It’s important to keep track of one’s budget for many reasons.
- First of all, a budget let’s you decide where your money goes before you spend it, instead of wondering where your money went at the end, or worse in the middle, of the month.
- Secondly, by keeping track of your budget you can find categories that you spend a lot of money on. It helps you get an exact picture of your spending and helps you decide whether or not it depicts your priorities. Is spending $30 a month on coffee where you want your money to go? Do you really like TV enough to spend $100 a month on it? What else could you do with that money?
- Further, keeping track of your budget allows you to plan your financial future. Saving for emergencies, a trip or retirement and repaying loans is only possible if you have a good grip on your finances.
All the benefits of setting up a budget can empower and motivate you to try and follow everything to a tee to get your finances in great shape. Unfortunately, the reality of tracking all of your spending can be tedious. When you have to keep all your receipts and enter the amounts, one by one, into a spreadsheet or even a notebook, staying on top of your budget can become a pain.
A good and reasonable budget is important and is actually tied to financial success. At PFC, peer counselors use the budgeting process for many different personal financial situations. Budgets uncover spending leaks, show how large an emergency fund needs to be, can give college students an understanding of how much the first job out of college should pay, how much student loans are needed and last, but not certainly not least, to decide where the money should go before it’s spent.
One thing that we have found very helpful and has found much resonance with clients is Mint.com. The website comes with an app for iOS and Android and is the best resource we have found to track spending and manage finances. When a user first opens an account with Mint, he or she is prompted to enter access information to all checking, savings, and investment accounts, credit cards, and even loans. There is also an option to enter property, such as cars and a home, to the account. This approach allows the user to examine his or her entire financial situation. Mint has a triple layered security system to protect this sensitive information, which one can read more about on their site before creating an account.
The main function of the site, however, is tracking spending and budgeting. By entering credit card and bank account information, the user allows the website to track all transactions. Mint automatically places the expenditures into categories. So a purchase at a supermarket, such as Dillon’s, will automatically be placed under “Groceries”, and a transaction with Chipotle will automatically go into the “Restaurant” category. There are a problems with misplacement, especially with one-stop shops such as Wal-Mart, however the website allows one to change the category of a particular purchase and to split the transaction into multiple categories. If you spend cash, there is also the option to manually input transactions.
Spending in each category fills up a bar graph representing the budgets the user sets on the budget tab. Mint will come up with an estimate of an appropriate budget based on past spending and US spending averages, but they can also be manually adjusted by the user. The Website will send alerts via email when spending approaches budgeted limits, keeping the user on track. Besides setting budgets, users also have the opportunity to set goals, such as for a spring break trip, paying down debt, or saving for a down payment. Mint has preset goals that walk the user through the process, while custom goals are also an option.
On the trends tab, users will find statistics about their spending, income, debts and assets. This tab, among other things, can be useful in determining what the biggest spending categories are and give users a visualization of net income. While most investors find this information with their brokers, Mint’s investments tab can be useful by having all the information in one place. Lastly, the “Ways to Save” tab gives suggestions for savings and checking accounts, loans and credit cards, as well as investments and insurance. If a user is actually in the market for any of these items, this tab can be a great place to start researching, however it should not be the only place to look or and should not encourage one to take on new, unneeded credit.
Overall, Mint is one of the easiest money management and budgeting tools out there and a gold mine for anyone who struggles to keep up with tracking, no pun intended. Mint is one of the best websites/apps to help track spending, because it’s able to integrate with users’ bank accounts. Mint currently collaborates with more than 7,500 financial institutions, more than any other budgeting website (Rapacon*). Transactions are updated and put into categories automatically which makes it the easiest to use application out there. Try it out today by going to http://www.mint.com.
*Source: Rapacon, Stacy. “The Six Best Budgeting Sites.” Kiplinger.com.
Peer Counselor I
Powercat Financial Counseling