Several years ago, a strange trend emerged in the personal finance world. Using a budget started becoming something very close to cool. Until that time, the mere mention of the word "budget" brought looks of dread to most people’s faces. What seemed to turn the tide was when budgets went online.
Quicken Simplifi and several competitors are online budget "pure plays" in that they link to your bank, credit card, and investment accounts, importing transaction data from those accounts automatically. There are hybrid budget tools as well, such as youneedabudget.com, which provide online budgeting but do not link to your financial institutions. You can download bank transactions with youneedabudget, but not automatically. It’s designed for those who are concerned about the security of linking to their accounts.
Speaking of security, pure online budget tools point out that they use "bank level security" — the same approach your bank uses when providing you with online access. Most are also "read-only" services, meaning you can see your bank balance, credit card, debit card, and check transactions, and investment performance, but you can’t actually move any money around. If you can’t take any money out of your accounts, neither could a cyber crook. Adding to the security of such tools is the fact that linking to your financial institutions does not require your account numbers — just your user ID and passwords.
At the Bell household, we used to use Mint until it shut down in 2024, and we now use Quicken Simplifi. We have never had a security issue.
To take your household budget online, here are the first three steps.
Register
Opening an account requires only an e-mail address, your country of residence, your zip code, and a password. Whereas Mint was free, many of today's online budget tools charge a fee, so you'll need to take care of that.Link to financial institutions
Next you’ll be asked to link to your bank, credit cards, and if you’d like, your investment accounts. That way, transactions can be automatically pulled into the tool (which takes a lot of the pain out of the budgeting process).Set up a budget
The prime value of a budget is that it gives you the information you need to manage your cash flow. And one of the prime values of an online budget tool is that you can access your budget from anywhere there’s Internet access. Heading into a grocery store? Use your online budget tool's smartphone app to quickly see how your actual grocery spending so far this month compares with your grocery budget. This is the key information you need to manage to the number — to make conscious, proactive, informed spending choices that help you to stay within your budget.
A common question from those who are new to the budget process is, "How much should I budget for groceries, clothing, and all the rest?" The SMI website has recommended spending guidelines based on four household sizes and nine different annual incomes.
Use these guidelines to help you set up a budget.
Once your categories are set up, click the "Transactions" tab where you should see all of the transactions the tool has pulled from your bank. Go through the list to make sure the categories are the same as the ones you chose in the "Budgets" tab. If you want Starbucks’ expenses to be part of your "Entertainment" budget, you’ll need to change your budget tool's likely default category, "Coffee Shops," accordingly. The good news is that when you click the "Edit Details" tab for a given transaction and change how it’s categorized, you will ask whether you want all such transactions categorized that way — a big time saver.
Next month, we’ll see how to set up your paycheck, enter cash transactions, and more.
