The term budgeting is often used loosely to refer to different types of money management approaches. It’s important to understand what budgeting is and what it isn’t in order to understand the difference between Kualto and other personal finance tools like Mint or YNAB.
I found this great article written by Matt Becker over at Mom and Dad Money, that does a great job of explaining the difference between budgeting and expense tracking.
…in its purest sense keeping a budget means that you set hard limits on your spending. As an example, if your monthly grocery budget is $500, then you don’t allow yourself to spend more than $500 on groceries in any given month.
My problem with budgeting is that it’s not a flexible approach. It’s not realistic because there are always unexpected things that happen that cause us to go over our limits and “break” our budget. Then we feel guilty about not sticking to the plan.
On the other hand… Continue reading
3 Reasons Why Budgeting Sucks
It is said that about 70% of lottery jackpot winners lose everything within two or three years and yet the vast majority of those with money problems are under the false impression that what they need to fix those problems, is more money.
The truth of course, is that if you don’t know how to manage the money you have, getting more is only going to result in you wasting more of it.
Everyone understands this and yet most people don’t have a system for managing the money they make.
I think part of the reason is that traditional budgeting just sucks.
- It’s not flexible or realistic. It forces you to create a neat little plan that rarely works out as written. Why does it rarely work? Because life isn’t neat or predictable.
- It makes you feel guilty. When things don’t go as planned–which is inevitable–you feel like crap for failing at budgeting. Oh well, better luck next month!
- It makes you feel poor. For those of us who don’t like to feel so restricted, traditional budgeting can be painful.
This article and the accompanying spreadsheet, will provide you with an alternative way to manage your expenses that isn’t painful.
It will show you an approach to budgeting that is flexible, realistic, fun, effective, and that doesn’t require you to become a boring, miserable penny pincher. Continue reading
The envelope budgeting system most people are used to using makes you write down your monthly income and then list out all of your spending categories and what you spend on each one, per month. It also makes most people hate budgeting, and for good reason.
Here are some of my main problems with that system…
Who in the world spends on a monthly basis?
Do you get paid monthly? Do you do monthly groceries? Most of us get paid semi-monthly or bi-weekly, we may do groceries once a week, and have random one-off expenses here and there. A system that forces you to think in terms of monthly spending just isn’t natural.
Envelope budgeting is not very flexible.