What Is The Best Type of Money Management Software To Use?Finding money management software that will help you maintain and a budget without taking up a lot of your time can be difficult. You may be surprised by this, but even as a bookkeeper for over 15 years, I never used a budget. It’s not that I didn’t try. In fact, at one point I even went so far as to use accounting software to track my own personal finances. But I eventually gave it up because it was highly time consuming and it really didn’t help me focus on the money management tasks that would actually make a difference in my finances, and my financial freedom. Unfortunately we aren’t taught how to budget and there doesn’t seem to be a lot of resources available to simplify the process so that it’s not so time consuming. When I was working as a bookkeeper, my first task was to record everything that had already happened. Often my clients were behind in their bookkeeping so the priority was to get them caught up. Being small businesses, they usually could only afford basic bookkeeping – never mind setting up a budget. Not that I hadn’t been asked by a few to help them set up and maintain a budget. There just didn’t seem to be any software available that provided a systematic approach to control the money that wasn’t time consuming. As with accounting software, most money management software focuses on recording your spending AFTER the fact, rather than proactively helping you to monitor and control your spending as it occurs. There are basically two types of budgeting methods. They are expense tracking or envelope budgeting. Expense tracking is a reactive model. Once the month is over, you can pull a report to see your actual spending versus your budgeted spending. The envelope model is a more proactive approach that tracks how much is left in each category as the money is spent. We have found two different money management applications that use the envelope method of budgeting: Mvelopes and YNAB Pro. Mvelopes is online money management software, so there is no need to install anything on your computer and you can access it from anywhere. They offer a free trial so you can try it our for yourself for 30 days before having to pay. Being somewhat of a “techie geek”, the first thing I noticed that I really liked is that Mvelopes can login to your accounts, automatically download your spending transactions and pay your bills. But I found creating and updating or changing the spending plan to be a bit cumbersome. Also, I couldn’t easily see the current and following month’s budgets or any unused or overspent amounts rolling over to the next month. The other thing I didn’t care for was the monthly ongoing fee paid upfront quarterly, annually or every two years. YNAB Pro is a money management software that you download and install on your computer. YNAB means “You Need A Budget”. You can download a 60-day free trial at Download.com . The thing that I really liked about this program was its simplicity and how intuitively easy it was to use. Right away I could quickly and easily see what funds were available to budget for the current month and the following month and then allocate those funds to my own custom spending categories. With this money management software, you really can do your own budgeting in no time flat. Also, it gets you to formulate good money management habits by employing four simple rules: Rule #1 - Stop Living Paycheck to Paycheck What this means is working towards living on last month’s income so that whatever you earn this month will get spent the following month. This is especially useful if your income varies from month to month. Following this rule will give you breathing room and allows you to stop juggling bill payments until after you paid (you can now just pay them when they arrive). Rule #2 - Give Every Dollar a Job Once a month, you (and your spouse if applicable) will give every dollar a job by assigning the funds available to your various spending categories until all of the available dollars are allocated. It takes no time at all with this software and it help you take control of your finances. It also dramatically increases your awareness immediately and helps you to align your spending with your values. If you have it spouse, it will greatly improve your communication with each other about money thus reducing arguments and unplanned spending. Rule #3 - Prepare for Rain This rule helps you prepare for those larger, less frequent expenses, such as car insurance, or new tires. For example, if you have a $600 car insurance premium due in six months, you simply stick $100 into your Car Insurance category each month and watch the balance grow until it is due. Following this rule will even out the crazy ups and downs in your finances, ease the stress of opening the mail and help you gain a true picture of your discretionary income. Rule #4 - Roll with the Punches Without a doubt, you are going to fail – especially in the beginning. The key is to roll with the punches. YNAB will help you keep on your “budgeting feet” so to speak by making small adjustments with that overspending, ensuring that you fix those mistakes before you go on to the next month. You’ll barely notice as YNAB makes its gentle corrections and you will be able to start each month with a clean slate, which is a huge psychological boost and will help you stay in the game. In Conclusion Setting up and following a budget doesn’t have to be a time-consuming headache. In our opinion, YNAB Pro provides the best value and is easy to use. It is our first choice and we are using it ourselves. Whether you choose to use Mvelopes or YNAB Pro or some other money management software, it is important to have a budget and live within your means. If you do not manage your money, you will never achieve financial freedom. Go back to manage money
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