Budgets Get an Extreme Makeover

Sue BerginSue Bergin

The tight economy and some hip personal financial management tools have done the impossible.  They’ve made budgets sexy.

No one ever used to admit that they liked to budget.  Creating a budget was tedious and uncool; sticking to it was even harder.  Thanks to recent technology, however, budgets are being seen in a new light. Today’s economy has made it necessary for more Americans to know, with certainty how much money they have coming into and going out of their household.  As consumers delve into the budgetary process, they are realizing it isn’t nearly as overwhelming and time consuming as they may have thought.

A recent study showed that most Americans follow a spending plan. Nearly half (48%) say they “loosely” follow a budget.  25% “strictly” adhere to their budgets.” Only 27% say they have no budget at all.

Household income is the primary determinant of whether someone will commit to the budget discipline.  36% of those who earned under $30,000 annually followed a budget faithfully.  Only 18% of earners whose salaries exceed $75,000 a year were as vigilant about the budgetary process.

Personal financial management sites such as Mint, Betterment, MoneyDesktop, Yodlee and PNC Virtual Wallet have given the budgeting process an extreme makeover.  They’ve simplified the budgeting process, brought it to life, and even made it fun.  Financial planning software such as the offerings by eMoney Advisor and MoneyGuidePro includes budgeting tools that make it easy for financial advisors to offer an insightful analysis to their clients on how to maximize savings and create user-friendly budgets.

The key innovations that have revolutionized the budgeting process are account consolidation, aggregation and automated expense characterization.  Once accounts are linked and tracked in many of these services, the expenses are automatically pulled in, categorized, and updated regularly.  This simplifies the task of routine budgeting and offers huge relief when it comes time to preparing mortgage and loan applications.

The transparency these services offer into actual spending habits may also be behind the positive ranking survey participants gave to inquiries about their financial holdings.  Nearly half (47%) claimed to know their checking and savings account balances, and 48% have a “rough idea.”  Only 5% say they “do not know”.

When it comes to spending, 36% say they can calculate the “exact amount” while 58% has a “rough idea” of what they pay out each month.  6% had “no idea.”

Innovative technology offers a gateway to help clients become more mindful about spending.  Until a website or mobile app comes along that effectively prevents people from overspending; however, the face-lift offered by technology is simply cosmetic.[1]


[1] Survey statistics mentioned are from CashNetUSA, September 5, 2012

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