Budgeting Basics

Starting a budget, using a spreadsheet, and basics like listing out and categorizing monthly expenses, are tips often associated with college students and young people new to the fiscal responsibilities of adulthood. However, a surprising number of adults of every age admit that they don’t have a particularly strong hold over their monthly spending; a staggering 65% of the 1,500 people surveyed by Mint in their budgeting survey reported that they did not know how much money they spent in the past month, though nearly a third said they wish they spent less.[1]
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Plan sponsors can’t make a personalized budget for their employees, but they can point them in the right direction. For those interested in getting started, different budgeting models work for different people; there’s no one-size-fits-all approach, but there sure are a lot of systems to choose from.[2] What works best depends on a combination of personal preference, organization habits, and individual goals, be it paying off debt, building savings, reeling in spending habits, or even simply being able to track purchases. Learning how to start and maintain a budget benefits adult of all ages, and when it comes to tracking, there are a number of ways to go about it—and of course for those who prefer digital tools, like all things of the modern era, there’s an app (or ten, or twenty) for that too.
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Good old-fashioned spreadsheets

This might be the most boring, work-intensive option, but for those who prefer to control what details of their spending they see, limit tracking to only certain categories (groceries or pet expenses, for example), or have security concerns regarding sharing the login and details of all their financial accounts to one centralized location, simply inputting all their transactions into a spreadsheet might be ideal. This is best for people who know they won’t fall off the budgeting wagon since it’s fairly labor-intensive, who already have a budgeting model in mind, and don’t require spending notifications, and for those who need the DIY approach because they may simply ignore transactional data if it’s in an app.
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Bank Tracking

Many banks offer spending and budgeting options on their websites and mobile apps. This is handy for people who have their primary-use credit card through their bank, regularly deduct directly from their bank accounts, have bank accounts linked to their investment accounts, or primarily use Zelle (which is owned by several banks and integrated directly into their apps and websites) as their digital payment platform. For those who qualify as one or more of the above, this method of tracking can eliminate the need for an entirely different app and centralize almost all of their transactions into one platform. As a bonus, many budgeting options on bank sites already categorize spending, and have many of the same features that third party apps offer.
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Using an App

Many “budgeting” apps are primarily geared toward expense tracking, rather than enforcing a specific budget model. That said, here are three noteworthy apps for those who prefer to outsource their habit tracking.
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Mint

Mint is one of the best-known budgeting apps, and for good reason. Owned by Intuit of TurboTax, QuickBooks, and Credit Karma fame, Mint works by connecting to a user’s accounts and housing the data in one place to track money habits broadly. By providing the login details to their bank account, investment accounts, credit cards, and more, users can track their spending habits across a wide number of platforms and also manually input cash and other transactions as well. It also provides users with their credit score, data on their transactional trends, and includes budgeting and goal-setting options as well. It’s robust, easy to use, flexible, and free, which helps to explain its wide popularity. It’s a great option for those with multiple accounts and can be a good fit for both seasoned budgeters and those who aren’t sure where to start.
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HoneyDue

While Mint is excellent at tracking personal spending, HoneyDue is made specifically for couples who are budgeting together.[3] It not only allows users to link accounts, but also link profiles, and see the balances of everyone’s individual and joint accounts, and expenses can be scheduled and assigned to individual users to clarify who is paying for what bill. Interestingly, it includes a chat feature so users have a dedicated space for finance-related talk, and can cite specific transactions if they have questions. As stated, this is a unique tool for cohabitation, but probably not for people who are “just” roommates, rather than long-term partners, romantic or not; though the coordination can be tempting, this level of fiscal transparency and control is probably not something one would want to share with roommates or casual acquaintances as it can track the balances of bank accounts, loans, investments, and more.
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YNAB (You Need A Budget)

YNAB is not just an app, it’s a lifestyle that happens to have an app. It’s also the only paid app on the list; the first 30 days are free, but it then costs $11.99/month or $83.99/year to use, which is pretty pricey for first time budgeters. However, their claim to fame is that they aren’t just a tracking app, they’re a budgeting system, which is another way that they stand apart from almost every other so-called “budgeting” app (which, as mentioned earlier, are mostly spending trackers). The four tenants of their method are: give every dollar a job, embrace your true expenses, roll with the punches, and age your money.[4] The first rule, “give every dollar a job” is a version of the zero-based budget, so for those who need more structure and instruction, believe this budgeting method will work for them, and aren’t afraid to pay, YNAB might be the answer they’re searching for.
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Lastly, an important budget-relevant note on third party payment apps: they may track transactions within their sites and applications, but that doesn’t mean they’re being tracked more widely. While some budgeting and payment apps can connect others can’t, and payment app frequent fliers should take note of what budgeting apps connect to their preferred budgeting platforms. Because the apps themselves also serve as virtual wallets, if a user conducts 10 transactions using their Venmo balance, and then transfers $50 to their bank account at the end, the bank only registers one transaction, $50 deposit. Additionally, payments to and from third-party apps may simply be labeled as “withdrawal” or “deposit”, making it much harder for users to granularly track their spending unless they manually enter every transaction.

All in all, personal finance is personal for a reason. Regardless of income, assets, and spending habits, there’s a method for everyone out there—it’s just a matter of discovering what that is.

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[1] https://mint.intuit.com/blog/budgeting/spending-knowledge-survey

[2] https://www.nerdwallet.com/article/finance/how-to-choose-the-right-budget-system

[3] https://www.honeydue.com/how-it-works

[4] https://www.youneedabudget.com/the-four-rules

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‍These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.