Back in early 2010, my older sister me showed me how and her husband used Quicken to organize their finances. I was impressed by it and looked into Quicken when I got home. I found and started using its free online version, called Quicken Online, which soon after was discontinued and converted over to Mint.com. I started using Mint.com in the spring of 2010 and have since then become a daily user.
For those of you who haven’t heard of Mint.com, it is a free, and safe, online service that logs into all of your online banking sites and downloads your transactions and balances every time you log in. It then attempts to auto assign all of your transactions, organize and summarize your financial picture to make it easy for you to manage. Now, in my opinion, it is not worth using Mint.com if you simply want it to do everything for you. I spend a lot of time on my Mint.com account and it really pays off.
Here are three main reasons, in my opinion, to use Mint.com:
- Tracking your expenses
- Tracking your income
- Creating and managing a budget
Tracking Your Expenses
Since Mint.com downloads all your transactions, 80% of the work will be done for you. I recommend logging in at least 2-3 times per week to look over all of your transactions and assign the accurate category to them. That is the easy part.
The hard part comes with cash spending. A withdrawal from an ATM will show up as an uncategorized amount of money spent. If you do nothing further, you will only know much cash you pulled out and won’t have a clue what you spent that money on.
If you’re serious about knowing where all of your money is going, it’s crucial that you track your cash spending as well as credit, debit, check, and auto pay transactions. Here’s how to do it:
- Wait until your transaction clears
- Split your cash withdrawal transaction
- Add a new row or sub-transaction to your cash withdrawal transaction for every expense
- Add transactions until your cash is all spent and your cash withdrawal transaction reaches zero
If you put in the effort of managing where all of your money went each month, you will, like me, have a memorized view of your spending. Knowing your spending really well will help you to create and manage a budget and set and reach financial goals like it has for me.
Tracking Your Income
Tracking your income is easy if you are an employee, which is what I will refer to in this post. If you’re like me, you have your paychecks directly deposited into a checking account. These kinds of transactions will automatically come through to Mint.com and once you assign it as a paycheck, it will remember it from then on. Other types of income can either be added in through deposits to your bank, which will look a lot like I explained above with direct deposit, or you can add them as a cash transaction.
No matter which way you track your income, make sure that every dollar you make gets entered into Mint.com, every single month. Accurately tracking your income is every bit as important to organizing your financial life as tracking your expenses are. How will you know whether you’re spending more than you make or hitting savings goals, if you don’t have an accurate picture of your income? Again, it’s crucial.
Creating and Managing a Budget
Once you are accurately tracking your expenses and income in Mint.com, it’s time to start using their budget features. Now, if you’re a Dave Ramsey listener like I am, you will probably tell me that it should be done “on paper, on purpose”. Now, I am not saying don’t do a paper budget, but in my experience, Mint.com budgeting has worked just as well as a paper budget.
Here’s how to set up a simple budget with Mint.com. Ideally, you will set up the budget at the beginning of the month. First, create a budget for your income. If it’s salary, it will be a simple calculation. If it’s hourly or variable, just do your best to predict what it will likely be this month. If you have multiple sources of income, enter in each one separately.
Next, you’ll need to set up budget items for each spending category. Common categories that most of us have are:
- Mortgage and rent
- Auto and transportation
- Bills and utilities
- Food and dining
Where you put each expense will be completely up to you. If you need ideas on how to categorize expenses, I would encourage you to look online for advice. The main point here again is to make sure that you have a budget for every expense that you have. At the end of the month, the goal is to have every dollar spent be included in one of your budget categories.
At the beginning of the month, you’ll need to do a reasonable amount of guessing what your expenses will be for that month. If, later in the month, you realize that you will have an expense that’s not already in the budget, you will need to add it. That is why I am constantly tweaking my budget on Mint.com. In my opinion, it is perfectly acceptable to modify it as the month goes on.
Your main goal of managing your budget on Mint.com should be to plan how much money you will be making and spending each and every month. Being on a budget means that you are in control of your financial life and you are telling your money where to go. A budget will change your life and attitude about your money situation.
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: Tracking Your Finances