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Why I Love My Budgeting Software

My poor dog Sammy leaped over a snow bank the other night on her walk and did something to her paw; she started limping Tuesday night and by Wednesday was crying in pain. Wednesday is our vet’s day off, so we took her to an animal hospital about a half hour away.

The docs there shaved her hairy paw and didn’t find anything; they suspected it might be sprained. They gave her a morphine shot and told us to let her rest and call our vet in the morning. We were on our way 15 minutes later with a bottle of pain reliever to crunch up in her food. Bill: $259.

Ouch. On the bright side, this is one of those occasions that allows me to demonstrate my deep love for both my dog and my budgeting software! I rely on a subscription program called Mvelopes. (Full disclosure: I used to write a paid column for the site on successful budgeters. M & H readers can get a 10 percent discount on Mvelopes by clicking here.)

The beauty of the Mvelopes is that I plan out my spending for the month based on the old-fashioned envelopes system used by my grandparents’ generation. They would get their paychecks and put a specific amount of cash into physical envelopes (food, rent, utilities, clothing) and when the cash was gone, they stopped spending.

Mvelopes imitates this principle but with virtual envelopes linked electronically to your credit and debit cards, checking and savings accounts. I budget $500 a month in my grocery envelope; when I swipe my debit for $50 at the food store, the purchase shows up in a “new transactions” folder. I click and drag it into the groceries envelope, which goes down by $50, so I know I have $450 left to spend on groceries for the rest of the month.

So here’s the thing – I only budgeted $40 for the dog this month. That means I’m $219 in the red on my dog envelope. The beauty of Mvelopes is I can transfer money out of a range of discretionary envelopes, such as entertainment, clothing and eating out – to cover the unexpected expense. So we skip a trip to the mall or the movies, cook at home a little more this month, no big deal.

The bottom line: The money has to come from somewhere. When you match your monthly income to specific spending objectives in a disciplined way, you don’t have to turn to a credit card to cover the unexpected. Mvelopes lets me start with my paycheck in hand and allocate it to cover expenses in the month ahead — instead of spending for 30 days, adding it up, and looking backward at what I did. (And saying, “Uh oh, my next paycheck doesn’t cover what I spent last month.”)

Shifting money around to different parts of your budget as you move through the month is really hard to do with pencil and paper, or an Excel spreadsheet. Mvelopes, how I love thee, let me count the ways…

Forgive me while I wax poetic on another Mvelopes feature: The joy of saving for a quarterly or annual expense month by month, rather than getting socked in the financial jaw when the bill arrives. Let’s say I spend $1,200 a year for auto insurance. The insurance company will let me pay $100 a month or $300 quarterly – for a fat fee. I hate paying fees. It’s no way to get rich. So instead, I set $100 aside each month in the auto insurance envelope, and when the bill arrives, I have the full $1,200 to pay it off.

The software guides my decision-making. Instead of mindlessly looking at the balance in my checking and thinking, “Gee, I have enough dough to go to that new place in town with the girls for dinner tonight! Better buy new shoes so I look super fancy!” — I realize that the money in my checking and savings is not really cash. It’s a resource, and parts of it are already spoken for to pay future bills. That’s not to say I never go out or buy new shoes — I do plenty of both. It’s just that I budget for it in advance. I always know exactly where I stand with my money, and can make adjustments that reflect the way my financial life really is: goal-oriented, complicated, occasionally surprising — but because of Mvelopes, never messy.

And Sammy is doing much better.

How do you track your spending? Do you have a budgeting tool you love? Comment here or email me at laura at laurarowley dot com.

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12 Responses to “Why I Love My Budgeting Software”

  1. Tommy Says:

    Thank you for providing us with this valuable info.

  2. Kathy Kaufman Says:

    I am a follower of Mary Hunt and I know of this, but this is the first time I understand how it works. thanks. Also, I tried something radical last month. I put a second income check right into savings. If I needed that money for bills, I would use by withdrawal of the funds I needed. I saved $600.00 by the end of the month. That was powerful.
    Thanks, Kathy

  3. Edward Iannone Says:

    I had built a 13 month “Check Register” for my business before I sold.
    I’ve adapted this for household use. These monthly Excel spreadsheets, Jan to Dec, plus Jan new year, for looking ahead one month, works like a check register. Income/deposits, and Fixed expenses/payments are entered in every month.

    As cash is drawn and deducted from the bank balance, there is a Descretionary cash control/tracking. I can even include cash balance that should be in pocket at any point. I have not put this feature into it, only for myself. When cash is carried from last year to the new, it will not be accurate in Jan, although I have a method to correct it.

    A separate Recap sheet, totals each “Account”, Deposits, Fixed and Descretionary expenses, with a Chart of account numbers. All are tracked and totaled for the year.

    The check book balance is shown after every entry. Each month will automatically balance with the bank, with only a couple entries, Uncleared checks, and current Bank Balance. Percentages of available funds are calculated as well.

    The user must only create their accounts to be tracked. Mortgage/Rent, Utilities, Card Payments, Auto, Groceries, and ATM/cash draws. Any expense one wishes to track. I have listed suggestions. One can add to and/or delete those.

    Entries during the month are done as the check register is done, but the Account number is entered as well. One can look ahead in any month to see their bank balance, even to the End of December.
    Planned amounts can be entered monthly and followed against actual.

    The problem with so many software programs, they are not flexible enough. When a check or card is used for many items, such as at Walmart, the software does not permit breaking out all the different expenditures for that one payment. Even for cash on a debit card or check.

    The best thing I find is being able to see any future month’s needs and bank balance. If in one month, one has a nice balance, a month or so ahead, that money may be needed. I recently looked at my July Balance, $25.00. I have 5 months to correct that.

    I have posted this in a few places and about a dozen or so people have requested it. I have offered this free to anyone who is interested in trying it. Just contact me at and I can attach the file and instructions to an email. I’m not interested in any fees.

  4. Jessie Inouye Says:

    March 6, 2010

    Dear Laura,

    I think that this might be a very good idea on how to budget my spending every month online. It would be easier to keep track of, and take less time than to do a preadsheet or do by hand. How can I purchase this, how much does it cost, and is it easy to learn?

    I am a widow living on a fixed income now, so this would be perfect for me.



    Hi Jessie: I pay about $7 a month. There are different membership programs. Click on the link in my post to get more info.

  5. Linda Duskey Says:

    I do the same kind of thing your software does by setting aside money in my checking account.

    I set aside $115 a month for car insurance, homeowner’s insurance and property tax. (I took the yearly amount for each of these and divided by 26 since that’s how many paychecks I get a year to arrive at the $115 amount.) I write the 115 in the registry and subtract it from my balance as if I had already spent it and I keep a running total beside it. I do the same thing with a Christmas fund, $50 a paycheck, (and how nice it is to have over a $1,000 money to play with in December!) and an emergency fund.

    I also use actual envelopes by figuring up how much I need to leave in checking with all my funds and for bills – I use a 50 cent notebook to figure it up! – and then I get out cash from the ATM for groceries, gas, entertainment, etc. and divide it up amongst envelopes with those labels. When I have extra money in the grocery envelope, which I usually do because I’d rather budget big, I move it to an “emergencies” envelope for such things as a birthday gift I need to buy for someone or when they take up collections at work, etc., (or a big hot fudge sundae on a stressful week!)

    I’ve been using this method for about 4 years and I’ve tweaked it over time to its present form, but it works well for me and it’s free (except for the 50 cents for the notebook!)

  6. Sara Says:

    Hi, I am very much into making a digital budget. A couple of years ago I made an excel sheet budget for myself. I put my income (monthly and yearly), then I list all my bills and subtract it from the income number (monthly and yearly) and at the bottom it shows how much I have “left over” to save or use to do fun things like shop or go out to eat. I also list my savings account money seperate (that money I never touch unless I need to and I save $30 a week, comes our automatically from ING Direct) and I list my loans (car and student loan) and I list all the ways I can “save money”, like sell stuff on ebay or eat less fast food and something I’ve recently done is quit smoking. So it works for me, I hope someone reads this and sees that it’s easy to do, just list out all your bills and update it every once in a while, typing the update date on the bottom of the excel sheet.

  7. Kevin Says:

    I have been a die-hard ‘tracker’ (reference to LR’s Fast Track to Financial Success 5/13/2010 commentary) for many years (25+). I use Quicken’s ‘Savings Goal’ feature to set up a digital envelope system. Each paycheck gets electronically sliced-and-diced into a multitude of savings goal accounts: one for annual home insurance, another for auto maintenance, property taxes, utilities, rainy day fund, speed-skating travel expenses, charity, and so on. Once funds are moved (credited) into the Savings Goal account they ‘dissappear’ from my checking account balance so my checking account only shows money that is left for miscellaneous purchases (this makes it easy to avoid overspending). As bills become due, the savings goal accounts are debited and the funds ‘magically’ appear back in the checking account balance to be spent for the intended purpose. This approach has allowed our family to pay off the mortgage, pay off the car (well, pay cash for the car), pay for daughters education at a local university and the wedding that followed, and save a substantial amount towards retirement, all on a modest single-income (Mom home-schooled daughter through high-school). Being debt-free at 55 is a marvelous way to prepare for ‘the golden years’, and minimizes the stress one might feel in uncertain financial times. Do something for yourself and your family today and take charge of your finances . . .

  8. Nick Says:

    My wife and I found mvelopes (the online tool described here) ~8 years ago. As a engineer I, of course, I have tried several tools including Quicken, and spreadsheets that I made myself and none came close to mvelopes.

    It is the easiest to use, takes little time after the initial set-up, since it automatic it catches errors we inevitably make entering our expenses, and both my wife and can can help with the tracking since you can use it from any computer in the world with on-line access. I have found promotions and a check incorrectly debited from my account so it has easily paid for itself.

    Some will say that $8-11 for this service is expensive since they can buy a piece a paper and do it all by hand, but the time savings and greater accuracy of this tool are worth every penny. Also, since it is a subscription if you have a problem you can always call their customer service (which is excellent) and you get free upgrades automatically as they improve the tool.

    Hi Nick: Thanks for the comment. You’re preaching to the choir! –L

  9. Tomas Says:

    Have you ever heard of YNAB?

  10. Tom Says:

    I just don’t see how you can budget on a monthly basis. Why this arbitrary time period? My expenses can be seasonal or vary month to month or year to year. New things are coming up all the time that are unpredictable. I like to do a huge non-perishable grocery buy at a big-box store every 9-15 months to replenish my stockpile of dry foods, canned goods, toilet paper, etc., and then just buy produce, meat, and dairy every few days. I buy clothes, computers, car repairs, etc., whenever they are needed, not according to any budget. I can’t do without these things when they are necessary. I don’t buy more than is needed and I look for the best deals. This is why credit works great. I put everything on a credit card and I never have to worry that at some particular date I won’t have enough to cover my needs. If I go over “budget” (i.e. spend in excess of my income) one week, one month, or one year, it doesn’t matter. I pay off what I can when I can. If I start to carry a balance, I strive to pay it down. If I have surplus, it goes into a brokerage account. I’m frugal to begin with. I don’t buy frivolous things. It seems to me that you only need a budget when your income is significantly in excess of your necessary expenses and you have to manage your “play money”. But if you don’t have any “play money”, then a budget is kind of worthless. To put off buying necessities until you have income to cover them is counter-productive. Buy necessities when you need them and pay for them when you can. Just be aware of when you start carrying debt, whether it is growing or shrinking, and if you’re on a sustainable path. Doing that has served me very well over the years. I keep track of my finances, but am not bound by them. Income is not specifically earmarked. I’m free to take the dog to the vet AND go to a nice restaurant this month (because the dog needs meds NOW and because it’s our anniversary NOW), and maybe next month will be a more frugal one or maybe in five months from now when I just so happen to have less necessary expenses. I’m not going to live on Ramen just because the property tax bill happens to be due this month. Widely variable expenses smooth out over time. It’s the overall trend that’s important. Also, saving up doesn’t work in a highly inflationary environment like we have today. Better to put it on credit and pay it off with depreciated dollars than to save up ahead of time and pay a higher price later. That would change if we ever got off this fraudulent fractional-reserve fiat money system, but until then, it pays to use credit.

    Hi Tom: I enjoyed this intriguing comment. I think this might be more of a style issue — some people are inherently planners (like me) and it makes them feel good to have control of their money; some are more spontaneous and don’t like to feel beholden to a budget. I totally get this — but you pay for it in interest and fees. My theory is that those interest and fees actually add up quite a bit of money over a couple of decades, and can make a difference in things like paying college in full for my kids or funding some nice travel in retirement. But I can understand why other people would trade off those things for the ability not to be constrained by a budget.

    On the other hand, I find my budget freeing, not constraining. I have seasonal, quarterly and annual expenses as well — and long-term expenses such as car purchases. For instance, we pay our homeowners and auto insurance once a year so we don’t have to pay an extra fee for the monthly or quarterly payment plan. I take the total, divide by 12, and put that amount into my virtual envelopes monthly. When the bill arrives, I have the cash to pay it, and it’s been earning interest all year long. (This requires that I manage my money off the software and not the actual checking account, because it looks like it has more money in it than it actually does, since a portion of it is earmarked for these future payments.)

    We’re also saving cash for a new car. We had a ’96 minivan that was on its last legs so we did the Cash for Clunkers program in 2009 and bought a new Kia (we got $3,500 trade-in for the minivan and $2,000 cash back from Kia). I figure the car will last ten years — hopefully longer — but in any event, I put money aside in the “car purchase” envelope every month so when we need to replace it we can pay cash for the car.

    So again — if I have a month where the dog needs to go to the vet and I want to go out to dinner for my anniversary, I can do both. I jsut shift some money from the car purchase envelope and replace it the next month.

    Here’s why I don’t use credit to manage my cash flow: I have seen too many of my friends and family members sidelined by an unexpected job loss or a medical issue. I work for myself, so if something happened to me, my income would disappear, instantly. If it happened to be a month where I loaded up on credit, with a plan to pay it down the next time I was flush and the flush month doesn’t come, what happens to my family? Having no debt except for a small 30-year, fixed mortgage and keeping three months of basic living expenses in the bank gives me financial peace. So when my income fluctuates, I don’t worry. And my budget helps me to make sure I’m spending on the things that I value, and that make me happy. –Laura

  11. Tricia Says:

    Is there a sample tutorial so I can see if this is the type of budget that will work for my family? It sounds like what would work for us but I am still a bit confused. You did a very good job explaining, I am just a bit confused. Thanks.

    Hi Tricia: Yes, the 30-day trial is free and there are a number of different tutorials on the site when you sign up. If you don’t like the service, just be sure to cancel before the 30th day. It’s easy to cancel – just hit “Live Chat” and let the operator know you’d like to cancel the service. Live Chat is available 24/7. See this link for more info:

  12. Chris Says:

    I like but have found some features frustrating – it looks at your net worth and you can even include your house with a zillow estimate as part of it.

    The frustrating part is it double registers your accounts sometimes. It also sometime incorrectly allocates a purchase (from food to entertainment or something).

    I think these type of websites will improve with time.


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