Today, we had a budget seminar at work where I found out that only 2 out of 40 people in our company used an online financial organization/budgeting software to manage their finances. One co-worker and I are both using Mint.com. Our seminar leader mentioned Mint.com as being one of the leading tools available to help young adults like us at our company manage our finances. I agree with him in saying that Mint.com just flat out rocks. The software itself is pretty run of the mill and not overly exciting. The exciting part is the result of tracking your spending, getting on a budget and getting your financial life organized.
Many of my co-workers seemed interested in learning more about budgeting and one co-worker asked me after the session if I would answer some questions about Mint.com for her, as she is planning to start using it. For any of you who also want to know a little bit more about this neat way of managing money, here’s a little guide on how to get started using it and how to make it work for you.
What You Can Expect From Mint.com
First off, we’re going to take look a this demo site where you can use the functionality of Mint.com without actually having an account. Each time you log in to your account, this overview screen will pop up:
On the left side of this overview screen are all your financial accounts. If you connect all of your accounts, this will provide you with a pretty comprehensive overview of your financial situation. In business terminology, this left side is really your personal balance sheet or a list of your assets and liabilities. The bank accounts, investment accounts and property make up your assets and the credit card and loan balances make up your liabilities or debt. At the bottom, a calculation is made which starts with your total assets and subtracts your total liabilities. The result is your net worth.
To make your time investment in Mint.com worth your while, I recommend linking all of your accounts to it. That means every bank account you have, every credit card you have, every single loan you have and all of your investment accounts and property. You’ll probably be amazed at what your personal balance sheet says once you link up all of your accounts. I know that after seeing a negative net worth of several thousand dollars, I really woke up and the pain of being in debt really hit me.
In the middle of this overview screen is a brief glance at your budget for this month and how much of it has already been spent so far this month. It’s a glimpse of what we’ll see on the budget page, which we’ll touch on in a bit.
Budgeting with Mint.com
To create and/or manage a budget with Mint.com, click on the Budget tab at the top of the page. You see here an example of a very simple budget.
Each line represents a budget category. There are no right or wrong budget categories. Although Mint.com does come pre-loaded with many of these, you can make your own and completely customize your categories. Some normal categories that most people have are:
- Mortgage and Rent
- Bills and Utilities
- Car Insurance
- Health Insurance
- Internet and/or Cable
- Cell Phone
- Restaurants and/or Fast Food
- Alcohol and Bars
To start out, create all the categories that you spend money on and make a budget line item for each, with a specific dollar amount allocated. Make sure that you don’t leave any areas of spending out. Every category that you spend money should be added. No money that you spend shouldn’t have a category either. Also, make a budget category for all of your income sources. This could include paychecks, interest income, rent income, etc. Make sure all of your estimated income is budgeted for. If you don’t know your exact income, do your best to guess what it will be.
Once this is done, take a look at the total budgeted spending amount for the month on the top right of this page. Hopefully it’s less than what your estimated income is. If it’s not, don’t worry because you’re very normal. But for the sake of getting ahead in personal finance, I’ll say you have a lot of work to do.
This is what a budget is. It’s a list of your estimated income and your estimated spending for the entire month. How does it look? Pretty cool, huh?
We’ve Only Scratched the Surface
This only explains the overview page and the budget functionality of Mint.com. Other important areas of this online tool are the Transactions tab and the Trends tab. The goals tab and the investments tab are really optional beyond that and I don’t use them.
An Opportunity to Explore These Concepts Deeper
If you’re interested in getting the full Mint training, I created a video course, called “How to Use Mint to Track Your Finances and Win with Money“, digging deeper into it.
Category: Getting Started with Mint.com