The Best Budgeting Tools and Software

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.


By , on Mar 7, 2008
Lynnae McCoy I'm Lynnae, wife of one and stay-at-home mom of two. I'm committed to getting out of debt by being frugal with my choices in life.


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  1. Mary:

    My wife and I have a routine around money that we started when I got laid off in Jan of 2009. It required a lot of time, but that worked well because we had lots of time, but very very little money. The routine allowed us to budget every unpredictable penny on a weekly basis.

    Several months later, I started getting freelance work, and making a decent amount of money. The money routine didn’t work at all because it took so much time, but not doing it didn’t hurt because we had enough money to make mistakes and not feel it (at least not right away).

    A year ago, I started graduate school, which created an “in-between” place: not much time, but not much money either. We have tried to continue the routine, but have had some trouble finding the time to do it, and going too long between times always means we get off track. I am hoping that maybe you or your readers can help us cut this down a bit. Here is our routine:

    1. GROUNDING. We pray. This step is crucial for reminding us that God is the source of our income and that we can let go of fear. It’s also the step that reminds us that we actually like each other, and are on the same side. ;-) Also, before we start, we make sure no one is hungry! We are cranky if hungry, and that’s never good. Finally, it’s best to do this if the toddler isn’t around because toddlers need things. Constantly.

    2. DOWNLOAD AND RECONCILE. Person A downloads into Quicken and Person B opens and sorts the mail. I say “Person A and B” because we switch off who does which. The person who downloads into Quicken then runs a report on income/expenses by category for the period we just ended, and puts the figures into our budgeting spreadsheet. We call the spreadsheet “River” because it is always flowing. I will say more about the spreadsheet, but in brief, we use the spreadsheet rather than the Quicken budgeting tools for two reasons. The first is that we are budgeting in odd-sized periods (one week, 12 days, etc.), and also because our income is unpredictable. Putting stuff into River is another step, but I haven’t found a tool that works better. This step is not too difficult or time-consuming.

    3. LOVING ACCOUNTABILITY AND FORGIVENESS. This is the step where we look at what we budgeted and what we spent. Sometimes those don’t match and we have to figure out why. This is the area where there is the most opportunity for friction, but we usually don’t fight here. We talk about strategies for doing things differently, or we increase the budget for that item – or whatever. What’s important for *me* is to notice that neither of us sticks to the budget perfectly.

    4. DECISIONS. Now that we’ve ended and accounted for the previous period, we enter new income (money we have actually received), and then decide what we’re going to do with that money. The amount of money we have at that point helps us decide how long this period can be. If it’s very little money, we have to DO River more frequently. Ideally, we do it twice a month, but if money is tight, we might only have enough money to make it a week.

    The spreadsheet is set up like this:
    Money on hand – this is our checking account only, and doesn’t include savings.
    To Deposit – new money that has come in.
    TOTAL- the two added together.

    Below that, continuing in rows, is the list of spending categories. The first two rows are tithing and savings. Next are categories you would expect: rent, phone, etc., and we also have categories like “creativity” and “date night.” Across the top, there are four columns: 1. Owe/Want; 2. Decision to Spend; 3. Actual Spending, and 4. Difference. (The last two columns are for Person A to complete in step 2.)

    We put the amounts due (or the amounts we wish to spend) in the OWE/WANT column, next to each row/category. (Remember that Person B opened and sorted the mail earlier in the step 2. We also have recurring amounts due, things that get sent in email – gathering all of that stuff is an important step.)

    Tithing and savings are percentages of “To deposit.” Tithing is 10% and Savings is 5%. (The savings percentage goes up and down depending on how tight things are, but the tithing percent is fixed.) I want to pause to say something about tithing: it is the best thing we’ve ever done. We give they money where we are spiritually fed. This is sometimes a church, but not always, and certainly doesn’t have to be. Regardless, I’m convinced that we have more money if we do it than if we don’t.

    Toward the bottom of the spreadsheet, the amounts are added up, and subtracted from the TOTAL that we have to spend. (This calculation is done in every column.) Often there isn’t enough money, and that’s where column two comes in. We leave column one’s numbers there. We don’t want to lose track of the fact that we owe PG&E $24.80, so we leave that in column one, but we might decide not to pay them, and we’d enter 0 in column 2. The difference in income and expenses in the OWE/WANT column might be negative, but it has to be a positive number in the DECISION TO SPEND column. Now, let me be honest. We have never neglected to pay PG&E $24.80. What usually gets cut are things with more perceived flexibility, like car maintenance, or my coffee budget. When times were really tough, we didn’t pay lots of things – which is another story – but we’ve never gone without a meal, and we’ve never had the electricity turned off.

    5. LICK, STICK, CLICK & DO. Having made decisions, one person pays the bills we’ve decided to pay. The other person deals with the “to do” stuff that came up in the mail/email. The “to do” list sometimes creates the most friction and time-loss for us. For example, Anthem says that they are going to start charging $15 per month if we use our credit card to pay the bill. We know it comes out automatically, but we don’t know if we set it up with the debit card, or with the routing number/checking account number. Figuring this out takes multiple phone calls. Very frustrating. Interestingly, this is where we start snapping at each other, and not being very nice. I’m not sure if it’s because we were holding stuff in from the loving accountability section, or whether we have been working too long, or what.

    6. FILING. I can’t say we get to it every time, but we try! We’ve never let out pile get more than about 2 inches thick.

    7. BENEDICTION: Another prayer. A walk. Ice cream. Whatever we need and have time for. It’s important that we leave with the idea, once again, that we like each other and CHOOSE to be together.

    What do you think? Ideas for cutting? Making it more simple? Thank you!

    – mary

  2. Jacob Paukovitz:

    Check out for your budgeting needs. syncs up all your financial accounts (banking, credit cards, investing, etc) so whenever a transaction takes place, it is automatically recorded. You can not miss a transaction. It will categorize your purchases (allowing you to split transactions too) so that you can maintain your budget. It will also notify you when you are over budget.

    And because it is web based, you can see it anywhere, even through their iphone and android apps! Great software.

  3. Nico:

    Thank you for the tips! Keeping a good track of your budget is essential!

  4. theburnzz:

    @Mel – You get what you pay for. As far as “the days before computers”…. Really? Do you still write hand written letters to people like the days before computers or have you given into email yet or are you worried about being exposed to advertising?

    BTW, YNAB is worth every penny!

  5. Mel:

    How much money is everyone spending on budgeting tools?

    Pencil and paper works just fine for me. My point is that if you are buying budgeting software …. well that just makes me laugh.
    And if the software is free, how much advertising are you exposed to?

    People were able to budget their money fine in the days before computers.

  6. This looks great! I created a spreadsheet 6 years ago that I’ve used and developed and grown that essentially views my finances exactly the same way. The only thing I do differently, is that I save every receipt and enter everything manually. What I like about that is that it forces you to come back a second time, after purchasing, and again evaluate your need for the purchase. I’ve been giving people my spreadsheet to help them with their finances, but I think I may point them to YNAB from now on.

    • Celia:

      Byron just curious about your spreadsheet that you have been giving to people. How easy it would be to follow. Would I be able to see an example.???

  7. Eric:

    I have been using YNAB Basic and I love it. I use this because I use the Linux operating system and Basic works just fine with that. My g/f and I used to use the envelope system where we’d have an envelope for each of us. A pen and a notebook. We’d write down how much we had in each category for each of us and put that amount in the envelope. When we spent money, we’d simply record how much we spent and put the new amount and total up the entire thing for the next time we looked at it. It worked a bit well for a while but I wanted something better and with YNAB, I belive I found it.

  8. Karen:

    For those who like to use the technology, Yodlee Money Center has a free online service where you can access all your online accounts in one place and create manual accounts for the others. You can use their categories or modify them to fit your needs. I like that I can see at a glance in the Accounts Overview section what is going on with all my accounts, and that I can set up email alerts for bill notifications, etc.

    You can also export the transactions in csv format, which would probably work well for the YNAB spreadsheet system (which is $20 less than the full program).

  9. amy:

    We’ve been using YNAB since last spring…..
    it’s great software, wouldn’t be without it.

  10. Lisa:

    Enjoyed your review of all the current budgeting options out there. Right now, I use an excel spreadsheet with some simple formulas. It tracks really well, but there’s no way to connect it to my bank accounts, etc., so I have to enter everything manually. One of these budgeting alternatives you’ve pointed out might do the trick. It would save me a lot of time if it was done automatically.

  11. 99kby2011:

    I’ve been reading your budgeting series with interest. I too found YNAB and absolutely LOVE it. Exactly as you said – the more I use it, the more I love it! I do wish it would reconcile to my online account a bit easier, but I think that may be my bank’s fault too (tricksy to download transactions)


  12. LJ:

    This was a great post! I use Money, but may toy with some of the other tools you’ve recommended. I like Money because other than budgets, I can track our retirement accounts and such very easily. But, I am also up to try out new things that may save me time or make life easier!

    Take Care


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