Online banking, budgeting software, and personal finance apps have made money management easier than ever, allowing users to categorize and track monthly expenses in a streamlined way that wasn’t possible with excel or the paper balance sheet. Still, good budgets are famously hard to create and even harder to stick to.
Other than a few expenses that happen on a regular basis like your car payment, housing expenses, or student loans, it can be hard to predict how much you’re likely to spend on variable expenses in a given month. August or September mean back-to-school gear for the kids. December is gift-buying time. Summertime vacation? Your monthly budget is shot. It’s often difficult to determine how much money you will use for discretionary spending.
While budgeting tools are definitely useful, what’s ultimately most important is that you have a sense of your overall saving and spending habits. How does your monthly income balance out against your monthly expenses?
If your spending — or take-home earnings — come from more than one source, it can be hard to keep track of your net savings.
It’s always been a part of our ethos here at Personal Capital that a simple budgeting tool isn’t enough — the key to mastering your finances is transparency and having a holistic view of everything related to your money — your spending & saving habits, your income sources, everything. In this article, we’ll show you how to create a realistic budget that you can stick to with the free tools available through the Personal Capital dashboard.
Having a holistic view of your finances in one centralized location is a great first step to mastering your household budget.
Personal Capital’s dashboard allows you to plug in all of your investment and bank accounts — checking, saving, credit cards, 401k, 529 accounts, loans, investments — so you get a real sense of how your bottom line has moved by the end of the month. What do all of your monthly expenses — the mortgage, bills, student loan payments, car payments, groceries — look like against all of your earnings?
How to Budget Using Personal Capital
Your monthly income vs. monthly expenses stats are front and center on your dashboard when you log in to Personal Capital. You can flip back and forth between viewing your income and viewing expenses, and take a deeper dive into each for a more detailed view of your deposits, income, and transactions.
You can look at transactions from each of your financial accounts, adjust the time frame, and see which expenses or income take up what percentage of your personal budget. A bar-graph also shows income-vs-spending month by month. Knowing your spending and saving habits, and understanding where your largest “hot spots” are is a great springboard for getting a handle on your household budgeting.
This detailed view of all of your finances and transactions will also allow you to determine a realistic monthly budget number: it’s easy to list off all your fixed expenses like rent, car payment, student loans, and the like, but it’s harder to get a handle on all of the variable spending that happens every month on your different cards and from your different accounts.
On the mobile and tablet apps, spending is shown in the “Budgeting” view: A circle chart depicts your transactions by type (ATM withdrawals, groceries, bills, etc.) so you can see which transactions account for what percentage of your monthly budget.
If you want more control over organizing your transactions, Personal Capital allows you to categorize them either in general groups like “Entertainment” or “Food,” or in customizable fields, like “Fido’s dog food” or “Yard Maintenance.” If you charge work expenses to your personal accounts, you can label transactions as reimbursable so they won’t count against your household budget.
With a 360-degree view of all spending and all income, you can focus on the most important part of responsible budgeting: ensuring that you are saving more than you’re spending and investing your extra money.