Sometimes the best tools are the simplest ones. To effectively keep a budget, you need the right tools. And there are many tools out there to choose from. Ranging from free to hundreds of dollars, it’s hard to know exactly which tools to use. Many programs come with fancy charts, integration with online banking, bill pay, and a whole host of other bells and whistles. But do you really need all that in a budgeting program?

In my opinion, there are three features that absolutely must be present in an effective budgeting tool.

  1. You must be able to easily record money coming in to each budget category.
  2. You must be able to easily record money going out of a budget category.
  3. You must be able to easily see how much money you have available to spend in each budgeting category.

I’ve used many different tools over the years. Quicken, Money, Mint, and a whole host of others. While each of these programs have their place in money management, none of them are ideal for keeping track of a budget.

4 Budgeting Tools and Software

In all my years of trial and error, I have only come across 4 tools that work the way I want them to, meeting all three of my budget tool requirements. They range from the low-tech to the high-tech, and I’m sure there will be something here for everyone.

1. A Basic Ledger Sheet

This is the cheap and easy option for those who don’t like to use the computer. You can find ledger sheets at any office supply store, and even the technologically challenged can use them. Make a list of your budgeting categories in the columns, and every time you deposit or spend money in a specific category, record the transaction in the appropriate column.

It can be tedious, but I know people who love this method. I used it myself for a couple of years. If you make sure to balance each category every time you record a transaction, you can just glance at your balance sheet to see whether you have the money in the budget to go out to dinner.

2. Envelopes

This is a great method for those who like to pay cash for everything. Label a separate envelope for each of your budgeting categories. When you get paid, split your money into your envelopes. When the money in a given envelope is gone, you stop spending in that category for the month.

This method can be good for those who get paid weekly and run through their cash rather quickly. It’s a very good method to get you acquainted with a budget, because it lets you visually see the budgeting process. Here’s a video tutorial from NCNBlog.

3. Mvelopes

Now we’re getting into the technological options. I used Mvelopes for the better part of the last year — here is my full review of Mvelopes. Mvelopes is an online-based program, so it’s great if you use multiple computers to manage your finances.

You can create budget templates for each of your paychecks, so when you get paid, you can split the money into your budget categories with a click of the mouse. Mvelopes also supports a long list of financial institutions, so you can automatically import your transactions into Mvelopes.

The downside to Mvelopes is that it’s pretty spendy. Membership plans range from paying $39.60 a quarter to $189.60 for two years. Still, if you have extra money in your budget, it’s a good program.

4. You Need a Budget Pro

This is my favorite of all the budgeting programs I’ve tried. The longer I use it, the more I love it. I’ll give you a brief synopsis of the software. Here is my review of YNAB.

Available in a spreadsheet or a Pro version (I recommend Pro for the extra features), You Need a Budget is a desktop based system. In my opinion, YNAB is the best, because it does exactly what it needs to do. Nothing more. Nothing less.

Importing transactions from your bank can be tedious, but it’s great for security minded people, who don’t like the thought of a program automatically accessing their bank accounts. You can download transactions from your bank in Quicken format and then import them into YNAB. It’s slower than an automatic download, but I haven’t had any trouble.

It’s easy to categorize your spending into each of your budget categories, and there is a whole page which gives you a great overview of what you budgeted, what you spent, and how much you have left to spend.

YNAB also operates on the premise that you should have a month of income as a buffer in your checking account. So when you get paid for this month, it shows up as money available for budgeting next month. But don’t worry. If you don’t have a month’s worth of expenses in the bank yet, YNAB will help you work toward that point.

YNAB isnt’ free, but it’s only $49.95. This includes updates, when YNAB adds new features.

Final Thoughts

I have used each of the methods above successfully, and I have no problem recommending any of them. They are all effective in their own way. The important thing is that you keep track of the money coming in and the money going out of your life, so you can get closer to your financial goals.

Now you know everything you need to know about budgeting! I hope you found this series informative and useful. Budgeting can sometimes be a hard habit to develop, but once you start doing it, it can have an amazing effect on your finances.