Free Home Budget Software For Beginners: How To Get Most Out Of Household Budgeting Tools
Free Home Budget Software For Beginners: How To Get Most Out Of Household Budgeting Tools
Creating your own personal or family budget is certainly not the most exciting thing to do. It is nevertheless an important step towards first taking control of your finances and then keeping your financial house in order. People who do not make their budget often point out the necessity of having to provide and deal with as much detailed information as possible. The truth is, the reward makes it all worth it. It actually is a fairly simple process, but simple doesn’t mean easy. Plus, people who have successfully been budgeting for years know that setting up the budget is the easy part. Your money management skills and mettle will really be tested once the budget is set, and you have to strike a balance between sticking to it and making it flexible enough to accommodate unplanned events as well as changes in your financial situation. There is free home budget software out there to assist you in getting your money under control and show you where your money is coming from, how much of it there is, and where it’s all going. Here are some of the most popular free home budget software available to you:
Quicken Online
Back when it was first introduced, Quicken Online used to cost $3 a month after the initial 60-day free trial period, but is now totally free to use (probably because all its competitors were already free). Of course, you should not expect its feature list to be as complete as the standalone, paid version of Quicken; nevertheless it’s very good and you can do a fine job at setting up your budget with it. It’s somewhat similar to Mint (presented thereafter), but it’s apparently more beginner-oriented because it’s simpler to use, with a bit less functionality. The option to have alerts sent to your cell phone or email make it a solid choice; you can get reports of your financial highlights, bill reminders, balance and transaction alerts just to name a few. One of its few drawbacks is that it doesn’t offer advanced features like, for example, investment tracking.
Mint
Clearly designed to compete with Quicken’s offerings (namely Quicken and Quicken online), this site mounted quite a marketing campaign and got a fair amount of hype before launch. It seems to now have matured into a very good money management option. It’s easy to use and offers very nice features. Its business model is that it offers you a free product, and makes its money by analyzing your spending patterns and recommending you offers that will make you money, through its network of advertising partners. Setting up your account is a breeze: in minutes you can open an account, enter your bank and credit card info, and Mint will pull all of your balance and transaction information and present you your financial situation in great graphic detail. Not only does Mint break down your spending behavior, it has some really cool features like automated transaction downloads that update accounts every night, weekly or month account summaries via email or text message. The software also alerts you when your balance is low, when a bill is due or when you have overspent your budget.
Geezeo
Geezeo is a free online money management system that also lets you discuss ideas with others. Settings up your accounts only takes a few simple steps to complete. You’ll need to add a bank account to track your daily finances. Once your account has been added to Geezeo, it’s automatically updated on a regular basis. Geezeo allows you to manage all your accounts, offers mobile access, greatly facilitates budgeting, allows you to create and track goals (one of its strongest points), and to join groups and learn from others. Geezeo is an online money management system and social networking service built into one application. You can balance your finances, get support, and make friends in the process. Extremely simple and packed with multiple features, it does a lot of the things the other financial software options do, with the benefit of active forums and groups to give the site more of a social network feel.
Buxfer
Buxfer is a site with a no-frills design that helps its users take care of their finances among their friends and groups in a very easy manner. Labeled by many as a Quicken for 20-somethings, it lets it users set up budgets, know where and with whom they spent the money, who they owe how much, split bills, assign tags to transactions, settle accounts online, synchronize with different banks and credit card companies and access the service while on move via their iPhones, Twitter or a simple SMS. This software is specifically recommended to the younger crowd. It makes splitting, managing, tracking money easier and lot more fun for its young users. However, the service restricts itself to somewhat simpler tasks. High- end financial planning and advice are not the focus. Buxfer tackles the unique needs of young people trying to find out where all their money evaporates to and rein in their expenses.
Wesabe
Wesabe is a community-based personal finance site which allows users to track their bank accounts while sharing money tips and goals. The service organizes all your account transactions in a single place, translates “bankspeak” into human-friendly transaction descriptions, charts a birds-eye view of where your money’s going, and puts its community of users to work to help you save money and reach your financial goals. Wesabe’s strong suit is its tagging system. Everything on the site can be tagged, be it a transaction, a tip, or a goal. The tags are visible to the community and make it that much easier to see what’s “normal” for a spending category, or to get tips and set goals. It’s called financial social networking. Once you upload your data to a site, that information is shared (anonymously) with thousands of regular folks who have similar interests and spending habits. Everyone passes along tips on saving, investing and spending.
Now that you have a pretty good roundup of the free home budget software options out there, please keep in mind that they’re just tools. As such, You can only get out of them what you put into them (garbage in, garbage out). Here are some useful tips to get the best out of them when budgeting for your household.
Creating a budget can be summarized as a 5-step process:
- Setting your financial goals: they must be of the S.M.A.R.T variety (Specific, Measurable, Attainable, Realistic, and Time-Limited)
- Calculating your monthly income: salary, and other sources
- Calculating your monthly expenses: both fixed and variable expenses. Take ALL expenses into account and set an approximate amount for each. Start with the recurring monthly expenses such as mortgage, rent, phone, cable, electric, gas, insurance, car payment, groceries, lunch, credit card payment, student loan, etc. For the bills such as electric that fluctuate use the average.
- Comparing your income to your real expenses. You will have to do what it takes (increase your income and/or decrease your expenses) to AT LEAST balance them out. Hopefully you have a positive number, which means the excess is the amount that can be saved in an emergency fund or can be used to save for the down payment on a home, financing a college education or saving for retirement. Besides, just to use an example, there’s no way you’re going to know how much you can afford to borrow to buy a house if you don’t have a clear view of your income vs. your expenses.
- Follow the evolution of your financial situation and make changes to your budget accordingly
Mistake to Avoid:
When setting up a monthly budget, some people simply assume that their yearly expenses will be 12 times their monthly expenses. That is simply not the case, as some months clearly will cause you to spend more than others (birthdays, anniversaries, school tuitions, and so on…) So it’s important that you don’t forget your quarterly and yearly expenses. It’s a good idea to break these expenses down into monthly amounts and put them in your savings. This way, you don’t run into a budget crisis when the big yearly bills start rolling in. You can also customize your expenses to make up a small savings fund for Christmas, for example, and the monthly contribution to that fund can be added to your monthly expenses. Several banks allow you to open accounts specifically for that purpose.
And now, here are some important tips to help you make the most out of your budget:
- Your savings should be your first “expense”. Always include a contribution to your emergency savings fund in your fixed expenses
- Do NOT completely eliminate entertainment spending (concerts, movies, eating out…) unless you’re basically standing on the edge of financial disaster. A good approach is to reduce them to a minimum until your financial situation gets better. It’s very hard to live without any entertainment at all, so it’s very important to include those in your budget, otherwise your budget will feel like a prison and it’s more than likely that you’ll get rid of it.
- Go through your budget line by line to determine the areas where you can eliminate superfluous spending. The first place to trim is on recreation and eating out. Other places to trim are the morning cup of Starbucks coffee and eating lunch out at work. Other areas are the cell phones, ensure you are using a family cell phone plan, get rid of the gym plan if it is not being used and you can also reduce your cable plan to a more basic one. All of these cost cutting actions can add up to saving hundreds of dollars a month.
- If you have a surplus after having trimmed your expenses, use half of it to further pad your emergency savings fund; use the other half as extra payment on your debt. If you have no debt, take a stock market for beginners crash course and start investing.
- Get into the habit of writing down all your expenses. Little expenses that you don’t even think about twice really add up and you might be surprised to see how much money you’re literally throwing away. This money could have been used as further payments toward your debt, or for investing purposes.
- If your personal budget shows that you’re only getting further and further in debt as time goes by, even after trimming down your expenses to a minimum, maybe it’s time to take a deep breath and look into a debt consolidation program so you can get out of debt once and for all.
- Once you’ve paid off one debt, use the available money as extra payment towards other debts. Once all your debt is paid, you can increase your emergency savings fund and/or increase the pace of your investing.
Ultimately, the time and effort you put into your budget should help you shape a much brighter financial future.
Mistake to avoid:
Don’t kid yourself and try to save what’s left over at the end of the month. It simply doesn’t work. Save first (no matter how small the savings), and spend what’s left.
Once again, it’s crucial that you write down all your expenses to avoid reverting to your old habit of spending more than you earn. And if you think you can get out of debt without a budget, think about this: how can you trim your unnecessary expenses if you have no idea where your money goes?
The positive thing, though, is that by deciding to make a budget, you’ve taken one step in the right direction. And luckily, there’s plenty of free home budget software programs that you can use to create the budget that’s perfect for you.
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