No Budgeting Changes, 2015

A blogger that I follow and enjoy for his personal product reviews recently did a review of a financial product called You Need A Budget.  This product isn’t new to me; it’s been around for a while.  In the post, he invoked the names of Mint, MS Money, and Quicken, so of course I was intrigued.

Also in the post, he gave a rundown of his former money management process and I was startled that it was exactly like my current process.  So I read the rest of the entry with great interest and then went to the YNAB site to read more.

The result?  I’m sticking with the way I’ve always done it with MS Money.  And you know why?  There’s one feature in Money that sucks in Quicken and doesn’t even exist in Mint: Cash Flow Forecast.  And that feature is how I handle my money.

Although my management technique mirrored the blog author’s, after I calmed down, I realized even though I do all that, I do something more.  The three key actions I do are:

  • Put every recurring and non-recurring expense in the Bills Summary feature
  • Put every source of income, recurring and non-recurring in the Bills Summary feature (including tiny things like manufacturer rebate checks)
  • Check the Cash Flow Forecast regularly and make sure the balance is rising

That’s pretty much it.  Cash Flow tells you if your income exceeds your expenses.  If you take on a recurring bill that makes the cash flow become neutral or negative, something needs to give.  The forecast can tell you when you will have the funds to take on a large expense or how long it will take to recover from an unexpected hit.

For me, I have 14 recurring expenses in my list.  They range in frequency from monthly, to quarterly, to yearly.  By keeping an eye on the forecast, nothing is ever surprising.  Since I am of the philosophy to charge everything and pay it off monthly, I just have a catch-all bill for credit card.

That is what YNAB seems to be trying to eliminate is the feeling of “where did the money go?” at the end of the month when the CC bill exceeds what is budgeted.  I can sympathize with that a lot.  Money does have a report, “Spending by Category”, but that is historical (unless you run it for the current month).  To make up for that, I just log my receipts more frequently and I can see where the money is going.  That’s something I’ve said before: keep your numbers in your face as much as possible.  Whether using YNAB, The Envelope Method, or Money, that’s the key: awareness.

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