Finding the best budget tool

/ Finance / By / Automation, Budgeting, Reducing maintenance
The best budget tools for simplifying your budget

Introduction - 5 of the best budget tools to simplify your budget

If you are like most people, you can pay your monthly mortgage or rent, utilities, and grocery bills each month without too much trouble, but planning beyond that can be a bit tricky. Finding the best budget tool for you is important to support this planning process.

How confident are you that you will have the cash available to pay for the next issue you have with your car or house? Or on a smaller scale, how confident are you that you will be able to afford spending on gifts around the holidays without having to use credit card debt or savings?

I managed my own business for more than five years and have a degree in Finance, so I understand the importance of carefully managing a budget.  However, as someone that worked a corporate day job all while managing that business on evenings and weekends, maintaining a relationship, and keeping up a household, I also know just how valuable time can be.

This post provides a comparison of some frequently used budgeting tools.  What budget tool is best for you will depend on personal taste, so what works best for me may not be the same for you.

The hope is you can use this information to make an informed decision about which tool will fit your situation best, and help you find an approach to managing your budget that will lower the day-to-day effort required for you to keep your goals on-track.

Table of Contents

Why should you build a budget?

When I started working professionally, I noticed quickly that the flow of money in and out of my bank account went well beyond just a few transactions for rent and gas. 

If you want more information about the benefits of building a budget and how to build your first budget, see my other article How to build a budget.  Below is a short summary of the takeaways from that article.  If you are already familiar with the pros and cons of building a budget, skip ahead to the reviews.

The average household budget is complex

It’s easy to overlook just how many expenses are likely to be part of the average budget.  Here are just a few of the expenses that you may uncover once you start digging into the details of how you spend your money:

  • Rent or Mortgage
  • Renter’s or homeowner’s insurance
  • Other insurances (such as auto, medical, life)
  • Phone
  • Utilities (electricity, gas, water, garbage)
  • Internet
  • Groceries
  • TV
  • Streaming services
  • Restaurants
  • Movies
  • Fuel or public transportation costs
  • Clothing
  • Recurring software expenses (like cloud services)
  • Haircuts and personal care expenses
  • Home maintenance
  • Pet expenses
  • Gym and other memberships

The sheer quantity of expenses to account for makes managing a budget without some sort of tool incredibly difficult.  Without tracking these expenses closely, it can be very challenging to know if the money in your bank account today is free to spend or if it is going to be needed on another expense tomorrow.

Multiple and variable income streams only further complicate this situation.  If you work hourly or seasonally then this adds a timing variable to consider as well, which requires monitoring when money will be coming into your accounts to cover your expenses even more closely.

Not every expense is monthly

In addition to the volume of expenses to account for, some expenses may hit your budget at different times during the month or may be seen less frequently.  Some examples are insurance payments that may be paid annually or twice-per-year.

This makes it difficult to know if money will be in your bank account when you need it.  Unfortunate timing could also result in several of these large expenses hitting your bank account all at once.  If unprepared, this could put you in the unsavory position of needing to use credit cards or other short-term debt to get by.

The benefit of active planning your budget

Being deliberate about planning your budget can avoid the pitfalls noted above.  Here are just a few more of the benefits of actively building and managing a budget:

Actively plan your budget
  • Security – you will have the money available for regular expenses, with some extra saved for emergencies
  • Flexibility – you will know what money in your accounts is yours to spend versus what will be needed for future expenses
  • Being prepared for the future – knowing the difference between your income and expenses provides the ability to make informed decisions about how to set aside money for savings goals
  • Reduced reliance on short term debt – being able to set aside money in advance for known expenses avoids the need for short-term loans that often charge very high interest rates
  • Break free of living paycheck-to-paycheck – once all expenses are planned for, you can begin allocating money for the next month’s expenses alongside the expenses of the current month.  With time this will lead to you being able to live today off income from last month; no more living paycheck-to-paycheck!

Why don't more people plan their budget?

Managing a budget can be difficult. A budget requires discipline to closely track spending.  It also requires us to be honest about our limitations given our current financial situation, which can be tough to face.

Setting up and managing a budget can also seem challenging if you don’t have a way to organize all the transactions and compare them to your budget targets during the month. 

Selecting the right budget tool can help make this process much simpler by providing organized expense tracking and reporting capabilities to track your spending against targets.

Comparison of 5 budget tools

There are many options out there, so don’t consider this a complete list.  These are the 5 tools I have found to be best for managing a budget, along with the pros and cons of using each based on my experience.

The right budget tool will also have as much to do with how you think and plan as it does with the features of the tool itself.  Given everyone’s opinions differ, please only consider these recommendations as some additional data points when making your decision.

YNAB (you need a budget)

YNAB is my personal favorite.  Many budgeting tools I’ve seen will allow you to set monthly budget targets, but YNAB takes this one step further and allows you to carry forward any unused budget amounts month-to-month.

An ongoing approach to budgeting

This ongoing approach to budgeting makes it easy to slowly accumulate balances in buckets for expenses that may occur less frequently.  This also makes it easy to start setting aside money for long-term projects and savings goals, like replacing a car, that may take years to reach.

Other budgeting tools focus more on the current month, which is great for making sure the bills get paid but makes longer term planning more challenging.  This detailed and forward-looking approach does mean that you will want to ensure all your income and expenses are being catalogued.  This is because essentially every dollar in your accounts is being accounted for in your budget.

You will have detailed knowledge about how and when your money is being spent, but you will also want to be thorough about tracking all transactions in and out of your accounts to make sure those details are accurate.  A regular schedule of reconciling account balances in YNAB to what is shown on your bank and credit card statements is best practice as well.

Annual fee required

YNAB does require an annual fee that is currently $99.  If you are on the fence about paying for a tool, I would recommend trying out budgeting in any free spreadsheet tool or looking at a free service first.  Coming up with the budget strategy and all the individual buckets I wanted to track were the most challenging steps for me.  Once that was determined, moving between tools was an easy task.

For me, the price of the subscription is well worth it.  The forward-looking approach matches up well with how I like to plan my budget as I don’t like to think about just this month, I want to know I’m on-track to meet my long-term goals.  I also enjoy the detailed transaction cataloguing as I know nothing is being missed.

Automating transaction tracking and categorization

YNAB, like other dedicated budgeting tools, allows you to sync up your accounts directly to the app to automate importing and categorizing transactions.  I personally prefer not to link up my bank accounts directly (I don’t like the idea of others logging into my bank for me, even through encrypted channels), but I do sync credit cards which have most of our regular expenses.  This means I can quickly sync transactions and categorize all activity in the morning in only a few minutes.

Setup is also an easy-to-understand process as YNAB provides resources on their website explaining how others have used the tool to achieve their financial goals:  Real Budgets – You Need A Budget

Why YNAB may be the best budget tool for you

Pros:

  • Budget balances roll over to future periods to support long-term planning
  • Monthly spending targets can be copied to future months to make setup quick and easy each month
  • Bank and credit card accounts can be connected to automatically import transactions into your budget
  • Intuitive guide for setting up the first budget
  • Reporting capabilities to show where money was spent each month, and how trends have changed over time
  • Resources on the site explain how begin the process to pay off debt as well as to stop living paycheck-to-paycheck
  • Multiple budgets can be setup for tracking different accounts or planning for future budget changes
  • The mobile app makes it easy to check your budget while on the go

Cons:

  • License fee required, although this does come with a free trial:  Pricing – You Need A Budget
  • This will require some time to setup, but the amount of time is entirely dependent on how much control (and therefore how complex) you want over your budget
  • Accurate tracking will require categorizing all your income and expenses each month
  • Reporting is built into the tool with filtering to get to most of what you will need for analysis, but reporting does not have the same degree of customization as will be found in a spreadsheet tool.

Spreadsheet tool

A simple spreadsheet tool seems to be the tried-and-true standard for tracking most home and business activity (no matter the size of the business – everyone seems to use Excel or something like it). 

Microsoft provides some easy-to-use budget templates within Excel, which can be seen on their site (Budgets – Office.com). Apple Numbers and Google Sheets both offer similar templates as well.

A good tool for getting started with a budget

This is not my preferred tool as it does not allow the flexibility and low-maintenance operation of a dedicated budgeting tool. 

However, this is a great option for those that are new to budgeting and looking for a free and quick way to get started.  Because of this, if I’m not recommending YNAB to someone, I’m generally pointing them to something free and easy to set up like a spreadsheet tool. 

The most challenging aspects of budgeting are determining your strategy and building good spending habits, both of which can be done without paying for anything.  So don’t feel rushed to pay for something if you’re not ready.

Customization at the cost of time and effort

This tool is best used for getting started understanding what your income and expenses look like in general but tracking month-to-month budgets will require some effort.  This is because nothing is automated – every transaction will need to be entered and categorized manually, and monthly budgets will require setting up formulas.

This manual effort does open the door for building complex reporting that you won’t be able to replicate in other dedicated budget tools.  If you need a very specific data point to manage your budget accurately, this could tip the scale in favor of a spreadsheet tool.  Just keep in mind the cost of prioritizing this customization.

I’m a big fan of automation and simplifying all aspects of life possible, so to me using Excel for my budget isn’t really ‘free’.  I can pay someone else to build a great tool that automates much of the process.  That time is a commodity I can then plan deliberately on something that either makes me more money or helps me unwind after a hard days’ work.  I haven’t found a report that I need so much that it outweighs the benefits of using a dedicated budgeting tool.

Any cost/benefit analysis must also account for my time. To me, $100 is well worth the time I can save each year by using a paid tool.  How much is your time worth?

Why a spreadsheet tool may be the best budget tool for you

Pros:

  • Free options are available, like Google sheets, if you don’t have access to Microsoft Excel or Apple’s Numbers app
  • Easy to get a look at an example budget structure thanks to free templates
  • Most are already familiar with how spreadsheet tools work and how to setup formulas, and if that’s the case for you this will be an easy tool to jump in and start planning your budget

Cons:

  • Any non-monthly planning will require formulas
  • Reporting on budget performance and tracking monthly spending targets will require manual effort, likely via formulas
  • Transactions will need to be entered in manually, meaning a lot of day-to-day manual work to keep the budget updated 

Mint

Mint is another budgeting tool, now owned by Intuit.  Like YNAB this is a dedicated budgeting tool and is also free to use.

Focus is on the current month

I haven’t personally used Mint in over five years, to put that disclaimer up front.  This was a great tool in a lot of ways, but the challenge when I set this up originally was the focus on reporting where money had been spent to keep spending within targets, rather than allowing me to track progress over many months.

For some, the point of the budget is more to keep spending within some tight bounds, so that saving can be tracked outside of the budget itself.  If that’s the case for you, then the ability to track multi-month targets and long-term savings may not be a priority for your budget tool.

Whether this is right for you will ultimately depend on how you want to use the tool.  Do you just want a tool to help provide some accountability and keep spending within certain limits? Or do you want to take the time to build detailed information about your spending?  What is more important to you in this case, time, or information?

Simplicity first

If you’re looking for a simple to use tool for understanding your budget in a broad sense, without getting into detailed tracking of every dollar, I would recommend giving Mint a look.  This is also an easy choice for those still deciding how to set up and manage a budget, as the service itself is free (although it appears to be supported by ads on the site).

Why Mint may be the best budget tool for you

My pros and cons below are based on my prior experience but appear to still be backed up from current reviews.

Pros:

  • Free, although ads appear in the dashboard by default
  • Monthly budgets can be stored for easy copying to future periods
  • Sync accounts online to automatically import credit card and bank transactions
  • Intuitive tool for setting up the first budget
  • Mobile app which makes it easy to check your budget while on the go

Cons:

  • Ads in your budget tool for credit cards or other financial instruments can be a bit distracting
  • Detailed budget forecasting is easier in YNAB, but comes at the cost of more budget admin, so this may not be a con for everyone

Tiller

Tiller allows you to take your standard spreadsheet-backed budget to the next level, with a paid add-on.  This tool does help get around some of the limitations of a spreadsheet alone.  Given this requires an annual license, however, I would compare this to tools like YNAB, not something like Excel.  At current pricing, YNAB is only a $20 annual premium over tiller. 

Honorable mention

I haven’t used this tool personally, but I’m including this here as I see this tool mentioned in online forums frequently. 

If you’re in love with the look of a spreadsheet, and don’t mind an annual license fee, then this could be the tool for you.  This tool also allows for connecting bank and credit card accounts, so transactions and be automatically imported and categorized just like with the dedicated budgeting tools.

Why Tiller may be the best budget tool for you

Pros:

  • Based on common spreadsheet tools that many are already comfortable with
  • Monthly budgets can be stored for easy copying to future periods
  • Custom reporting is possible if you are familiar with charting and formula building in spreadsheets
  • Compatible with either Excel or Google spreadsheets

Cons:

Smartsheet

Smartsheet fits somewhere between Excel and YNAB, as a cloud-based spreadsheet tool that comes with a lot of good collaborative functionality and templates available to help expedite setup. 

I have mainly seen Smartsheet used by businesses, but the ability to share sheets for data entry and use formulas to gather info from multiple sheets makes this an interesting choice for individuals as well.

Spreadsheet tool, plus!

Smartsheet is essentially another spreadsheet tool with a lot of extras. With functionality built into the cloud and with the ability to track data across multiple sheets.  This could simplify the budget structure as you could use one sheet for all your data entry and a series of sheets for individual months’ budgets.

Any complexity does mean more work to setup, but there are templates available online to simplify this process:  Simple Budget Template | Smartsheet

This does also come at a cost.  The lowest tier is currently $84 annually, so the price is just below that of YNAB, but Smartsheet could be used for a lot more than just your budget.  The ability to share sheets with unlicensed users for data entry means only those looking to create or edit sheets need a license as well.

If you find sharing and collaborating on spreadsheets using one of the standard apps difficult (Excel, Numbers, Sheets), Smartsheet may be the answer.  The budget tracking capabilities would essentially be a nice bonus to add on top.  But if you’re only looking for a budget tool, this will likely be a lot to spend given the manual effort required to manage your budget.

Why Smartsheet may be the best budget tool for you

Pros:

  • Easy to get setup thanks to available templates
  • Same look and feel of common spreadsheet tools that many are already comfortable with
  • Easy links and formulas between sheets allow for some interesting reporting and data entry options
  • Sheets can be shared with non-licensed users to get input on specific fields, although non-licensed users will have limitations on what they can do
  • Can be used for much more than just your budget

Cons:

  • License fee required
  • Depending on how you choose to set up your budget, tracking budgets over multiple periods will require setting up a few sheets and creating tracking formulas that link these sheets together
  • Transactions will need to be entered in manually, meaning a lot of day-to-day manual work to keep the budget updated

Conclusion - What tool should you choose?

I provided my favorite: YNAB.  Ultimately what’s best for you will depend on how much planning you want to do, what your goals are, and how detailed you want to be when budgeting.  Use the pros and cons for each option above to help guide you to what tool may be the best budget tool based on your preferences.

There are free options available (Mint, Spreadsheet tools), so there are some ways you can get started with budgeting whatever your financial situation may be.  As with anything, budgeting will require practice to perfect and learn the habits you will need to keep your goals on track.  So whatever tool you choose, get started right away!

If you want more details on how to automate your budget and how to set one up for the first time, see my other articles here:

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