Using Technology to Create a Budget

March 9th, 2018 by Anchor Bay Capital's Investment Team


The financial success of any individual, family or business largely depends on how effective they are at budgeting.  My goal with this post is to show some helpful tools that will make creating and tracking a budget simple, fast and efficient.  However, before discussing the right tool to use, it is important to understand how mindset can affect the success or failure of any good budget.

Getting into the right mindset:

Budgeting can sometimes create a negative response in people for a few reasons.  Here are some of the biggest challenges or objections that I see as I work with clients on their budget:

  • It is an analytical process. Digging into numbers isn’t the most fun thing to do in your day and it is easy to want to tune out before you even begin.
  • It feels like setting rules. Some people don’t like to follow rules.
  • It can create a feeling of shame or guilt. When comparing what you are spending to what you should spend, we can all beat ourselves up a little.

Overcoming these negative responses:

  • Create balance in the process. You don’t need to look at your budget every day.  Use general spending categories when creating your budget so that you have some flexibility and then set up “Money Dates” with yourself or your spouse/partner.  I recommend reviewing your budget twice per month with one “Money Date” or in depth financial review per month to really focus on how it is working.
  • Use rules to promote good habits. The focus of a budget should be to guide your money into the places that will help you accomplish your financial goals.  It is a blueprint to examine how to spend and save money effectively for your personal intentions.  Giving up bad spending habits is a result of focusing on the good habits that you are creating with an effective budget.
  • Put feelings of guilt in the past. Let it go.  Money comes and goes.  The only thing that you can control is how you will spend your money today.  Financial mistakes can be overcome and if you put in the time to create a good budget, you will have a guide to make the right financial decisions as you are presented with them.

Getting Started

Sometimes I just stop and smile because of the world that we live in today.  The other night, we were watching the movie, Wonder, as a family (It is excellent!).  There is a part in the movie where Julia Robert’s character is trying to figure out how to get her college dissertation off of a floppy disk and her kids had no idea what the disk was.  We paused and asked our kids if they had heard of a floppy disk and they had no clue.  When I tried to explain why we used floppy disks and tried to draw a comparison to the technology that my kids are aware of, it was surprisingly difficult!  So when I think about how easy technology advances make our life, it really can be something to smile about.

With this in mind, there are some really great tools that you can use to create and track a budget efficiently.  Here are a few things to think about when choosing how to monitor your budget:

Which tool to use?

There are a number of online budget tools and apps that you can use.  Some of the most popular are,, and Clarity Money.  Our firm, Anchor Bay Capital, offers clients our own digital budgeting tool similar to these apps.  There are many, many others and each system has pros and cons, but they effectively do the same thing.  They give you a tool that allows you to sync your financial accounts into one place.  This allows you to see all of your money together, track your transactions and set budgets.  Keep in mind that just like any company these companies are in business to make money.  When you are given a free tool to use like Mint or Clarity Money, they have permission to market products to you.  You get to choose if this is helpful or not, for example, Clarity Money will promote deals on credit cards and help you compare offers.  Anchor Bay Capital’s spending and budgeting tool is part of the digital portal that we offer our clients as part of our total service offering and it does not allow third parties to use your data or market products to you.

Setting up your budget

  1. Review your last six months of spending. This will give you an idea of how much money you spend in each category.  The image below shows Anchor Bay’s digital portal and how it can be used to view your spending history:
  2. Separate your fixed or “essential expenses”. These expenses are the items that have to pay to live.  Mortgage/Rent, Food, Utilities, Insurance are all examples of fixed expenses.  Your budget target for essential expenses should be 50% of your net income.
    • Based on your last six months of spending in these areas, you need to set reasonable budgets for these categories. These are the necessities, however within these essential expenses it is important to review where you may be losing money to inefficiencies.
  3. Review how much money is going toward your future goals. While your essential expenses are the items you need today, you do need to set aside money for expenses in the future.  Retirement, college education, emergencies, these are all items that you need to budget for.  Your budget target for future goals should be 20%.  This category also includes debt payments for non-revolving accounts.
  4. Lifestyle Spending. You should work to live.  These are your discretionary spending choices.  Your budget target for lifestyle spending should be 30% of your net income.  This is most likely the area of your budget that you have the most daily control of.  When spending on your lifestyle remember to ask yourself if the money is helping you achieve your overall goals both personal and financial.
  5. Create your budgets and set up automatic alerts. Now that you have aligned your budget with your life and your goals. Put the numbers into your technology system and create automatic reminders.
  6. Schedule your budget reviews on your calendar. As I mentioned above, you don’t need to check it every day, but you should definitely review your budget at least twice a month and if you are using an app, it makes it easy to check in about once per week.

Going old school

While new technology is great.  It does have its issues.  Financial institutions are regularly updating their security.  This is great for protecting our money and it is not so great sometimes with integrating technology systems together.  In every online financial tool there can be glitches and problems with account connections that take some time to resolve.

If you are on a technology break or just prefer to keep your data offline, a good budget spreadsheet is still a great tool.  You still want to follow the same steps above, but you can manually update your spreadsheet on a monthly basis to keep yourself on track.

For assistance with our digital portal, please contact us.  Check back in every Friday for more ideas to create an effective financial plan.