Creating a Budgeting Tool That Works

Tools Needed In Order to Budget

Now that you are familiar with the envelope system, let’s fast forward to today’s time, when credit cards do exist and thankfully, so do budgeting tools.

Let’s talk about the tools you need in order to budget.

There are many ways to keep track of your spending. Depending on how much work you want to put in or how much money you want to spend towards your budgeting tools, you can choose from any of the following: traditional pencil and paper, using an Excel sheet, or using online tools such as YNAB.

While the first two options are free and the preferred choice for all frugalists, I would like to take the time to point out some perks of paying for an online tool. At our household, we use an online tool called YNAB.

Perks of YNAB


·     YNAB can link to your financial institutions and your accounts. Once linked, YNAB will import transactions automatically, which saves you from needing to manually input every transaction you make, thus saving you tons of time. This also reduces error, since you are less likely to miss documenting a transaction, which then increases accuracy.

·      Since YNAB has access to your accounts, it keeps track of transfers between your accounts. So if you pay your credit card dues from your personal checking account, it will take note of that as a transfer, without affecting your budget.

·      You can categorize your transactions on YNAB the same way you would on paper or on an Excel sheet. However, YNAB has the perk of remembering past categorizations, so that if you have a repeating purchase at “Whole Foods”, for example, it will automatically categorize these purchases as “Groceries” for you. All you have to do is click “Approve”! Trust me, this saves us so much time. After a few months, YNAB will auto-categorize more than half of your transactions.

·      YNAB keeps tabs on your income and spending from previous months. If you ever need to access the data from past months or years, all you need to do is scroll back. YNAB also has great tools under the “Reports” tab. It easily gives a visual of your net worth, your income versus expense, and what main categories you apply your spending to. This is great for visual learners like myself. Plus, you won’t have to spend time making graphs on Excel or making spending reports.

·      You can create GOALS with YNAB. For example, if you have a goal of saving $20,000 for a down payment on a home, you can enter a goal that states you want to save $20,000 within the next year. Then YNAB will constantly remind you in that category whether you are on target to hit your goal. If you are not on target, YNAB will indicate how much more you need to budget in that category in order to hit the target. Likewise, you can also set monthly budgeting goals. For example, if you want to budget $300 in groceries for the month, then you can set that goal. It will remind you when you are under-budgeted, or over-spent.

·     The quick budget tab on YNAB simplifies the budgeting process. The quick budget tab shows you your goal target, the amount you budgeted last month, the amount spent last month, the average amount budgeted, and the average amount spent.


Off course, there is a drawback to YNAB, which is that it comes with a cost. The first month is FREE, however, each month thereafter costs $7, billed as $83.99 a year. But in my personal opinion, it is a hundred percent worth it. We wanted to simplify budgeting so that it was easy. If budgeting is easy, then everyone would be more likely to stick with it. Plus, over time, the work becomes more automated, so we have less work to do and therefore have more time to spend on our priorities, like being with family or traveling the world.

Try to look at the cost this way. If you pay $7 a month in order to stay motivated with saving $300 a month towards that down-payment we mentioned earlier (or towards a dream goal), then isn’t it more worth it that spending time tediously working on an Excel spreadsheet and possibly getting burned out from budgeting?

Of course, if you get fired up over Excel spreadsheets, then by all means – stick with Excel! 🙂