With the hundreds of different budgeting apps, how do you find the best budgeting app or system for you?

Downloading and testing them all would take forever!

If you want to find the best budgeting app, you need to understand the philosophy and technology behind how they work. 

Fortunately, the hundreds of budget systems can be boiled down to four basic types:

  1. Aggregators
  2. Manual entry
  3. Cash envelopes
  4. Banks that offer budgeting tools
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1. Aggregators

These budgeting apps collect related items of content and displays it in a nice dashboard. Aggregators connect to your financial institutions and pull in transactions. This allows them to view your spending and depending on the level of sophistication, automatically categorize it.

Pros 

Data aggregation budgeting apps automatically track your transactions. 

Cons 

The downside to aggregators is they show information after the purchase is made and therefore, don’t effectively change behavior.

They can take days to show transactions and the connection to your bank can be a pain, requiring you to repeatedly re-authenticate.

Also, every Mint user knows the frustration of a “mismatch.” Especially at stores like Wal-Mart.

Not to mention the number of uncategorized transactions.

These apps require constant maintenance. 

Bottom Line 

Because aggregators require constant maintenance, this may cause you to fall behind, become overwhelmed, and fail to budget.

That’s why we don’t think these are the best budgeting apps.

Examples

  • LearnVest
  • Betterment
  • Personal Capital
  • EveryDollar Plus
  • YNAB
  • Mvelopes
  • Albert
  • Mint

2. Manual Entry

Balancing a checkbook and keeping a manual ledger of your spending has been done for hundreds of years. 

Today, you may use paper and pencil, a computer and spreadsheet, or an app.  

Pros 

The best part of a manual entry is that it keeps you “in” your money. One of the big challenges with budgeting is life disconnects you from your money.

Entering transactions manually keeps you painfully aware of your spending habits. 

Cons 

Manual entry requires a lot of time and organization, it’s prone to human error, and it’s inconvenient.

This is often one-sided, which makes it difficult if one person understands and controls the finances. It’s no wonder budgeting becomes a hassle.

Bottom Line 

Manual entry creates money awareness, however, it can be time-consuming, tedious, and inconvenient. We don’t think these apps are the best budgeting apps.

Examples 

  • Excel spreadsheets
  • YNAB
  • GoodBudget
  • EveryDollar Basic
  • Checkbook
  • Sticky notes
  • Special wallets with inserts and pen holders. Search “budgeting” on Pinterest and you’ll find all sorts of ideas

How to Find the Best Budgeting App | Qube Money
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3. Cash Envelopes

Cash envelope budgeting is done by organizing cash in envelopes to manage spending.

To follow this method of budgeting, you label envelopes to represent your budget categories (food, fuel, dining out, home repairs, etc). After that, withdraw cash from your bank to fund your budget using zero-based budgeting (aka giving every dollar a job), for instance.

To spend, you decide what category you’ll use to fund a transaction.

After spending, you’ll see the balance of each envelope. Because of this, your budget then becomes “real” and when your money is gone, it’s gone.

Pros 

A big pro is cash envelope budgeting requires you to think before you spend—improving spending behavior.

Envelopes make organizing money simple. Spending money directly from the budget naturally creates effective real-time awareness of the limits money has.

Cash envelope budgeting has proven to support the behavior of healthy money management. 

Cons 

Using a cash-based system in a cashless world is difficult.

Cash envelope budgeting does not make online purchases easy. If followed diligently, using modern payment systems required to pay for travel and a growing number of industries causes extra work.

Read: 11 Disadvantages of Cash

Regular trips to the bank and ATM are inconvenient and counting money is tedious—especially when you are waiting in a checkout line.

Lastly, using cash in envelopes opens you up to theft which can cause anxiety.

Bottom Line 

The cash envelope system is effective, but living a cash-based life in today’s world takes Navy Seal-like discipline. 

Examples

  • Dave Ramsey
  • The Budget Mom
  • Etsy designer cash envelope wallets
  • Mvelopes
  • GoodBudget

4. Banks That Offer Budgeting Tools

Many banks offer budgeting tools, however, it’s not the bank’s primary business.

For example, one reason bank budgeting software hasn’t been widely adopted is because banks don’t focus time and effort on improving budgeting features. It doesn’t make an impact on the bottom line.

Banks generate income by providing banking products. Not budgeting products.

Pros 

Using your built-in budgeting software from your bank is easily accessible. Seeing how you’re already a customer, you don’t need to open a new account to start using the budgeting tools.

Cons

One downside of using budgeting software created by your bank is it’s not user friendly. And most banking budgeting software doesn’t show you the entire picture of your finances. It only shows spending from that bank.

By bringing everything in one place, aggregators have grown in popularity.

Bottom Line

Budgeting software created by banks is hard to use.

In addition, banks haven’t found a way to make money by offering budgeting tools, therefore, it’s not a focus of their business model.

Examples

  • Simple (reportedly shutting down)
  • Wells Fargo
  • Chase
  • Chime
  • Varo
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The Best Budgeting App 

Between aggregators, manual entry, cash envelopes, and banks that offer budgeting tools, there’s no end to the number of budgeting apps you could get started with today.

Our hope in writing this has been to give you an overview of the different types of budgeting systems and to help you pick one that’s right for you.

Lastly, now that you understand the four basic types of budget systems, which is the best budgeting app or system for you? 

Bonus: How We’re Creating A New Budget App Category

Current budgeting apps on the market today have limitations; the biggest being that none of them change spending behavior.

We’re creating a new category that combines budgeting and banking. The budgeting system is the core feature and the bank supports it.

We called it Budget Based Banking.

To learn more, visit qubemoney.com.