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Selecting a Budgeting Tool

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Selecting a Budgeting Tool

Choosing a budgeting tool

Most of us are somewhat familiar with budgeting tools and admire them from a distance until we discover that we are hemorrhaging money and don’t know why, how, or where. At that point, we start looking at these tools more closely because they can answer those questions precisely. They are available not just as software that you download to your computer, but also as online tools. In fact, your bank or credit union may offer them on its Website. There are also free ones out there, which you can find with a simple search. If software isn’t your thing, you can also use manual tools.

Things To Know

  • Many good online tools are available and free to use.
  • Your financial institution may have budgeting tools already up, with your account data already in them.

Budgeting shouldn’t be a drag. It should make you feel free, but you must first be ready to put in the necessary time and effort.

What do budgeting tools offer?

Budgeting tools make budgeting easy. They are designed to take data and turn it into a story about your financial life. This data inputting can be manual or it can be automatically downloaded through an Internet connection to your financial institution; it depends on the tool. Different tools offer different features.

If you’ve started referring to budgets as "the B word," then perhaps it’s time to look at how easy these tools have become in the past few years.

What to look for in a budgeting tool

Budgeting tools run the gamut from desktop software to online software to app software to homemade applications like spreadsheets.

Desktop budgeting tools are those that you buy on a CD or on the Web and install on your computer. As such, they need to be updated periodically based on how you choose to update them. Online budgeting tools live on the Internet and are updated automatically.

Both types of tools can gain access to your financial data such as checking accounts, savings accounts, and investments, but online tools do this more quickly. Once they have this data, they do their magic—they provide a look at your cash flow and analyze trends in your money habits, and some even provide forecasts for you.


If you primarily want to enter your income, expense and savings amounts in a simple-to-use Excel spreadsheet, you might want to consider the budget project in this article. It is very easy to use and is flexible so you can make revisions when you want. This is a great way to get started with budgeting.

If you are interested in more advanced budgeting tools, you must invest some time in researching the options. More advanced options allow you to set up your budget electronically and link your bank, credit union, and credit card accounts to the budget tool. When your accounts are linked, your transactions are automatically and electronically sent to the budget tool. Your actual expenses will be categorized and compared to the budget estimates you build. Additionally, you will be able to analyze and view reports about your spending and saving.

If you have online access to your financial accounts at your financial institution, then it may have budgeting tools already up, with your account data already in them. Check there first; a little time tooling around will show you the great perspective they can provide on your money.

An online search for phrases like "budgeting tools" will bring up dozens that you can research. Also, there are reviews in the media every year that cover the plusses and minuses of each program.

Try them out

Many good online tools are available and free to use. You can try them out to see if you like them and find them useful. Here are some things to consider when choosing a budgeting tool:

  • Ease of use. This is what will probably make or break it for you. Programs that are formatted and organized well are more enjoyable to use. The more effortless a program is, the more likely you will want to work with it.
  • Flexible categories. Can you add new categories or must you use the ones provided? How likely is it that you will need to add new categories? An upcoming change in your lifestyle may prompt you to need them.
  • Security. Look at the URL of the Website. If it begins with https instead of http, it means the site is secured using an SSL certificate (the S stands for "secure"). SSL certificates secure all of your data as it is passed from your browser to the Website’s server. To get an SSL certificate, the company must go through a validation process.

The highest level of validation, extended validation (EV), is the safest and most extensive. With extended validation the company requesting the certificate has to prove their identity as well as their legitimacy as a business. You can tell if a site has an EV certificate by looking at the address bar. Browsers show a green address bar with a lock icon for Websites with EV certificates, as shown in the picture below.

Extended validation certificate
  • Connection to your bank accounts. Budgeting tools need the clearest picture possible of your finances. That’s why most of them can connect to your financial accounts and download your data, which they use to produce reports and budgets.
  • Features. Do you want a simple program that keeps track of your income and expenses, or do you also want analysis and reporting?
  • Communication. Many budgeting tools send you alerts when there are large or unusual changes in your accounts.

In summary, budgeting tools can be very helpful. These tools do the work for you and can show you things about your money you didn’t even know were happening. Many of us complain about how we don’t know where all our money is going; by submitting it to a good budget, you can see exactly where every cent of it is going. Finally, using a budgeting tool holds you accountable for your choices.