The BEST Budgeting Software (And Why You Need It)!

With so many choices for budgeting software on the market, are you confused about which one is the right one for you? Today I’m going to break down the best options and give you that answer!

A common question I get is, what is the best software to track your budget? I’m going to answer that question with another question. What level of detail do you want, and what are you most comfortable with?

WHAT LEVEL OF DETAIL DO YOU WANT?

Maybe you’re the type of person that’s, give me everything you’ve got – loads and loads of detail – because you want all the details. You could be more of a middle-of-the-road details person and just want something manageable. Or maybe you want the summary top level of data. And I’m going to guess there are a few of you out there that are like, give me as little information as I can get away with to make a decision or provide an executive summary only.

The level of detail you select depends on how you process information and assess risk. It is also critical to check in and take into account how your significant other processes information and risk. This potential misalignment could be a big reason why you don’t see eye to eye with your partner on money.

Now that you’ve decided where on the detail scale you are most comfortable, I want to remind you that when you are just starting out, getting through the nitty-gritty details of your budget is really important. You need to know where you stand without information lurking in those deep dark corners. I know that facing it can feel a little like facing a vivid nightmare, but I promise that when you bring daylight to the information and issues, it has the power to fix them.

SOFTWARE OPTION #1

Getting into the different software options, I’m going to start with my favorite and most comprehensive budgeting program, YNAB or You Need a Budget. This program allows me to take my detailed information and roll it up or easily dig into the details, depending on what I’m working on. I’ve used this program personally for over a decade, and what I love about it is that I can hit my budget in two distinct stages.

The first step is reconciling my accounts. This is where I go into the details of each transaction and make sure that my YNAB accounts match my bank accounts. Now those afraid of the details, note that this can be done with automatic imports. Or if it suits you better, you can easily manually update, or mix and match the methods.

Then, for the second stage, I review my budget and assess where I’m at and where I am headed. One thing I am really striving for is to be less reactive and more proactive in my budget. YNAB becomes my secret weapon in this fight, too, with its mobile application. When I am at the store, I can make real-time decisions about purchases right from my phone and update expenses live.

SOFTWARE OPTION #2

Now a free alternative to YNAB is Mint, and this program is similar in most ways to YNAB. The two biggest differences I see are 1) at Mint, you and your information are the commodities, and the program has ads tailored to you. For some of you, this may be a deal breaker, and for others, it might not matter. The second difference I see is that the philosophy and guidance on getting ahead in your budget are not built into Mint like it is YNAB.

A con of both these programs is that they don’t really work without the details.

So, coming back to your assessment from earlier in this article, these programs may or may not meet your needs. There are ways around this and ways to simplify your budget, but if you don’t want all that information or just won’t keep up with that level of detail over the long term, I have another solution for you.

SOFTWARE OPTION #3

The next program I want to discuss is one of the cheapest and simplest ways to create a budget. You might have guessed it – a spreadsheet. You can use Excel, Numbers, or a free version like Google Sheets. All of them really work in the same way.

The trick with a spreadsheet is that you have to create your own format and manually update your numbers. To get started, you can search for budget templates and get ideas for where to start. You can also download my template HERE.

The basic principle is that you list out your income and all of your expenses. For your expenses, list out all your monthly and irregular costs – those things that hit once or twice a year – like your car registration. Then subtract your expenses from your income, and you will get what is called your net income. This will provide you with an overview of what is happening in your financial life.

You can use this spreadsheet to look at your budget in two distinct ways. The first is one looking into the past. This is where you’re going to fill out information from the past 3 to 12 months and really get an idea of how you’ve been spending money. The second step is to take the historical information from step one to inform a forecast for your future spending or planning where you want to be. Using these two views of your budget will really help you get your arms around your financial information and proactively take your budget to the next level.

Now, a huge benefit of this budget format is that you get to choose how it looks and how everything is rolled up or detailed out. It’s also one of the biggest downsides that you have to create everything, and it can be difficult to update and track accurately if you want or have loads of details to track. I find spreadsheets are best left for high-level analysis, including long-term planning, where you need to compare different options and scenarios.

Overall, a spreadsheet is my favorite starting point for people just beginning on their financial awareness journey because you don’t have to know how to run a complex or fancy program. You can just start with a list of income and expenses, do the addition and subtraction, and find out where you are. Awareness is really the key at this stage.

SOFTWARE OPTION #4

Another option I want to introduce you to is an interesting program that marries a more dated and simplified technique called the envelope system, with an electronic debit card. This software, which is also, interestingly, a bank, is called Qube Money.

With this software, the basic budgeting principles still apply. But instead of budget categories, line items, or envelopes, you are creating a qube. When you go to spend at a store, you have to open the qube you want to pull from, and it sends that amount to your debit card so you can pay and returns the remainder to your qube once the transaction is complete. What’s amazing about this is that you cannot overspend without an action or a decision, making the reactive nature of budgeting a thing of the past.

A con with this app is that if you use credit cards for points or other benefits, your main spending is done on the Qube debit card, and you lose this benefit. But MAYBE not overspending will allow you to take the vacation you have been saving those points for. A pro with this software is if you are trying to get control of your money but hate carrying cash, this is an amazing modern spin on the envelope system.

CONCLUSION

There are, of course, many more budgeting applications out there. The key is to match the level of detail you need and want in your choice of software so that you will track your budget for the long term.

When you’re beginning your financial journey, you’re going to be deep in the details, and you’re going to want to track things on a very regular basis. This will help you get control of your budget, know where you’re spending, not guesstimating, and drive your financial journey down the right road to meet your goals. As you mature at getting control of your finances, looking at the summary or trend of your information will be what’s most pertinent.

At all stages, remember to keep it simple so you will check in on a regular basis.

To reiterate, the SECRET to getting control of your financial life is maintaining your budget regularly. So, no matter which software is the right piece for you, check in regularly so you can course correct to get where you want to be!

If you need more support in creating and updating your budget, the links to the programs and resources we discussed today are below.