The ol’ adage of “you can’t improve what you don’t measure” is certainly true in the financial health and literacy department. A big part of setting up a successful financial plan that fits your needs and circumstances starts with understanding where you are today.
This means seeing where money is coming in, where it’s going out, and how much you have as a surplus (or savings) each month. In a single metric to track your financial health, I’d likely point to using Net Worth.
What You Own – What You Owe = Net Worth
Lucky for you, dear reader, there’s never been a better time to create a monthly budget and track your net worth to make sure you can afford those Balenciaga’s (for those hype beasts out there, you know who you are) or a new vehicle or vacation plans.
There are a number of tools out there designed to help you keep track of your finances so you can see where you are today, and set budgets and goals for the future.
Types of Financial and Budgeting Tools
In most cases, the tools that you’ll want to use are web applications that integrate with the various banks, loans, and investing platforms that you have. They aggregate all the information collected from your different accounts and provide you with a holistic financial picture complete with a net worth calculation.
How do they do this? You will need to provide your login credentials to the tool or tools of your choice so that they can pull the appropriate transaction and balance information from each of your accounts.
For example, if you have a checking and savings account with Chase, and you have a ROTH IRA with Fidelity, you’ll provide your username and passwords for Chase and Fidelity to the online financial tool so that it can gather your information from each of these institutions respectively.
Concerns about security and sharing your data? It’s definitely something you should consider when choosing a tool, and also when using the internet in general. I’ve decided that I trust the financial tools that I use and understand the potential implications of sharing my usernames and passwords.
In any case, I’m going to take this moment to get on my soapbox and ask you to please, please, please, use a Password Manager and make sure you have a unique and random password for each and every account that you create. Yes, your dog is the cutest with the easiest name to remember, but that’s also incredibly easy for a nefarious individual to compromise.
Best Tools for Budgeting and Getting your Financial Picture
In order of which tools I prefer, here’s the SurgeonJourney Approved (TM) list of online and offline tools for tracking your finances.
Why this list, you may ask? I’m going to go through each one to explain my pros and cons. While this is the definitive SurgeonJourney list of finance and budget tools, you may have a different tool of choice depending on your needs and priorities, like security, for example.
Personal Capital – The Investors Choice
I’ve been using Personal Capital for the last few years and I can’t say enough good things. It’s focused primarily on tracking investment performance and can also help with portfolio composition analysis. Because the tool is built so that you can get a clear picture of where your investments are and how they are performing, I check multiple times a week to see how my net worth is doing.
I should note that while I look at Personal Capital a few times a week, I don’t make changes to my investment plans based on day to day changes in the market – that is bad (I’ll dig into investing strategies in a future post!).
Pros for Personal Capital
- Great investment analysis and tracking tools
- Intuitive UI and functional desktop and mobile applications
- The financial tools are provided free of charge because they want you to use their Wealth Management services
- Because Personal Capital is trying to sell you a service by offering their wealth management advising, it’s less likely they’re trying to sell your data to marketing partners
Cons for Personal Capital
- Budgeting tools and goal creation isn’t as robust as Mint
- Transaction categories are limited and I’ve found automatic categorization to be less accurate than Mint
- The financial institutions that are available to connect with are slightly more limited than Mint, though in practice this really isn’t an issue
- Online tool requires that you share your financial account credentials with Personal Capital
While there are some draw backs, Personal Capital fits most of our needs and we have linked accounts from banking to investing to loans, even our house and cars. It’s a great way to get your complete financial picture in one holistic view.
Mint – The Budgeting Incumbent and Intuit Behemoth
Before I started using Personal Capital, I was on team Mint for years. It’s one of the original financial aggregation tools to gain broad appeal and does an excellent job with account integration. It’s primarily a budgeting and goal setting tool and it excels at both of those tasks.
It has a friendly interface and solid web and mobile applications, making it easy to track your finances. You can even set alerts for low balances and also it will track when bills are due.
Pros for Mint
- Excellent budgeting and goals tools, this is what I started with to set up my monthly spending and savings plans
- Great integrations with a plethora of accounts from banking to wealth management and more
- Bill tracking and payment through Mint if desired
- Free credit score provided quarterly
Cons for Mint
- Investment tracking is a feature, but not as robust as Personal Capital
- Investment charts still use Flash and won’t display for most users with modern browsers (like Chrome)
- You are the product, as in your data is most definitely sold and shared with marketing partners of Mint and Intuit
- Online tool requires that you share your financial account credentials with Mint
Given that I’ve shifted our focus to investing, I would recommend Mint after Personal Capital. If you are just starting out with budgeting and setting goals, give Mint a shot. I will say that be aware that the information you provide to Mint is absolutely shared with partners. While the offers you will receive are tailored to you based on your accounts and spending habits, it’s up to you whether that’s worth it to you.
A Spreadsheet – The Manual Option
For full control and complete customization, consider using Google Sheets or Microsoft Excel (don’t use Numbers, just don’t) to keep track of your finances. It’s definitely not the easiest and it’s probably the most time consuming, but going through the exercise of crafting a spreadsheet budget will help you become intimately familiar with your finances.
Additionally, building the discipline to enter your transactions and tracking your investments manually will have you more attuned to your spending than most. Do what works for you.
Pros for Spreadsheets
- Infinite customization, very flexible to fit the format and needs of your financial picture
- Templates are available online to help you get started
- You can keep all your account information private, you don’t need to share credentials to gather transactions and balances
- Most banking and investment accounts offer the option to download transactions to spreadsheet, making it easier to move transactions into your budget and tracking sheet
- The self satisfaction of creating and maintaining your own spreadsheet shouldn’t be underestimated
Cons for Spreasheets
- Very manual, you’ll need to have the time and discipline to enter in transactions and investments monthly
- Charts and graphs will need to be created manually
- No automated investing and savings recommendations
While there’s a big time investment to making your own financial tracking spreadsheet, you’ll have a deep understanding of your spending and saving habits after you do this for a few months. There are some great resources to create your own if you’re interested! I’ll be posting some resources I like to use in the future.
YNAB – The Alternative, but also Great, Budgeting Tool
I’ll admit, I tried really hard to use You Need a Budget, and I just didn’t get it. It’s probably because I seek immediate gratification (I know, #millennial, sue me) and the logic of YNAB didn’t make sense to me; but I don’t want my experience to stop you. I’ve had friends use YNAB to great success and it can really help with wrangling expenses and debt if that is something your struggling with.
The idea is that you allocate every dollar in each month to a job. Whether it’s for groceries or a car payment or entertainment, every dollar should have a purpose and be put to use. That way, you don’t need to check whether you have enough for X expenditure, because you’ve carefully budgeted all your income and expenses for the month.
Pros for YNAB
- Amazing budgeting tool, website has helpful tutorials to get started
- Great for getting out of the paycheck to paycheck cycle, or paying down debt
- Builds budgeting and spending discipline
Cons for YNAB
- No investment tracking, for budgeting only
- Budgeting paradigm might not work for everyone
- YNAB isn’t free, but this may also help make sure you use the tool
Perhaps I didn’t give YNAB enough of a chance, but again, don’t let me stop you from trying out YNAB. It can really work wonders and I do recommend you giving it a shot to see whether it works for you or not.
It’s Not the Tool, It’s How You Use It
In the end, it’s not what you use, it’s how you use it, or whatever that old saying is. Understanding your earning and spending habits is critical to building a healthy financial foundation for your future. This can start while you’re in medical school and building the skills and discipline for budgeting and saving can never start soon enough.
By the time you’re an attending, you might earn a high income, but without the spending and saving habits you develop early – making $300,000 and living paycheck to paycheck isn’t where you want to be. Use investing and budgeting tools to start early and stay ahead of the game.
I’ve suggested a few tools above, let me know in the comments which ones you’ve tried and what works best for you!
-SurgeonJourney
Excellent post! I think you did a nice job breaking it down. I use a combination of Personal Capital for investment tracking and YNAB for day to day budgeting. PC is fantastic, but their random calls for money management are annoying AF. It’ll be clear when one’s net worth>100k. Still a very robust tool though. YNAB makes it really easy for me to do stuff on the fly and gives me a very clear idea of where my money is going each month. The “age of money” concept is really interesting. Building wiggle room in your life is important. Kinda nice to see that concept play out over a few months of use. Took a while to get used to the interface, but it has helped me a lot. For me, worth the small expense.
Thanks, LineMonkey! I’m a big fan of Personal Capital – agreed that their money management calls are super annoying. I’m mostly fine putting up with it since I like the tools for free, but there’s no way I’m ever paying 0.8% AUM for their robo advising. I took one of their calls once just to hear their pitch and it was basically pitching an even weighted S&P index fund. Not earth shattering and not something I’d necessarily want to use myself. I’ll have to do some more research on it.
I’ll have to give YNAB another shot! I definitely need to run through the tutorials again. It’s just such a different concept than budgeting via Mint or PC – I didn’t get it the time I tried to use it. Thanks for checking out SurgeonJourney!