There are different approaches to this concept of Money Management. Money Management, firstly, is important because it helps us to build on that awareness of our situation, at all times. I have mentioned before that I used to use Money for Blackberry. It cost only $10 but it defaulted on it’s promise of PC support.
When considering my next bit of personal finance software I have a few requirements:
- Clear Display of my Cash Available to Spend, across select accounts
- Clear account of my Net Worth across all accounts
- Easy transaction management
- Easy budgeting
- Ability to run reports on PC that help me understand my spending trends.
- Easy manipulation on my handheld device
Two applications floated to the top of the pile, one before the other. The one at the top was YNAB. The second is Ascendo Money which only came into contention after I heard about it on a YNAB forum.
You Need A Budget
This application is built on some fundamental concepts. It says run your life according to your budget, not your bank balance. Budget every dollar and stop living from pay cheque to pay cheque. Initially I was sceptical of the approach however once you get into it the sense starts coming out.
Practical Example
- This month I think I am going to spend $5000 on Entertainment. This means that all I have allocated to spend on entertaining myself (films, parties) is $5000.
- If however I went to one less party then I may have only actually spent $4000. There is still $1000 carried forward. This money is not used elsewhere, but it’s job has not been fulfilled. This $1000 is there to greet me the following month and I can choose whether to still only budget $5000 (which means only $4000 of new funds being allocated) or whether I want to lower my budget based on my spending performance, to make the allocation more accurate.
- Lowering the budget means that instead of $4000 I put in $3000 of new funds. The $2000 that I have saved on my budget can be used to facilitate anything I want- whether to put into an emergency fund, or to roll over as a buffer for my next month’s budgetary consideration.
- The more accurate I am in budgeting my expenditure, the more I can potentially save on my budget. Saving on budget builds a buffer that is rolled over into the next month’s budget. When I spend according to budget and not according to bank balance, I can potentially have $10,000 in the bank that is unspent, but is budgeted for something else. Eventually this type of adjusting over time will allow me to break the cycle of living pay cheque to pay cheuqe, because I would have freed up enough money to defer spending my salary, and just spending my buffer. Can you imagine a time when you spend December’s Salary at the end of January, and not the beginning of January?
Budgeting has never worked for me, however this is a fresh approach. I think I have been doing it wrong before I met this application. In the past I would budget my bills and then if any excess is left it goes unmanaged- until it turns to zero. This application says sure, budget for your bills, but budget for the excess. Actually, the expression they use is “Give Each Dollar a Job“. That way, your spending is tied to the budget category and you can clearly direct your funds. If you overspent in a category, you can analyse it and figure out if you need to make a bigger allocation next time. The programme goes as far as to encourage budgeting for a rainy day- as well as saving monthly towards those big expenses, like vacation and insurance premiums.
YNAB requires some time to sit and give serious consideration to what you are undertaking. Budgeting every dollar may seem like a small feat, but don’t be fooled. It gets even more interesting when you are resolute and stick to your budget. You will fall of the budget, but the system is built to help you compensate for the fall (called rolling with the punches). I love the concept, love the approach and think the execution is sensible, once I have done my part to think it through.
Now here is some rather ugly truth. Learning the concept, testing the programme for about 2 weeks and getting an acceptance of the method is free. You know what isn’t free? The application. The desktop application costs U$60 and the iPhone and Android apps cost U$5 each. There is no Blackberry support and the mobile apps cannot work without the desktop application. Essentially you would have spent U$65 on this application.The application is attractive and fluid; it also seems to have an active community. I can understand (kinda) where the extra money is going- but the core application is not worth U$65. For that type of money I would have expected cloud syncing but that is not included.
Ascendo Money
This application has no frills. There is no guiding principle, there is no real community- no instructional classes or videos. It is just an application that allows you to enter all your accounts, set up categories, budget per category and run reports. As a matter of fact (and I feel bad for doing this, a little) if you try out YNAB for a week (and request an extension if you so desire) you can set up Ascendo to feel exactly like YNAB.
I still have some refining to do, but I get everything I want done. Unlike YNAB Ascendo gives me a 30-day trial for both desktop and blackberry apps immediately. After that, if I want to purchase, I get both desktop and blackberry applications for U$30. Both. YNAB offered a Cyber Monday deal by selling the desktop application for U$39 but you still had to spend U$5 for the mobile apps.
The Verdict
I am a Blackberry user. I was content with the absolutely no frills Money for Blackberry- Ascendo is a huge leap forward. Additionally, the customizability of the application to feel like a YNAB clone without violating any copyrights is phenomenal.
However, if you use iPhone and Android maybe there is no comprehensive no frills solution. In that case YNAB may be best. But if you missed the Cyber Monday deal, well, lets hope you don’t mind spending U$65 for what a disciplined techie can do in excel. Remember, the methodology is free, the application is far from it.
