3 min read 22.03.2022 229
Best Apps for Personal Budgeting
Are you working hard every day to earn good money but cannot account for it before your next payday? You may be already depressed about your financial predicament. Even if, cheer up! For all hope is not lost yet. We bring glad tidings to you through this post. Now is the time to discover the secrets you need to know about budgeting and personal money management. So, you can always be on top of your finances!
What is a Budget?
A budget can be defined as a manually prepared or computer-aided forecast of weekly, monthly, or yearly income (money inflow) and expenses (money outflow) that is normally updated periodically. It is a strategy for controlling your money. The process of creating a budget is known as budgeting. Individuals, groups, companies, and government agencies involved with money management responsibilities need plans to help them pursue personal or organisational goals. Such plans are called budgets.
At the personal money management level, which entails personal budgeting, a budget helps you to avoid financial stress by serving as a reliable tool with which you can be in control of your financial situation. For example, if your take-home pay is £3,000 monthly, without a budget you might end up spending all of it before you receive your next payment. Therefore, a budget is an indispensable tool to have if you want to stay financially happy.
Three Main Methods of Preparing a Budget
When it comes to budgeting, there is theoretically no limit to the methods that can be created by anyone knowledgeable about financial management. However, in practical terms of personal budget management, three main techniques would be helpful to you: zero-based budgeting, envelope budgeting, and 50-20-30 budgeting.
Do you lack the ability to account for your income and expenses or manage unallocated money? If yes, then the zero-based budgeting technique is ideal for you. This method helps you to prepare a budget that does not create room for any remaining money that you could spend on something unexpected. It is called a zero-based technique because it can help you to zero out your budget at the end of the period it is to cover. In other words, every portion of your income goes to a mix of expenditure, debt reduction, and savings plans. So, this method comes with the responsibility of thoughtfully anticipating and allocating money for all your disbursement for the week or month.
Many decades ago, when cashless payment options were unavailable or scarce in most parts of the world, the envelope budgeting method was the dominant practice. It requires placing cash in separate envelopes that have been labelled for every planned personal or household expenditure. The number of designated envelopes varies from individual to individual, depending on what each person plans to spend within the period. Despite the existence of many mobile apps and electronic wallets that have digital envelopes for you to safely apportion your money, some people still prefer to use this old-school manual budgeting technique.
The numbers in this budgeting technique represent percentages of classified and fractionalised expenses. According to this principle, there are three main categories of expenses to use your budget to take care of if you want to be financially in control of your life and be happy:
- 50% - Essentials: Half of your take-home income should be apportioned for spending on essential needs – food, housing, clothing, critical utilities like water and energy, insurance, and others.
- 20% - Savings/debt repayment: It is necessary to save part of your income. Likewise, repaying any down debt is important if you truly want to have some savings. Therefore, you need to set aside 20% of your take-home pay for savings or/and repayment of your debts. Try to pay above the minimum monthly payment requirement of your debt so that you can quickly become free from the burden of the debt.
- 30% - Wants: A person’s wants are said to be impossible to satisfy completely and permanently. Therefore, you must allow some part of your monthly income to go into meeting your desires for things that make you feel more pleased about life, even though you can live without them. So, 30% of your income should be for your wants like entertainment, tickets to sporting events, vacations, and the like.
Now the most interesting aspect of the 50-20-30 budgeting technique is that it helps you to meet your basic needs, pay your debt or save some money while also having extra money for pleasure. Moreover, if 50% of your income is not able to meet your need in any month, or 20% is unable to pay above your minimum debt repayment or add to your savings, this system allows you to use a portion of the 30% to take care of the other area that is lacking funds. Thus, this is the most flexible and ideal budgeting technique to use.
How Can I Create a Personal Budget?
You can use any of the above budgeting techniques to create your personal budget. If you would like us to help you pick one, try the 50-20-30 budgeting method. So, for example, if your net income is £3,000, your budget should look like this: £1,500 (which is 3000 x 0.5) for your needs, £600 (that is 3000 x 0.2) for your debts/savings, £900 (being 3000 x 0.3) for your wants. But if none of the above methods is perfect for you, please feel free to design your own system. The most important thing about budgeting is to ensure that your method keeps your total expenses below your net earnings, allows you to pay your debts in time, and lets you save some money. That’s all!
How to Stop Exceeding Your Budget
It is easier to create a budget than to stick to it. Still, always exceeding your budget is financial indiscipline. Therefore, you need to start following your budget for your own well-being. How? Firstly, you need to always remember that your future will be better than your present if you practice good financial habits like sticking to that budget of yours. Secondly, avoid unnecessary purchases – whatever is not worth buying should be ignored. Thirdly, share your experience with a friend or financial coach online or offline who can monitor your financial spending and help you learn to be more accountable in this aspect. Last but not the least, try using a budgeting app for personal money management.
What are Budgeting Apps?
Budgeting apps are mobile applications that can assist you with making decisions on your weekly or monthly expenses and savings. They are also known as money management apps. With a personal budgeting app, you have all your commitments and goals relating to your financial life in one place. Moreover, it can be linked to your bank or credit card for a more holistic control of your finances. While some apps come with preset budgeting like 50-20-30 and envelope techniques, some others come with the added possibility of customising them to suit your budgeting goals. Also, there are location-supported money management apps. In other words, you need to be a resident of certain countries, for example, countries in the European Union or the United States, to use some of these apps.
List of the Best Money Management Apps
Now let us look at the best money management apps for your personal budgeting today.
Fudget is a simple, secure, and basic personal budget planner for beginners. Anyone who has just learnt about the benefits of using mobile apps for financial self-discipline and wants to try the technology can try this app. It allows you to create a basic list of your income and the items you plan to spend your money on so that you can keep track of them and monitor your account balance. With this app, you can create a weekly or monthly budget that you can use repeatedly or modify gradually as time goes by. Furthermore, it has a pro version that offers advanced features such as a dropbox for you to save your financial data online, up to 8 colourful themes, a calculator for your budget planning, zero ads, and others. To get the pro version, a one-time purchase fee of US$3.99 is required. However, Fudget cannot be linked to your bank account. You can download the app on the App Store or Google Play for free. It is available for use in the United States.
PocketGuard is a budgeting app that is ideal for preventing overspending. It comes equipped with features that help you to track your expenses, monitor your savings, and cancel any subscription that is not good for your financial well-being. PocketGaurd has a free trial period after which the user will have to pay US$7.99 monthly for the Pro version. It can be synchronised with your bank. However, this app has not expanded beyond the United States and Canada. Therefore, interested residents in the EU cannot create accounts with PocketGuard.
You Need A Budget (YNAB) is an app that enables you to build your budget according to your income. Following the zero-based budgeting system, the app helps you to ensure that every money you earn has a predetermined expenditure. Individuals and couples can use this app for planning and managing how they spend all their money. You can use its desktop or/and mobile versions, link the app to your traditional bank accounts, and manage your expenses on your needs, savings, debts, and wants. But it cannot be used to track your investments and has what looks like a Microsoft Excel spreadsheet in terms of the user interface. Moreover, the app requires users to try it for free for 34 days and then pay US$14.99 per month or US$98.99 per year to continue using it. Also, it is meant for US residents, thus a limited geographical reach.
Choose Mint if you need a great app that can help you with monitoring your daily activity. It puts all your income and expenses in one place to give you a clear picture of your financial habits. With it, you can track multiple credit cards, pay your bills and recurring expenses, manage your debts, and grow your net worth over an unlimited period. It provides high security of your personal and financial data through its multi-factor authentication, software encryption, and multi-layered hardware. However, only residents in the United States and Canada can use this app since financial institutions in other countries are not supported; and the advertisements within the app are sometimes worrisome.
The Goodbudget app helps you to focus less on tracking your previous transactions and more on planning your finances. It is excellent for a shared household budget with two or more persons – ideal for couples. Users can get a free account that can be used on two devices but with limited envelopes, or use its paid version (US$7/month or US$60/year) which comes with unlimited accounts, can be used on up to five devices with unlimited envelopes, and many other benefits. Goodbudget is best for budgeting using the envelope technique. The envelopes in your account represent various spending categories. In terms of funding, you cannot link this app with your bank account – you will have to manually credit your account in the app before apportioning the money into its digital envelopes. This app can be used in the United States of America.
The EveryDollar app comes with free and premium versions. Either version can be used to plan for all your monthly income. The app was designed for simple zero-based budgeting. It can be used by residents in the United States. New users of the app are offered a 14-day free trial period, after which a quarterly, biannual, or yearly membership fee of US$59.99, US$99.99, or US$129.99 is required, respectively. The services of this app are only available to residents in the United States and Canada.
Personal Capital is a free budgeting app for financial planning, cash flow tracking, education savings, retirement savings, debt payment, investment checkup, investment analysis, and urgent funds. In a word, it is useful for tracking your wealth and expenses. It has both mobile and desktop versions for users’ convenience. You can link your bank accounts, credit cards, mortgages, student loans, and retirement funds to your Personal Capital app. However, it is more of an investment savings app than a weekly or monthly budget app, plus the app is only available in the United States.
Are you a couple learning to manage your joint finance? Through a joint account that comes with no fees and limits, the Honeydue app helps couples to have better transparency and communication concerning their income and expenses. Beyond financial management, this app has a messaging feature that makes it possible for couples to chat about their finances in the app. Using this app begins with linking your bank account to it. Besides, there are over 20,000 financial institutions that can be hosted in the app. Users can also get a free debit card. Despite its impressive pros, the app does not have a desktop version, cannot help you track your financial progress, and does not offer financial reporting and analytics. In terms of coverage, it supports most banks in the United States, and other banks in Canada, the United Kingdom, France, and Spain.
Monese is an app that can help you to categorise and track your expenses, save money in different pots (like envelopes), and analyse your spending. You can open as many as 10 pots in one account. With this app, your budget could be weekly or monthly. It also offers multicurrency accounts, international wire transfers, andmuch more. Only residents in 20 EU countries (including the UK, Germany, and Estonia) can open a Monese account.
Revolut serves as a seamless tool for managing your money and personal finance. To help you with sticking to your budget, Revolut lets you set limits on your daily expenses. You can also use it to have all your subscriptions and bills controlled in one app. To create an account with Revolut, you need to be a legal resident of the UK, Spain, Denmark, or any other country in the European Union. Learn more about Revolut’s suitability for personal savings management in ouroverview.
What to Look for in Money Management Apps
Personal goals, location, features, fees, security, and customer service are the factors you should put into consideration when choosing a money management app. Apart from your own goals, every other information you need can be gotten from the websites of the apps, user reviews from other websites, and your personal experience from testing them for free.
- Foremost, if your personal goal for budgeting does not align with what the app was designed to do, look for another app. For example, if your goal is to prevent overspending, then go for apps like PocketGuard.
- Some of these apps do not work in certain regions. There are those for residents in the European Union countries and those for residents in North America (Canada or/and the United States). So, make sure to download a budgeting app that you can use in your location.
- Choose apps that have the features you would like to use for your ideal budgeting. For instance, Fudget cannot be linked to your bank account, therefore you should not choose it if you want such synchronisation. Also, if you want something that comes with retirement savings support, consider choosing Personal Capital.
- The safety of your data will depend on the app you choose. You should not risk your privacy and security to use just any app. Go for apps that provide the kind of security you need for your personal and financial data. Do you need apps with multi-factor authentication or more sophisticated security features? If yes, go for the likes of Revolut and Mint.
- Do you prioritise 24/7 customer support from the provider of your personal money management app? If so, then pick an app that offers such support. It is saddening to run into a technical problem and need urgent support without being able to get it from your service provider.
Spending and saving from your income is achievable if you use a budgeting app that rightly helps you to meet your money management goals. To help you take charge of your financial life, we have suggested the best of such apps on the market today. Put the knowledge you have gained from this article into practice, and you will be able to retire happily.