Creating and sticking to your budget can be a headache. Could an app make it easier?
You aren’t limited to tracking your spending with a pen and paper or spreadsheet – I trialled budgeting apps to see if they could help me reach my goals.
A budget highlights if you’ve got more money going out than you’ve got coming in. But setting one up, and monitoring it, isn’t always easy. How do you create a budget that shows the big picture without getting overwhelmed by the small details?
Pen-and-paper budgets are a classic method of managing your funds, but they can be tedious to create, and you’re limited to the transactions you’ve noted or for which you have receipts. Excel “revolutionised” budgeting as it was easier to keep up to date as you could import transactions exported from internet banking, but you needed to know how to use a spreadsheet for them to be effective. Budgeting apps are simple and easy to use on your phone or tablet.
Tracking your transactions is a great way to view your spending, but a good budgeting app will also encourage you to change your financial habits for the better.
Budgeting apps automate a lot of the work a pen-and-paper or spreadsheet budget requires. They also help you be more pro-active in budgeting, because the best apps show how much you’re spending and alert you where you’re going over.
If your phone screen is too small, some companies that produce budgeting apps also have a mobile website version linked to the app.
There are plenty of free and paid budgeting apps available. Both will have similar basic functionality of categorisation and visualisation. But paid versions offer additional features, such as being able to create multiple budgets, multi-user collaboration and advanced charts.
An important part of personal budgeting is how you categorise your spending. There are generally three types: needs, regular expenses and wants. Your regular expenses and wants are where you can make the most savings. With budgeting apps, the key is tailoring categories as much as possible. You don’t have to stay with the default options – change the names, group similar spending and create new ones that reflect your spending.
Once you’ve set up these categories, most apps can then automatically organise further payments for the same payee. This makes maintaining your budget easier. If your spending overlaps – for example, you grab a coffee while filling up at the petrol station – apps usually let you split the transaction between different categories.
No matter how you set up your budget, you need to be able to quickly understand what it shows about your spending, and how to change it. Choose a budgeting app that displays your data in a way you can easily follow.
There are three common types:
Pie chart (category based) – shows your monthly spending as percentages as part of a “pie”. This method is good for quickly showing where you’ve spent your money.
Envelopes (category based) – when money comes in, it’s categorised into “envelopes”, then as it goes out, you can see exactly where you’re overspending. A good system for tackling bad spending habits.
Graph – shows your overall spending in a line graph. Most apps also show your spending against previous months or even years. This way of displaying data shows the big picture of your spending and can forecast future trends.
If you’re not sure what type of system will suit you best, look for an app that offers various options.
Importing your bank transactions is a quick way to start a budget. All the major banks let you to export your data in a range of file formats, the most common are:
OFX (open financial exchange) and QIF (quicken interchange format). These file types clearly label and sort fields such as the payee, value and whether a transaction’s incoming or outgoing. They’re the easiest for importing into apps.
CSV (comma separated values). This is a basic file format that separates data such as date, payee name and the value with commas. Most budgeting apps accept this format. However, a drawback is that it often requires reorganising before you can import into an app, which can be fiddly.
Budgeting apps also let you enter manual payments, which means anything bought with cash can be included and categorised. A good budget includes all your spending.
Some budgeting apps can link directly to bank accounts and import live spending. To do this, the app needs your internet banking login, which is a big security risk. Even more alarming, some apps use a third party to sync, meaning you’re providing your details to multiple companies.
New Zealand Bankers’ Association Chief Executive Roger Beaumont said it “strongly advises against people sharing their banking passwords and login details with any third party. Doing so may breach your bank’s terms and conditions”.
Don’t use this feature. The risks outweigh the convenience. Instead, regularly importing transactions into the app is much safer.
Some banks have their own budgeting apps or online tools. These link to your account, so are more secure and easy to set up. However, they can be limited when it comes to features such as entering manual transactions. Check with your bank what budgeting tools it offers or recommends.
This app was incredibly easy to use and required almost no setup. All transactions were pulled straight from my checking account (CashNav can be used with transaction and credit card accounts). The login to the app was the same username and password as my internet banking. Categorisation was automatic, and it’s automatically applied to further transactions.
However, while I could change what category a transaction is applied to, I couldn’t customise the category names.
CashNav has a couple of ways to display spending including a daily summary, by category (where you can also set targets) and a comparison of the current month’s spending to a typical month or previous months. Notifications were good at reminding me to use the app and the daily summary was helpful, but they could be turned off.
The biggest downside was that I couldn’t enter cash transactions manually. Overall, it’s a good app for day-to-day budget management.
Setting up: A – very little setup required.
Tracking spending: B – good options with both graph and category views.
Viewing goals: C – can set spending targets, but not overall goals.
Cost: Free, but you need to be a Westpac customer.
This app was full of features so I could customise and tailor my budget. Unfortunately, I couldn’t import my bank transactions through the app; I had to log on to the website which limited the functionality of the app. Importing was easy using OFX or QFX formats, but difficult with CSV.
Categorising my spending was simple, but took a bit of time as the app didn’t apply the category to similar transactions in my first import. However, it did apply them to future imports. I found it best to upload my transactions weekly and enter cash transactions daily. Even though I was regularly updating my budget every week, I found myself checking the app daily to see if I could make an impulse purchase.
Viewing my spending was easy. It uses the “envelope” approach, where all my cash is neatly split into categories. I also found the “quick budget view”, which summarised my monthly overall spending, useful. I could set up multiple accounts, including for credit cards, and follow several budgets and savings goals. Another useful view showed my net worth from all accounts in a graph. There was also an interesting “age of money” view, which showed how long went by between me earning my money and spending it.
While it does have a sync option, I steered clear due to the security risk. Overall, I found the YNAB app good for managing my budget weekly and daily, as long as I kept it updated.
Setting up: B – importing was easy but has to be done via YNAB’s website.
Tracking spending: A – viewing spending and assigning categories was simple.
Viewing goals: A – very good customisation of categories.
Cost: NZ$122 per year
If you’re after a free and independent budgeting tool, the Sorted website is a great place to start. While not an app, it works well on mobile devices.
It was good at making me face the reality of my spending. It isn’t transaction-based, like most apps, so takes more time to set up. I needed to summarise how much I would normally spend on each category. Trawling through my bank account, I realised how easy it was to miss a regular payment. If you’re starting a budget with Sorted, it’s important to take your time and make sure you don’t miss anything.
Its main display is a pie chart that used my spending categories, but grouped them into areas of everyday expenses, living expenses, regular expenses, irregular expenses, savings and personal. I liked that any changes I made to categories were automatically reflected on the chart. Overall, I found the Sorted tool good for managing my budget monthly.
The Commission for Financial Capability, which operates Sorted, said the budgeting tool will soon let you have more than one budget and be able to share budgets with others.
Setting up: B – requires manual entry of spending.
Tracking spending: C – need to manually update to see any changes to spending.
Viewing goals: A – easy to view where your money is going.
We’ll be reviewing more budgeting apps. If there’s a particular app you’d like us to trial, email firstname.lastname@example.org.