Reverse Budget with Mint.com
When I first got into really figuring out the money side of my life I always had difficulty knowing where my money went. I would spend, review my bank accounts, realize I had enough money and keep spending. I was doing pretty good. I then graduated to a simple budget I built in Excel and tracked every dollar before I spent it and after I spent it. This worked really well until I got bored of doing it every month. I now use Mint.com to budget in reverse.
With Mint you can create your own budget and then track every single dollar. Every purchase you make can be put into a category and Mint will kindly let you know if you are under or over budget for the month. It’s pretty neat.
A side note: To use Mint.com you will have to be comfortable allowing Mint to access your accounts. This means they pretty much have direct contact with everything you do in your accounts. They are legit though so don’t worry much about it. I know it took me about a year to get the courage to input my account info at first. Now I love it.
Lets get back to the reverse budget. Before I start I have to let you know why this works for me. Before starting this technique, I did the Excel budget religiously for a couple of years. This allowed me to get a good grip on every dollar I spent before I spent it. If I didn’t have the money, I could not spend it. After two years of doing this, I had a good grip on where my money was going and where I was spending it. You need to know this and have to have good habits before you can reverse budget.
If you have all your ducks in a row and know your spending habits, you can give the reverse budget a try. I can’t stress enough that you have to know your spending habits before you try this.
This is how it works for me. Every month I track and categorize every dollar I spend in Mint. Once the month is up, I then review the entire month and previous months to see the total outcome. If I went nuts on beer or eating out last month, I now know where I need to cut back for the coming months, and I do. I use last months spending to decide where I need to cut back for the coming months. This is why I call it reverse budgeting.
For a lot of people this will not work because they are over spenders and need to get their spending under control. The only way to do that is to do a budget up front and put a name on every dollar. Once those dollars are up in that category, no more buying that stuff. Like I said. You have to know your spending habits and have control over your spending.
The reason I like the reverse method is because I know I am in control and it gives me a little more freedom. I do not have to worry about a budget up front because I can look back and the story smacks me straight in the face. If I like it or not. I plan for big spending months and expenses and a lot of the other stuff kind of flatlines once you do it for a few months. A lot of this I already know from doing the upfront budget for so long. If you do not know, get out a pencil and paper and write out every expense for the month.
Another reason I like the revers budget is because Mint is so easy to use. I just like to see where I told my money to go for the month, and Mint does the rest of the work for you. I also do gut checks and open up Mint on a weekly basis to see how I am tracking and to categorize. Mint gives you charts and graphs of your current spending to the day, week, month or more. Once you get used to using it and customizing it to your needs it starts working very well.
As with anything, it might take you a few months to really know how to operate Mint and how to make it work for you. If I had to guess most financial advisors would not recommend the reverse budget strategy to people who are struggling. I still wanted to let everyone know what works for me right now. Who knows, a year from now it could all change. I might move back to the simple Excel budget because that worked great as well.
No matter the direction you take, you have to learn and know where your money goes on a monthly basis if you want to get ahead financially. If your money just disappears every month and you live pay check to pay check it is time to get on a budget one way or another. Check out Mint.com, It might just work for you.
Originally published at www.jont.life on February 23, 2017.
