Wednesday Website #2: Mint.com

Here it is: the number one website for keeping track of your money - and best of all, it's free!

I discovered Mint about a year ago, and it has made my life so much easier. The basic premise of the site is aggregation of your accounts. You enter your online login information for your banking, loans, or other financial accounts, and then Mint combines them all into one easy to use tool. This is not a paid endorsement, I didn't get any freebies (other than the use of their site, which is always free) - it just has worked wonders for me.

There are a few areas where Mint is very very helpful. I find numbers 4 and 5 below to be the most helpful.

1: Categorizing your spending.
Mint automatically categorizes all transactions in your transaction history into different categories. For example, a credit card charge at (insert grocery store name here) will automatically be categorized as groceries, or food and dining. A trip to Shell will be categorized as gas. When these are categorized, you can view your expenses as part of a whole - do you spend 1% or 10% of your money on gas?

2: Tracking your spending over time.
Mint also allows you to compare your spending from month to month or year to year. You can see where your expenses have changed.

3: Compare your spending to others.
By anonymizing your data and others on the site, you can compare your spending habits to other people in your city, region, or nation-wide. If you see that you're spending $500 more per year on auto insurance than the average person, you can take action to try and find cheaper rates.

4: Simple, easy budgeting.
The best feature on Mint is the budget tool. Remember that plan you came up with in Step 3? Well here is where you make it nearly automatic and incredibly easy. Enter your budgeted amounts into Mint's categories (groceries, gas, insurance, etc) and then relax.

That categorizing aspect I mentioned above? It comes into play here. When you buy groceries, it will automatically deduct that amount from your budgeted amount. You can see how much you have left, in relation to how much time is left in the month. You also have the option to roll over budgets from month to month, so if you spend $400 out of $500 one month, you get an extra $100 to spend the next. Or, conversely, if you overspend one month, it can deduct it from the next month's budget.

5: Alerts
The last really helpful feature Mint offers is the ability to set alerts. You can have these alerts sent in an email or as a text message. You can set alerts to tell you when you have a low balance, when you exceed your budget, when bills are do, or a whole host of other important things. That way, if you exceed your 'shopping' budget for the month, you can get an email to remind yourself not to spend anymore until the next month.

Step 3: Building a Budget for Busy People

In Step 1, you created a list of every account you have - both assets and liabilities.
In Step 2, you checked your credit report to make sure everything was correct.

Now that you have a handle your current and past financial transactions, Step 3 involves creating a plan for future transactions. Having a plan is critical to getting your finances on track. There are thousands of cliche statements about having a plan - failing to plan is planning to fail, a man who does not plan long ahead will find trouble right at his door, a good plan today is better than a perfect plan tomorrow.

Ok so you get the point. Now, some people call their financial plan a budget, some people who don't like the word 'budget' call it a spending plan. Call it whatever you like - the important thing is that you make one!

Luckily, I have found one of the best (and easiest) ways to create this plan. Go to this website and download the spreadsheet by Michael Ham. Fill in as much information as you possibly can - income, debts, retirement goals, plans for buying things in the future, utilities, health insurance (if you are lucky enough to have it) - anything you can think of. If you think you will die without your "eating out" money, or going shopping, by all means add it in. The purpose of creating a budget is not to deny yourself the ability to spend money on things you enjoy. The purpose is to make sure that you can afford the things you want to do and aren't going into unnecessary debt to finance your lifestyle.

Don't forget to budget for emergency savings, either. Without this cash buffer, you are all too vulnerable to unforeseen problems and emergency expenses, which can make you all too dependent on credit cards, or worse, pay-day-loans. You need to have cash set aside in case your car breaks down, in case the air conditioning or heating breaks, or whatever else might happen.

Now, if you are anything like me, the first time you enter your information into the spreadsheet, you'll be in for an unpleasant surprise. If you haven't been saving for retirement, and you haven't been saving for an emergency fund, and you have loans in forbearance, you've probably had more than enough money to finance habits like going out to eat with friends, buying nice wines, shopping - whatever the case may be.

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But if you really want to get a hold of your financial future, you need to be realistic. The spreadsheet has a little number at the top that will tell you how much of your income you have left on a monthly basis. If this number is in the red, you are financing your lifestyle through debt - which is simply not an option. You need to play with the numbers - perhaps spend less on restaurants or shopping in order to build up a cash buffer or save for retirement. The loss of the instant gratification of a nice dinner will be more than made up for by the peace of mind you will get by knowing your financial future is protected.

Like that proverb says, a good plan today is better than a perfect plan tomorrow. Even if your situation changes, starting with a plan now is the best thing you can do. You can go in and change your budget every month if you want, but the important thing is to know how much money you have coming in, versus how much you have going out. If you like going to lots of sporting events or concerts, and wonder why you are always scrambling to pay the rent or your credit card bill, this will help you figure it out.

Try to stick to your plan for a month, and see how it goes. Planning for the future is the best way to get ahead!