John Frainee

As many of you know, we’re big fans of the envelope budgeting system here at SeedTime. Instead of looking at your bank account balance and estimating how much you can spend before you make a purchase, looking in an envelope you filled at the beginning of the month makes spending clearcut – you either have the money for the purchase or you don’t.

However, keeping envelopes for every budgeting category has become impractical in today’s digital world. Who pays their mortgage in cash? And good luck trying to do a little online shopping with that one hundred-dollar bill.

That’s where software comes in.

Finding a Solution

There are only a few programs on the market that integrate the envelope budgeting system (including the ability to do zero-based budgeting). With these programs you can enter your income and divide that income amongst virtual envelopes – assigning every dollar you earn to different budgeting categories. This is proactive budgeting.

Software that has you set up arbitrary budget amounts without taking into consideration how much money you actually have in the bank will typically lead you to spend now, regret later. When you look at a budgeting category, you want to know you can spend that money; you want to know that that number represents real money in the bank or in your pocket.

Over the past four years or so I’ve been using proactive envelope budgeting software called MoneyWell. It’s available on the Mac platform and there’s a companion app called MoneyWell Express for iPhone and iPod touch. Soon, the company that makes MoneyWell – aptly named “No Thirst Software” – will release a full-featured iPad app that can be used in conjunction with MoneyWell on the Mac or all on its own. MoneyWell is simply the best software I’ve found to date to handle my budgeting needs – and it’s not just adequate, it’s more than adequate.

Getting Started with MoneyWell

Analogous to envelopes, MoneyWell uses “buckets” to keep track of your spending and to show you how much money you have left to spend. When you launch a new document in MoneyWell, you’ll have the opportunity to set up a read-only connection with your bank accounts or manually manage all transactions. Either way works just fine, but I tend to prefer manually managing transactions so that I can be a bit more “hands on” with my budget.

As you set up your initial starting balances, you can also assign those balances to particular buckets. Starting out, you may want to assign all of your income to an income bucket, from which you can drag and drop different amounts of money into other expense buckets. MoneyWell supports an unlimited number of income and expense buckets. So, if you have a certain income source you want to dedicate toward your emergency fund, you can do it in MoneyWell. Simply create an extra income bucket for that income source, and set an event to move money from that particular income bucket to your emergency fund bucket.

Creating a Spending Plan

This is where MoneyWell really shines. Other budgeting software typically forces you to choose how much money you’d like to spend each month and can’t account for multiple “fill events.” With MoneyWell, you have complete flexibility.

For example, let’s say you have a transportation expense bucket. Instead of estimating how much gas, how many oil changes, and how many car repairs you have in a given month or year, you can create events under the “Spending Plan” tab in MoneyWell to automatically account for those expenses. The beauty of this is that you no longer have to remember all of the types of expenses in a budgeting category. Simply do the estimations beforehand, set up your fill events, and MoneyWell will handle the rest.

Then, as you collect your paychecks into your income buckets, you can click the “Fill Buckets” button to see what pending events need to occur. From this screen, you can see which buckets need money according to the events you set up – and you can even modify which buckets will be filled.

You can create a very simple monthly spending plan, or make it more complex and have MoneyWell move your income on particular days of the week, on a particular day of the year, etc. I like to keep things simple, so I set up a monthly spending plan.

And when it comes time to reconcile your accounts, MoneyWell has a tab for that too.

Other Powerful Features

MoneyWell is full of some very powerful features. I’ve tried a lot of different budgeting programs, and MoneyWell most certainly wins the day. Here are some other features I find particularly helpful:

Drag and Drop

I haven’t found another program out there that allows you to drag and drop like MoneyWell does. Want to move money between accounts? Drag and drop. A window will unfold, you enter the amount, and you’re done. Want to move money between budgeting categories? Drag and drop that too. Need to assign a transaction to a new category? Drag it. Drop it. You get the idea!

Modify Multiple Transactions

Occasionally, you’ll want to modify multiple transactions if the name of a payee changed, or if you need to assign them to a different bucket. Simply hold down “Command” on your keyboard, select each transaction, and make the necessary changes to the right of the window.

One Window Budgeting

Switching between different views can be frustrating. With MoneyWell, everything you need for a given task is contained in one window. For example, you don’t have to click to switch between your buckets and your accounts – they’re displayed at the same time in the same window. Little features like this can really speed up the budgeting process.

Interactive and Flexible Reports

Have a business? You can keep reports using MoneyWell, and generate just about any report imaginable – you get to choose the criteria for each report. This is how I personally keep track of my business transactions so that I can print out a report at the end of the year and hand it to my tax preparer.

Prioritized Spending Plan

For those with variable incomes, you’re going to want to prioritize your spending plan. That’s easy with MoneyWell. Just drag and drop events in the Spending Plan tab, and MoneyWell will automatically spend your income down your prioritized list.

Portfolio Accounting

You can enter in securities and track those in MoneyWell, too.

Smart and Quick Filters

With filters, you can create your own filters to track certain types of transactions. For example, you can have MoneyWell show you all transactions with a certain payee, or transactions that are in a certain date range – the sky is the limit.

Favorites

With favorites, you can tell MoneyWell about common transactions. For example, if you’re only buying gas at Arco (and not snacks), you can tell MoneyWell to assign Arco transactions to your transportation category as you type “Arco.”

Scheduled Transactions

Have regular transactions that you don’t want to enter manually every month? No problem. Just tell MoneyWell to create a transaction on a certain day of every month.

There is much, much more to MoneyWell than what I’ve listed here, but the good news is that MoneyWell allows you to learn at your own pace. It’s pretty intuitive, yet gives you the tools you need to do complex budgeting – if you want to use those features.

MoneyWell Express

MoneyWell Express for iPhone and iPod touch allows you to track your spending on the go. It connects to dropbox and allows you to sync transactions between devices. My wife and I use MoneyWell Express for entering transactions when out and about, and it ensures that we’re always on the same page with our budget.

Customer Support

When you have a question about MoneyWell, customer support is there for you. I’ve found the staff friendly and helpful. They’re even very speedy! Many software companies leave you to your own research on how to do what it is you need to do – not these guys. Expect an email reply quickly (I’ve found they usually reply within 24 hours, if not within a few hours). You’ll be able to communicate with them until you have resolved your issue. Thankfully, the No Thirst Software team squashes most bugs before you’re able to find them. They provide regular updates to their software and stand by their work.

Final Thoughts

If you’re serious about budgeting, and you have an Apple device, there’s no program I can recommend higher than MoneyWell. MoneyWell is built on sound budgeting principles I’ve used for years. With MoneyWell, I’ve paid off debt, built a fully-funded emergency fund, and am planning for the future. The only downside I’ve seen is that you can’t use MoneyWell on a Windows machine. But for you Mac fans out there, this is a must-buy.

You can download a free trial of MoneyWell for the Mac, install MoneyWell Express on your iPhone and iPod touch, and use MoneyWell for the iPad when it launches soon.

By the way, if you’re looking to make a budget on paper first, start by brainstorming your categories with my Budget Category Brainstormer – a printable worksheet with over 80 categories and spaces for your own!

If you have any questions about MoneyWell, please leave a comment below. I’ll do my best to answer the questions based on my experience and research. Happy budgeting!