Should You Spend Money on Budgeting Software?

Debbie Dragon is a professional freelance writer, specializing in personal finance. She frequently writes for which offers a large selection of free spreadsheet templates and financial calculators.

When you are attempting to get back or stay on track financially, a budget is certainly one of the most important necessary components. A budget is your clear visual of exactly where you stand and where you can go with your income. Without it, you can easily overspend, forget to save, and essentially live paycheck to paycheck barely making ends meet.

There are many ways to budget your money, including top of the line budgeting software and other technology that is promoted to do the work for you. While some of the software and tools are free, many are getting more and more expensive. But is it really necessary to go the distance with these programs? Should we be investing our money in such high-powered technology?

Measuring One’s Personal Preferences

There are really no tried and true answers to this question because it typically comes down to the person’s preferences. Ultimately whatever it is that makes you stay committed to doing the budget each and every week is what should be implemented into your daily life. If you feel it is easier to do some data entry rather than take pen to paper, explore the free or at least inexpensive tools for budgeting being offered. Since all programs differ in how they operate, check out the free versions or the trial periods until you can find one that suits your financial needs.

Working the numbers in a notebook can be just as effective as entering your data into a more complicated system. But the reality is you do have to start somewhere if you have not yet developed a budgeting system. Without understanding your budget, you have no way of knowing if you can even afford to invest in expensive budgeting software.

Here is a refresher course on what you need to establish a budget:

Gather Your Accounts

Even if you plan to use budgeting software to maintain your numbers, it is best for you to write all of your information down in one place to make data entry more efficient. You need to collect all of your billing statements, account numbers, contact information, balance totals, monthly payments, and interest rates from every creditor you are currently paying on. A budget worksheet will make this easier and more organized for you.

Compile a List of Expenses

Once you have the information in front of you, you’ll need to make a list of all your expenses, creditors, and account information in one column. In a second column, write down the amount required for monthly payment and the date it is due. In the next column, write down the interest rate if applicable (for credit cards). The last column should contain the total outstanding balance on the account. When all monthly expenses and creditors have been listed, total the amounts of your monthly payments and the total outstanding balances on all accounts.

Tally Income

Get your paystubs and other records of reliable income and total the amount taken in for a month. You will then need to deduct your total monthly expenses from your total income. If the total you get after subtracting expenses from income is a negative number, it means you do not have enough to go around. Supplemental income or budgetary cuts are necessary to free up more cash. Any total left over after the subtraction is what is ‘extra’ and should be allocated wisely into a savings plan.

Set Goals

If you can get your budget to the point where you are spending less than you are earning, you can start working on becoming more financially free. Budgeting software will often help you track your savings goals, but you can also find many free tools that can help you set up debt reduction plans as well.

A budget is an ongoing thing, one that needs to remain flexible and constantly updated to be effective. Whether you continue to track expenses and income on spreadsheets or prefer to try specialized budgeting software is up to you. The most important point to remember is that no software can add money to your income nor can it do the work for you entirely. You have to be an active participant in your budgeting process.

Related Reading:

Ten Tips to Stop Living Paycheck to Paycheck

Do You Keep a Budget?


  1. It largely depends on the purpose of the budgeting software. If it's just for personal use it might not be necessary. However, if it's for a company it's a wise investment. Excel spreadsheets can get messy and budgeting software makes things much simpler.

  2. I think it is ok if you really need it. It's a good investment as it helps you to make better informed decision about your finances so you can have more money at the end of the day.


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