Creating a budget — and sticking to it — is an important first step toward reaching financial goals large and small. Unfortunately, it’s easy to get overwhelmed by the complexity of creating and keeping a detailed budget; not to mention the time and dedication required. Before you’ve finished calculating your income, resolve has faded and your budget remains a good idea you never realized.
Realistically, managing household finances can be challenging, especially when it requires coordinating multiple people’s spending habits and staying on track to meet shared goals. The good news is that a budget doesn’t have to be complicated, and there are plenty of free tools and resources to help you get started and keep going. A handful of new tools have hit the market in recent years that give consumers more options and help individuals and families coordinate their spending and saving with each other. The revolution in personal financial management tools gives people better information and pairs it with a product around their needs, in addition to helping users to build and better manage spending habits. The goal of these tools is to make managing finances easier and more automatic, so you can spend your time on more enjoyable activities.
Here are several tools that can help you stay on top of your household finances:
Mint may be the most well-known of the Internet-and smartphone-based budgeting applications. Once you’ve entered basic information, such as banking, credit and investment accounts, Mint begins automatically tracking your money. The default categories are sufficient for most people, and you can add your own. The built-in goal-setting tools are robust and easy to use and, since it’s owned by Intuit, your data feeds right into TurboTax at tax time.
This tool allows users to log in at any time and check out their latest spending updates. On HomeBudget, you can manually enter your spending right after a purchase, and that transaction is then shared with the other person. To keep gifts a surprise, users are advised to refrain from logging into their accounts for a couple of weeks around the holidays. There is a cost of $5 to download the app to your phones.
To track net worth, including savings, 529 account balances and retirement investments, you can use and update a spreadsheet on Google Drive, which is free if you already have Microsoft Excel installed on your computer. Microsoft provides several simple budget templates, and if you’re familiar with Excel, they’re easy to use. For a truly free alternative, try a budget template for Google Sheets. This option is for those who don’t mind wrangling spreadsheets and entering data manually. Maintaining a spreadsheet budget does require more time than some of the other options here, but many experts believe the extra effort helps you have a better understanding of your money, which makes it easier to develop better habits. It also forces couples to sit down once a month to review their accounts and manually update them, as well as keep account numbers and passwords offline to protect accounts from potential fraud and identity theft.
By now you know that financial experts routinely advise that you have 6 to 10 months of salary saved. While many people know they need to save more, actually doing it and knowing how much they need to save is not always easy to figure out. HelloWallet, an online financial wellness company, launched a free tool that allows users to calculate an emergency savings goal for themselves, based on their expenses, lifestyle, and earnings. For example, a two-income family that has 80% of income going toward fixed expenses needs a much larger emergency savings fund than a couple that could live off just one person’s salary should a job loss occur. And since most people aren’t saving enough for emergencies, aiming for a specific target can make it easier and less overwhelming to set money aside.
(Continued on next page)