Take Back Your Finances #13: Choose and Use Your Budget Tracker

We are truly in the heart of the tried and true system we used to pay off over $100,000 in consumer debts.  We hope you are starting to get a glimpse of just how we accomplished this (using our 2×2 plan).  However we are also pretty sure it will take some time; plus we all know the old adage that seeing is believing so it just might take a few more months to see how these baby steps will really start to add up.

So far we’ve been talking about our 32,000 ft view of our budget.  We’ve looked at the categories, we’ve discussed cutting our spending each month by 2% and its been in terms of the total month’s budget.  But one thing we need to address – and that’s the subject of this week’s challenge – is just how we are going to track that budget.

We are so thankful that times have changed from when we were going through this process.  Technology has continued to advance and the tools to track your budget have made this part of your job much, much simpler than it was.  You see, back in the day there were discussions of envelope systems (a huge thank you to Dave Ramsey for that) as well as customized spreadsheets (like we used) to track our budgets.  But no matter how you do it, its important to track your spending.  It’s called Being Intentional.  And we’ve found that Being Intentional (we’re not plugging the 30-Day Be Intentional challenge…just showing how much we really believe in this) is probably one of the biggest keys to your success whether financial, health, or most any other area of your life).

So its time for the next task and challenge.  Your task is to select and implement a budget tracking system for your family.  And because each family is different and you have your own goals and resources, we will share a few different ideas for you to use for your own family.  We would love to hear some of your thoughts as well

The following are some different ideas with reasons behind each one:

• Envelope system – As we mentioned before the envelope system is one of the most simple and classic ways to manage your family’s finances.  And honestly, it really is great.  For those of you that don’t know – you write each budget category on an envelope and fill it with the cash you have budgeted for that time frame you are tracking.  The goal of this system is to make sure you don’t overspend (its easy to spend more when using another system) as when the envelope is empty you’re just plumb out of cash.
  • We have found this to be limiting (although there are systems to make it work for you) when it comes to multiple people needing to spend out of a certain category (e.g., a spouse coming home from work can’t just stop at the store to grab milk if the other has the envelope back at home).
  • In this day and age where there are more advanced ways to track the budget items (syncing purchases from your bank which are automatically categorized and then you have automatic, immediate reports for your budget categories updating your spending) it just makes it a bit more easy to track via a software approach.  However…this is where you really do need to Be Intentional about your purchases as you really do need to make sure you are not overspending for a certain category.
  • Finally we have so much of our spending online (both for bills and other categories) and even our groceries (we still buy many of our items from Amazon and other online sources).  Trying to manage this out of an envelope can be difficult if not nearly impossible (to be fair, I know not totally impossible :)).
• Customized spreadsheet – I admit I’m (Alex) a bit of a computer geek.  As such, although there were some more archaic versions of software out there when we were paying down our debt, I found that using my own spreadsheet and managing all my bills were much easier to track via my nifty programming and functions within Excel.  But I’ll be the first to admit this is something that I honestly don’t think every person will like to do.  This is more “secure” than the online options mentioned below as you are not connecting various accounts (e.g., bank, credit, bills) but at the same time you aren’t gaining all the advantages these other tools offer.
• Free resource like Mint.com – This honestly might be the choice that many of our readers will make.  If you haven’t heard about Mint.com (or others like it – though this is probably the leading solution at the time of this writing) then you probably don’t know yet that you can use it for your most of your budgeting needs.  We encourage you to research them more so you can make the decision your family needs.
  • They do admit they use the same level of security as your banking institutions (using 128-bit encryption) and are verified and audited by the big security companies out there like Versign, TRUSTe, etc.  However, the more information you share online (yes we know this is the society we live in and do it ourselves) can never be called 100% secure – just think of the breaches like Home Depot, Target and others.  But at the same time, the level of security they implement does consist of industry-standard standards and we have never had a problem with them.
  • The big name solutions (like Mint.com) are powered by the big names in the industry (Mint.com is powered by Intuit – the same people that bring you Quicken and TurboTax).  This helps increase our sense of security.
  • They offer other levels of security like being able to remotely wipe all the information off your mobile device in case of a stolen phone or tablet.
  • Other than security (a huge topic for us) they offer the ability to sync all your accounts (bank and credit cards) and then you can sync up all your purchases.  Those purchases are then categorized and easily broken down by month to let you see your goal for that month and where you are at in your spending for that category.
  • Setting your 2% cut from a certain category becomes very easy as you just plan the next timeframe’s budget for that category to be that much less.  Then throughout that next time period you can just ensure you spend less.  And because all the accounts (bank, credit card, etc) are tracked in one place you’ll ensure you aren’t missing any transactions.
  • You can divide up a multi-category purchase (e.g., you might purchase grocery, home items, and auto items all in one purchase at Walmart) manually so you can keep track specifically of each budget category.  If you were using the envelope system for this you would have to pull out money from each envelope (for that purchase) or have multiple purchases at the cash register; at least you see there are alternatives like Mint.com that could work for you.
  • You can also associate your other bills with your Mint.com account so it reminds you of due dates and keeps track of all your bills for you as well.
• Purchased software like Quicken – Obviously there are also solutions you can purchase like Quicken Deluxe 2015 (as of this writing is $39.99 on Amazon) – also powered by Intuit.  When you purchase this solution it runs native on your computer and gives you some additional features (over Mint.com) like additional financial reports and other savings tools that you might be interested in that the free tools just don’t have.  Obviously if this is something you want to consider we would just also recommending checking out the whole Money Management section on Amazon to determine the best solution for your family.  As security is a big thing for us we really would recommend making sure that whatever purchased solution you choose be backed by the industry standards and that its not written by some ma-and-pop shop down the street.  Essentially the biggest concern to us is security – and we would recommend that you make it your biggest concern as well. 🙂

Anyway, that is this week’s task! Find the solution that works for you and implement it for you and your family.  We recommend reviewing these options and making sure that whatever you choose will work for your family.  Because choosing an option that sounds great – but isn’t easy to use or doesn’t do what you want it to do – is an option that you just won’t use.  And when you don’t use it you’re no longer Being Intentional or making progress.

Have fun this week as you work through it.  And if you already have your awesome solution we would love to hear what you are doing.  Leave a comment and share with us just what that is!  And if you believe you have even more information to weigh in on the options above we would love to hear it – us and all our readers – to help us all make the best decision as we work through our finances.

Need to catch up?  Come join us on this challenge from the very beginning by clicking on the 52-Week Take Back Your Finances Challenge and sign up to start receiving your automated challenge from the very beginning!

One final thing…we also have a Facebook Group where you can engage in discussions, receive encouragement and talk to others that are participating in the challenges too for more ideas! Head to the Be Intentional with The Thrifty Couple Facebook Page HERE and ask to join us there! You can also invite friends and spouses too!

Disclaimer: We are not licenses financial planners. We are only a couple that have been just a hair-breadth away from bankruptcy and found our way out of debt with a goal to now help others. Please make sure to consider any advice given on our site and in this challenge as tips we have used ourselves; they may not work for everyone. If you have questions please make sure to contact a licensed professional.