Which Budget Tool Is The Right One?
Over the past five years or so there's been an explosion of financial app's out there for budgeting. Each one seems to have a slightly different spin on it than the others. We're going to dive in to six tools that are widely available (one is old school and the other five are on the top 100 personal finance app list on the Apple App Store).
First, here's a 30,000 foot view of the different tools.
Now let's do a deeper dive into each of these six tools.
Yeah, we're starting with Excel or paper. I know, they're old school. Here's the deal though, starting simple is never a bad idea. Remember how you started riding a bike? Training wheels. Writing down your income and your main monthly bills before you start jumping into an app helps clear some of the tension of doing a budget. If you're overwhelmed or struggling to get started, take out a piece of paper or open a new Excel doc now and write down all of the expenses and income that comes to mind. If you like Excel and want to use this as an on-going tool, email firstname.lastname@example.org and he will send over a budget template that you can use.
Who's This Best Suited For: If you're overwhelmed by technology or just looking for a simple place to start.
2. Every Dollar
This tool was developed by the folks at Ramsey Solutions and is completely centered around budgeting. It's simple, clean and is set up to make budgeting easy. The feature that I love the best about this tool is the ability to make any budget line-item a "fund". What this allows you to do is to create a goal within your budget. Let's say I want to save up for vacation, but it's 6 months away. I can budget $250/month in that line and if I don't purchase anything vacation-related then it will continue to build up and show me how much I have every month. The one downside is that while there is a free version, you have to manually enter all of your transactions into it which can take some time. You can pay ~$99/year for access where your transactions will automatically link to your bank accounts.
Who's This Best Suited For: If you're trying to get started with budgeting or have struggled to stick with a system in the past.
Mint is the most popular budgeting tool out there. It's completely free, but you have to put up with nonstop ad's everywhere on the site. If you struggle with debt, I might shy away because they're always advertising credit cards on here. Mint allows users the ability to run all kinds of reports on their expenses, budget every month, clearly show progress towards goals and more.
Who's This Best Suited For: If you love information and numbers and want a full picture of your financial life.
4. YNAB (You Need A Budget)
YNAB was developed by an accountant (and it shows). The tool itself has a bigger learning curve than any other app on this list. The positives about this tool though are that they offer all kinds of workshops to explain how best to use the app, how to pay off debt and have better overall financial habits. There is an annual cost of $84 for access and there's no free option other than a 34 day free trial.
Who's This Best Suited For: If you're looking for not just a tool, but an overall system for how to manage your money YNAB offers the most resources to do that. If budgeting is intimidating or confusing definitely avoid this one.
Cleo is set up to make money feel conversational. You text with the AI-powered app and it sends you messages back with simple takeaways from your financial information like how much you spent last week. Users set their bills in the app and then it tells them when their bills are coming due and how they're doing with spending for the month. My only issue with the budgeting feature is that it's set up to track your repeating bills and then it's up to you to dig into where the rest of the money is going. I've found it much more helpful in my experience if people budget specifically for each different item. For example, if you have $500 left over after bills you can spend that on anything in Cleo and it's fine. With a typical budget, you'd say we want $200 for eating out, $200 for clothes and $100 for anything else. The more specific the budget, the more likely someone is to change habits.
Who's This Best Suited For: This may be a very early first step for someone who is scared or nervous when it comes to money. If you find other apps that are very structured in nature and "finance-y" then this user interface may be appealing.
6. Clarity Money
Clarity Money doesn't hide their intent - they want you to set up a high-yield savings account with them. The app makes it so easy to drill down into where you're spending is going. On the home page there's a dropdown menu where you can select a vendor, for example Starbucks, and it will show you how much you spent there over a period of time that you select. The budgeting tool is simple, but it's limited to a weekly budget. The issue with a weekly budget is that we know we don't spend money on things every week, like gas. I wish there was a monthly budget option. It does make things bite-sized though where you know how much you have left to spend in a given week. The downside with this tool is that I didn't find an easy, straightforward way to incorporate a savings goal into the budget. You have to back into your savings goal by setting your spending lower than your income, which gets confusing.
Who's This Best Suited For: Similar to Cleo, if you find the other app's on this list intimidating then give this a try. It's probably my favorite user interface of any of the app's on the list. If you want a good look at how you've spent money over the past year, this will be a great tool.