Some people say that budgets just don't work for them, and throw the whole idea out. Others insist, to be responsible, every single penny must be accounted for. As for me, I'm a budgeter. I like to know where my money's going and approximately how much I have to spend in a variety of categories. I'm not as legalistic as some about it, and I appreciate that my husband and I see eye-to-eye on the matter.
Budget or no, an important first step when working to get out of debt (and stay out) is to track your spending. If you don't know where your money's going, you have no idea what needs to be fixed! For the last six months, I've given a free online tool called Mint.com a try.
Mint is different than other services I've seen because of how automated it is. There is no time-consuming saving-of-receipts and manually-entering-data. Mint is able to connect with your bank, credit card, investment and loan companies electronically and download account activity each time you log on. The downside to this feature (for me) is the fact that I'm giving all my most important passwords to one database, one company- one place for them all to be discovered if it is ever hacked. This took me a while to get over, and I didn't sign up for the service. When my husband decided he wanted to try it, I relented- and I was very, very pleased with the site!
Why I like it:
- Allows me to see, in one list, all my accounts- my brick-and-mortar bank, my online bank, my mortgage, my credit card, my investment accounts, even Paypal!
- I don't need to log into 6 different websites to track all of these accounts (because, seriously, that's what it would take)
- Pulling my expenditures from all of these together gives me a full picture of where I am financially.
- Categorizations gives me an idea of what I spend on groceries, home improvement, etc each month, letting me know how reasonable my budget is.
- Graphs are pretty. Seriously, though- the graphs showing how my investments are doing or how much I'm spending in different categories give me an at-a-glance idea of my financial health.
- Recently added: the ability to add "assets" like the value of cars and houses into the "Net Worth" calculation.
- There's also a feature that allows you to compare your spending in any category to those in your city (or whatever city). I take this with a grain of salt since I'm not sure others tag their purchases as carefully as I do.
Overall, Mint has helped my husband and I stay to the same page and both watch our finances carefully, with minimal hassle.Since we've been using it for six months, we'll hopefully sit down this weekend and crunch some numbers, to see what we really spend in our budget categories, and adjust accordingly. In my mind, budgets are living documents rather than rigid ones, and can and should be adjusted to reflect reality. Tools like Mint are useful in tracking how 'reality' is matching my budget on paper.