When the world is crazy, focus on your spending

Steve Merrell |

Q: The COVID-19 pandemic is really throwing my wife and me for a loop. Our income has dropped and our savings are shrinking. With everything going on, how can we keep our financial goals on track?

A: We all face a range of issues in our financial lives. Some, like the stock market, we have no control over. Others, like how much we earn, we can influence, but not control. Some areas, however, are largely within our control, including how much we spend to maintain our chosen life style. The trick to keeping your financial life on track when the world turns upside down is to focus extra attention on those areas where you have the greatest control, including spending.

If you think about it, this is completely opposite from the way many people behave. We have entire cable TV channels and newspapers and magazines devoted to covering things we cannot control (i.e., “the markets”), but relatively little is written about budgeting and financial planning. No wonder so many people grapple with paralyzing financial stress. Too many of us focus too much on things outside our realm of influence.

Fortunately, a number of apps have been launched in recent years to help people take control of their financial lives. Three that I really like are Mint, YNAB, and EveryDollar. All three are easy to use and work across multiple platforms including Apple, iOS, Android, and Windows.

Mint is one of the most popular personal finance apps on the market. It was launched in 2006 by Intuit, the same parent company that brought you Quicken and TurboTax. By linking with all your outside accounts, including bank accounts, brokerage accounts, mortgages, loans and credit cards, Mint tries to give you a complete up-to-date picture of your financial position. For many people, this is exactly what they need, but if you are trying get your arms around your spending, everything else can be distracting.

For me, Mint’s automatic expense tracking makes things a little too easy. When I am trying to help a client understand where they are spending their money, it is helpful to have them manually track their spending for a month or so. When they have to manually enter every transaction into the app, they suddenly become very aware of where their money is going.

Mint is free, but it is also full of annoying ads for things like credit cards and mortgage loans. If you don’t like ads, you probably won’t like Mint.

YNAB is short for You Need A Budget. As its name suggests, YNAB is all about getting your spending under control. It is based on a principle called zero-based budgeting which means you start your budget at zero and intentionally allocate every dollar you earn to a particular budget category. (In contrast, Mint builds a budget based on past spending patterns. You can modify the Mint budget after it is created, but you don’t start from ground zero.)

YNAB has a simple, intuitive interface that follows a clear step-by-step process to help bring your spending into line with your goals. YNAB is not a full financial package like Mint, but it is very effective at building and tracking a budget. On the downside, YNAB requires a subscription. However, paying $11.99/month or $89/year may be worth it to avoid the annoying ads that plague Mint users.

EveryDollar is part of the Dave Ramsey family of products and services. It has a free version and a paid version ($129/year). Like YNAB, EveryDollar’s primary focus is on helping you control your spending. It starts with a zero-based budget and its interface is simple and intuitive.

The paid version is similar to Mint in that it allows you to link all your accounts to the app and to automatically download bank transactions. In addition, the paid version allows the user to access other Dave Ramsey content including his “Baby Steps” approach to building a solid financial foundation and his Financial Peace webinars and online content. If you decide to use it, I suggest you start with the free option and manually enter your transactions. After a couple of months, you can switch to the paid option and allow the app to update itself automatically.



Steven C. Merrell  MBA, CFP®, AIF® is a Partner at Monterey Private Wealth, Inc., a Wealth Management Firm in Monterey.   He welcomes questions you may have concerning investments, taxes, retirement, or estate planning.  Send your questions to: Steve Merrell, 2340 Garden Road Suite 202, Monterey, CA  93940 or email them to steve@montereypw.com.