. There are so many personal finance budgeting tools out there – from standalone software to smartphone apps – it’s hard to know which to choose. I bet your bank even has one as part of their online banking portal. Mine does.
I wanted something simple but simple budgeting apps are a bit of a misnomer (kind of like affordable healthcare). Or maybe it’s just that “simple” is a relative term. Simple to me means that I can set up the handful of spending categories that I want to track, set spending goals, and “tag” transactions to automatically post to those categories. Simple to me means that income is defined as funds I earned and savings is an allocation of those funds into a special account. Simple means that I can import info into the app from all of my accounts so that I have a clear picture of my financial standing at all times.
First, I tried YNAB (You Need a Budget). That lasted a few weeks. Next came Mint. I stayed with them for a full month. I’m not knocking either app. They each have their good points and not-so-good points and both would be great for folks who are 1) new to budgeting, 2) love technology, and/or 3) need/want to micromanage their finances in order to cut expenses, increase savings opportunities, or simply find out exactly where their money goes. Unfortunately, I found both apps only complicated my already simple financial plan.
If you are one of the folks mentioned above and are debating YNAB or Mint, here are some tips I hope will help you.
EASE OF IMPORT: Both YNAB and Mint allow you to easily connect to your bank and other accounts (like credit cards) through a direct import tool. Using the tool is as simple as putting in your user ID and password for your financial institution, pressing a button, and waiting. With Mint, the wait was longer. In fact, I had to go through the direct import process several times before it would properly connect my Capital One accounts. With YNAB, I was able to connect all of my savings and investment accounts, including my savings bond account with Treasury Direct. Mint didn’t have Treasury Direct as an option, though Mint did allow me to connect my PayPal account and Navient student loan account.
LOOK & FEEL: Both YNAB and Mint have a similar interface but I found YNAB to be cleaner and more user-friendly. Setting up categories in YNAB was really straight-forward. The default categories were very much in line with what a normal budgeter would expect – rent/mortgage, electric, water, groceries, transportation, etc. and it was easy to delete or add categories. The budget page is even organized by priorities, with areas for Immediate Obligations (or what I like to call Absolute Expenses) and True Expenses (or Flexible Expenses). This is great for folks like us who are striving to keep their Immediate Obligations to 50% or less of their income.
Mint is a different story when it comes to setting up budget categories. Main categories are divided into a multitude of sub-categories. Again, this would be great for someone who really needs to drill down on where their money goes. Personally, I just don’t need that level of detail. Mint automatically tags incoming transactions to the most likely category. Comcast, for example, got tagged as Television though we use it only for internet service. Not a big deal since both are listed under Utilities but routinely I found gas transactions tagged as groceries, savings tagged as income, and every transaction from Walmart tagged as clothing. I was constantly changing the tags, which was a bit time consuming.
ACCOUNTABILITY: This is, after all, the point of a budget…to hold ourselves accountable for our spending. Both YNAB and Mint color-code budget items. Green = within budget and red = over budget. Yellow on YNAB indicates the category is underfunded. Yellow on Mint indicates you are approaching your category maximum. With Mint, I received email alerts when a category was over budget and also when a due date was approaching. YNAB may offer similar alerts but I did not receive any during my trial.
THE GOOD STUFF: Both YNAB and Mint are zero-sum budgeting tools, making you account for every dollar. This is the only way to budget, in my opinion, so kudos go to both. Both let you set goals. This is a great way to speed up you loan payoffs or reach a specific savings goal. When it comes to goal setting though, the advantage goes to Mint. Their goal setting tools are quite comprehensive and tell you exactly how long it will take you at certain amounts per month to achieve your goal. Both have mobile apps and web interfaces so that you always have your budget at hand no matter what device your’re on. If budgeting tools (or budgets in general) scare you, YNAB offers a free class for new users.
BIG PICTURE FINANCE: Mint gives more of a total financial view, with your credit score and overall net worth shown on the dashboard. YNAB offers a more limited view of overall financial health and focuses mainly on the monthly budget. If you’re new to budgeting, YNAB is a great tool. If budgeting is old hat and you’re looking to elevate your financial planning game, Mint is the better choice.
COST: Mint is free. YNAB costs $5 per month (or $50 per year).
For budgeting to be truly simple, you have to find what works best for you. So this month, I’m going back to my antiquated accounting methods. No offence to apps, but I do much better with my homemade budget. I have my mom to thank for that. When I was 12 years old she handed me the bills for the month, her ledger, and her checkbook. Together we reviewed each bill. She let me write the check, then she signed it. She taught me to post each transaction to the checkbook register and to the right budget category in the ledger, to write on the bill the date it was paid, and properly file it. Though much has changed in this era of digital transactions, the principles she taught me remain the same. My Excel spreadsheet is pretty reminiscent of mom’s ledger. It’s a method I grew up with and it’s one that works for me.
Do you use a budgeting app? If so, which one? Has using it helped improve your financial situation?
(All pictures in this post, with the exception of the featured image, are from Mint because I had already closed my YNAB account at the time I wrote this and did not want to pay to reinstate it simply for the screenshots. You can take a tour of YNAB at https://www.youneedabudget.com/tour or learn more about Mint at https://www.mint.com/.)