Helping you get in control of your money
So, you’re here because you want to be more in control of the money you earn. And one the first steps on that road is a budget. To some, the word budget represents restriction and sacrifice. Instead, I want you to visualise it as putting off what you could buy today if you maxed out your spending potential and instead delaying that gratification for later.
Delayed gratification is akin to that science experience of saying no to a small slice of cake now in order to get a larger slice later. It takes control, discipline and practice. And like a muscle being strengthened over time in the gym, the best way to have more control of your money is to set and regularly maintain a budget that you set yourself.
To help you stick to that budget and withstand temptation, it helps to have a budgeting app that is easy to use and will be something you want to keep up as you start taking control of your money bit by bit.
Here’s a few of my favourites.
One the best well known budgeting tools out there, YNAB stands for You Need A Budget. You can start using it for free and ensure it works for you. After that, the app just becomes a monthly recurring fee which for me was worth it as I simply incorporated it into the budget that I’d set myself through YNAB. The beauty of YNAB is that it will give every dollar in your budget has a job for the month so you have a complete picture of your spending. You can set up categories for everything in your budget, including a savings goal or contributions to your superannuation. Part of this is recognising your big yearly expenses like car registration or quarterly house bills and breaking them down to be part of your monthly budget so that you’re not hit by unexpected large expenses that you didn’t budget for.
Now I had a bit of a problem in the early days with not sticking to my set budget, be it an unexpected work team lunch or a birthday gift I forgot to budget for that month. One thing I love about YNAB is that you can address that overspend in one category by moving money budgeted across categories so that you don’t overspend on your overall budget for the month. The central habit I picked up from using YNAB is living off last month’s pay so that I started to age my money and have more of it backed up in savings. This is also a great way to start building your emergency fund because you can see how much money you have saved up beyond your current pay packet.
If you’re currently carrying debt, be it a credit card or a loan, the ability of the app to drive you to create this pool of savings is a great strategic way to pay down that debt fast. Their testimonials tend to focus on the ability to get out of debt and into savings, including five figure debt which can quickly spiral if you aren’t able to focus on paying it off quickly. If you or someone you know is facing a climb across the debt mountain, these stories really speak to how YNAB can help install a discipline to address debt through assigning dollars that job in your budget and directly the savings pool that will start to develop toward the debt.
Whether it be developing a savings pool, your emergency fund or ditching debt, YNAB is a tool I’ve used and could recommend if you want to be more disciplined in your budgeting approach.
2. Personal capital
This app has the edge when it comes to showing all your accounts in the one place but with an added focus on investment. The free version is one of the best no cost budgeting tools out there in that it shows all your accounts in the one place, and starts to help walk you down the path of investing if you previously hadn’t considered investing an option for you. I’d previously inherited a belief that investing was for ‘other’ people, equipped with tailored suits and the ability to understand the stock exchange section of a news bulletin rather than using it as an opportunity to go and make a cup of tea or refill their wine glass. Since studying financial literacy, I’ve recognised that investing can be one of the best ways to grow your money long term and there is great power in taking the decision and action to invest now.
Seeing all your accounts in the one place enables you to see all your financial decisions made over time and assess changes you need to make now to change your financial future. This includes savings, loans, credit cards and of course, your investments. And that’s where Personal Capital can be really helpful, with its cash flow analyser tool setting you a budget and develop strategies to reach the financial goals you set yourself through the app. They also have an investment check up tool to help you optimise your accounts, though you should always check that this makes sense for you based on your investment profile. The paid version of the investment tools might be worth investing in over time, though you should also look at other services to figure out which is right for you.
If you’ve thought about what your future when you stop working, the app’s retirement planning feature can helpful in showing you see what that retirement will look like, including if you build in career breaks such as choosing to have kids. I don’t see many apps that have this feature and it’s key that couples and women, who predominantly still take that career break to have children, think about the impact of that choice on their personal retirement account and then plan for it.
Keen to learn more? Read Best budget apps (Part 2) here!