Budgeting: Part 5: Budgeting Software

"If time be of all things the most precious, wasting time must be the greatest prodigality."

- Benjamin Franklin

I suppose this post might disappoint those who are looking for a budgeting software review or a flame war about which product is best, but I need to state what I really believe: your choice of budgeting software won't significantly affect the quality of your household budget, and it's probably better not to spend a lot of time selecting the perfect budgeting software for you.

I'm not dismissing the fact that everyone has particular likes and dislikes about budgeting systems, and I'm well acquainted with how annoying budgeting software can often be. I have used Quicken for 15 years! While it has proved adequate, I am the first to admit it is full of odd quirks, annoying constraints, and baffling limitations. But from time to time I've tried other products, and from my perspective, they just contain a different list of quirks, constraints, and limitations. I'm also quite certain that if I hired some company to create a budgeting software package that did everything exactly the way I wanted, then it would not work the way anyone else would like it to work. Such is the nature of personal preferences.

For each person, there probably is one software package that will be less frustrating to use than all the others. If you are the kind of person who gets easily frustrated by technology, then it's definitely worth some of your time to choose the right one for you. But I wouldn't agonize over the decision. Even the "best" software for budgeting won't make your budget succeed, and even the "worst" product won't make your budget fail. So pick something that works for you and start using it. Don't let an automation tool become your focus.

On two occasions, I searched the web for a couple of hours looking for budgeting software reviews to use as background material for this article. What I found was very interesting and only reinforced my view that many people waste too much time on this decision and are easily manipulated by product vendors. A large number of "reviews" looked like blatant advertisements for particular budgeting software packages, complete with loads of affiliate links on the pages. Even among the less dubious reviews, most of them seemed to focus on extolling one or two particular features with which the author was personally enamored or blasting one or two things that were a pet peeve of the author. If you simply need an overview of what budgeting tools are available, I would start with this post from the Get Rich Slowly blog.

This article is a turning point in this budgeting series. The first four posts attempted to show that the budgeting process is not just about trying to make sure you don't run out of money by the end of the month. It should be an opportunity to take control of your finances and align them with your goals in life. In that respect, the first four posts could be considered motivational, in that I attempted to show that the budgeting process holds deep personal value to enrich your life. I realize that a fairly large percentage of the population has no personal budget and considers budget construction on par with going to the dentist. While I'm not saying it can be made easy and fun, I am saying that the effort will be well worth your time. The rewards are very significant.

Now we need to turn to the "nuts and bolts" of household budgeting. The next few posts will describe how I handle typical budgeting details such as tracking, categorization, overruns, and irregularities. I'm also going to discuss at length the most common mistake that people seem to make with their personal budgeting. I see this same mistake over and over again both on the blogosphere and when I discuss money with my friends. It's easy to correct if you are willing to think in a way that most people are not willing to do. I don't believe there are any silver bullet solutions to most complex problems, but this budgeting tip is about as close as you will find. From what I observe, a sizable percentage of people would benefit tremendously from correcting just this one subtle problem with their budget plan.

Lastly, don't lose sight of the big picture. Remember that people don't create incorrect or irrelevant budgets because they use the wrong software. People create bad budgets because they use bad assumptions and bad numbers. In other words, budgeting goes awry due to factors far outside the realm of technology. I would suggest de-emphasizing the software and spending your time making sure you are using the right assumptions and the right numbers.