Where Does It All Go?

Budgets are not for everyone.  That may sound like blasphemy coming from a financial advisor, but let’s face it, few people enjoy keeping a detailed budget for living expenses.  Indeed, the traditional idea of “line-item” budgeting does not work well in our household.  Keeping track of money spent on necessities like gas and groceries does not seem like a good use of time for me.

However, I do believe that it is vitally important for us to know where our money is going.  In addition to the obvious need to spend less than we make (regrettably not so obvious to many Americans), there is the idea that where we spend our money says a lot about us and our priorities.  If I end up spending a lot of money on things that aren’t important to me, that’s a problem–my actions are not aligned with my values.

While we’ve always done a good job of saving, I was recently surprised  by the amount of money that was being spent in certain “lifestyle” categories.  How did I know this if I don’t keep a budget  spreadsheet?  Easy.  I started using Mint.com.  This free site is owned by Intuit, a company better known for products like TurboTax, Quicken, and QuickBooks.  The basic idea is that you give Mint access to your accounts (banking, investments, credit), and it aggregates the data in real time.  Mint has been around for awhile, but if you haven’t tried it recently, I encourage you to give it another shot.

Six month ago, I spent about five hours (spread over two days) to set up all my accounts with Mint.  I know that sounds onerous, but it’s a one-time investment that will provide you with a lot valuable information going forward.  Frankly, I had tried to use Mint several times over the last five years without much success.  The reason:  I didn’t put forth the initial investment of time.

The tools I find most useful on the site are those related to spending.  I can look at a pie chart for each month and know exactly where the money is going.  It is possible to examine trends in spending from both a category view and from a specific merchant view.  Another great feature is that it provides me with electronic reminders of when bills are due.

Now that the initial work is done, I probably spend less than thirty minutes per month on “maintenance”.  This is certainly manageable and I love the fact that I can easily see the “big picture” in one place.  One word of caution…Mint also provides users with on-demand net worth updates.  If you decide to use Mint, don’t spend valuable mental energy worrying about daily fluctuations in your net worth.  Remain disciplined and stick to your long-term investment plan.  Do the little things well (saving regularly, investing intelligently), and the big things tend to take care of themselves.