My experience getting started with NeoBudget

In a good budgeting system, you decide in advance how to spend and save your money.  A reader recently brought NeoBudget to my attention as an online tool that can help you easily create and manage a personal finance budget based on the envelope system.

I signed up for the NeoBuget free 7-day trial to check out the system.  The nice thing about the trial is that NeoBudget doesn’t collect any payment information up front.  I liked this because it made me confident that there were truly “no strings attached”.  At the end of the trial, you can subscribe to the service for just $2.50 per month. 

I was signed up for the trial in less than one-minute!  It was very simple. 

Setting up a budget and managing money with NeoBudget

Once you have created an account, then NeoBudget walks you through the setup process with an easy to follow wizard.  There are really just four steps to complete:

1. Create an account – You name your accounts.  The system does not require you to enter account numbers which is a nice security feature.
2. Add envelopes – In this step, you create your budget envelopes or categories.  You can have as many as you like.
3. Income allocation – Step 3 actually has two parts.  In the first, you name your sources of income.  This would include your paycheck and any other forms of revenue you enjoy.  In the second part of this step, you decide how to allocate each of these income sources to the various envelopes.
4. Initial balance – Finally, you have the opportunity to enter the existing balances in your account.  This step also gives you the chance to allocate your existing balances to your envelopes.

NeoBudget was a cinch to setup!  If you have all the information gathered up, then you can finish all four steps in a matter of just a few minutes.

My highlights from using NeoBudget

NeoBudget has a very clean and well-designed user interface.  It is fast and very intuitive.  I really like the way NeoBudget works.  Here is some of what I consider the highlights of the system.

1.  At-a-glance view of balance in all envelopes

The best way to explain this is to show you the screen shot below.  I really like this feature.  You can even choose the colors for each envelope yourself which is a nice way to highlight the envelopes that are most important to you.

2.  Consumer debt worksheet for getting out of debt

NeoBudget includes a worksheet that will help you payoff what you owe on credit cards, car loans and other forms of consumer debt.  It even allows you to choose the order in which you want to attack these debts.

3.  Ability to import transactions from banking systems

The system has the ability to import transactions from your banking accounts which alleviates the need to enter everything manually.  It supports both the Quicken Interchange Format (QIF) and Open Financial Exchange Format (QFX).

4.  Financial data is protected from loss

I like that NeoBudget is an online system.  This way if my computer at home crashes, then I won’t lose all my financial tracking information.  In addition, NeoBudget doesn’t store any account numbers or other information that bad guys could use to steal my money.

NeoBudget Questions & Answers

I was fortunate enough to be able to ask Luke, the developer of  NeoBudget, some questions about his system.  I think you will find this useful in your evaluation.

Why did you choose to create a new personal finance system when so many already exist?

There were many reasons I decided to create yet another one.  Basically it came down to two things. 

First, many of the good envelope-based systems out there are just too expensive.  I wanted to make one that was dirt cheap.  There are many free ones out there too, and it’s hard to get cheaper than that. 

Which brings me to the second reason I created my own.  Nothing I found out there had all the features I needed for my family’s budget, and combined them all in a simple, intuitive online interface.

What is the most notable and unique feature of NeoBudget?

I think the best part of NeoBudget is how it manages income.  When you sign up with NeoBudget, you can specify all your sources of income, like your paycheck and your wife’s paycheck. 

As part of this, you can set goals for each envelope, such as $300 per month for groceries.  NeoBudget will help figure out how to fund that envelope based on the paychecks you have entered.  After you configure all your sources of income, every time you get paid, you simply say which paycheck this is, and NeoBudget splits it out across all your envelopes.  You only have to configure your paychecks once, and NeoBudget applies it every time you get paid.

There are many benefits for handling your paychecks this way.  One thing I did this year was set aside a small amount from each paycheck all throughout the year into a separate envelope labeled “Propane”.  I actually forgot about it through the summer.  Without needing to remember, I was saving to fill my propane tank.  Winter is here now, and I’m thankful for this savings.  It would have been a steep bill had I not been saving all year.

Why did you decide to make NeoBudget an online system?

I had been using some desktop software that I really liked, but I like having my information stored online.  It’s much more convenient that way. 

I can access my budget on my iPhone when I’m at the grocery store, or on my brother’s computer when I visit him in another state.  It also ensures that if my computer crashes, I won’t lose all my financial history.

Some people have told me that they are concerned about storing financial information online.  This isn’t really a problem with NeoBudget.  No personal account numbers or credit card numbers are stored with your budget.  There is nothing worth stealing stored on our servers.  All that is stored is how much money you have allocated in each envelope.

NeoBudget doesn’t automatically connect to bank accounts, but many other financial planning tools do.  Isn’t that very inconvenient?

I don’t think so at all.  This was a choice for security purposes.  I don’t use the other online financial planning tools because I don’t want to give out my account information to people I don’t know and trust.  That would just make me incredibly nervous.

NeoBudget does have an import feature that is almost as good as directly connecting to a bank, but it’s a lot safer.  If your bank lets you download your bank statement in a supported format, you can upload it to NeoBudget.  In this way, you get all your recent transactions without needing to pass sensitive account information to NeoBudget.

Who will benefit the most from choosing to use NeoBudget to manage their personal finances?

I consider NeoBudget to be a mid-level budgeting solution for families.  It has many powerful tools, so it’s not designed for someone who wants a completely hands-off approach to their budget.  But I have also made a great effort to ensure that it’s simple enough to be used without an accounting degree.  It is geared toward people like myself who want to be on top of their personal finances, but particularly don’t like dealing with accounting programs.

What does NeoBudget cost?

I’ve set the price at $2.50 per month, but I offer significant price breaks for semi-annual and annual subscriptions.  Basically, I wanted NeoBudget to be dirt cheap, but I can’t offer it for free because I need to make a living.  For what you’re getting with NeoBudget, I believe $2.50 is very reasonable.

Has anyone else used NeoBudget?  What was your experience?

How we track our finances now.

In Mvelopes, we created an envelope for each of our spending categories.  We also have a spending plan or budget where we forecast our spending in each envelope.  For some of the envelopes, like groceries, eating out, and miscellaneous, my wife withdraws the money from the checking account every two weeks.  We then use this cash to pay for purchases in these categories.  For some of our expenses, like the mortgage and utilities, the money gets withdrawn directly from our account automatically.  We assign each of the transactions from our checking account back to an envelope in Mvelopes.  This helps us to plan and know exactly how we are spending our money.

We use three different types of envelopes.

We have envelopes that work in a few different ways.  Some of our envelopes get zeroed out every month.  An example of this is the mortgage envelope.  We know exactly what our mortgage payment is going to be every month so the exact amount goes in and comes out each month.  We never build up or carry a balance in this envelope.  The expenses like this are easy to track.

However, other envelopes do carry a balance.  For instance, the envelope we use for auto fuel is funded a certain amount every month, but the amount we spend for fuel varies.  Also, we don’t withdraw this money from our checking account because we pay for gas with our debit card.  So, we need to be able to keep track of what we spend and the balance in these types of envelopes from month-to-month.  The balance in these envelopes needs to carry forward to the next month automatically without our intervention.

The final type of envelope is not really used to track expenses at all, but rather to keep track of savings.  An example of this is our emergency fund.  We just became debt-free except for our mortgage a few months ago so, we are now building up our emergency fund.  We set up an envelope for this and each month according to our spending plan, we deposit the appropriate sum of money in this envelope.

Where the problems arise with tracking our envelopes.

As I said earlier, everything seemed to flow smoothly for us initially.  Mvelopes would automatically download our transactions from our checking account at the credit union.  When we logged in, it would notify us that we had new transactions and request that we assign them to the appropriate envelopes.  However, after our credit union did an upgrade to their system, Mvelopes was no longer able to automatically download new transactions for us.  This means that we now have to manually enter the transactions which causes us to get behind.

The other problem with Mvelopes that we can’t figure out is that sometimes an envelope gets out of whack and there doesn’t seem to be a way to make a simple adjustment.  We have had a few situations where we just wanted to zero out an envelope or we wanted to enter an adjustment because we knew the balance in the envelope was wrong.  Well, the software doesn’t seem to let you do that.  If a balance exists in an envelope, it forces you to transfer that balance somewhere.  You can’t just enter an adjustment that changes the balance in an envelope without it affecting something else.  I understand the reasoning behind this, but it doesn’t really work with real life and it annoys me.

What I like about our present system.

One of the things that I like about Mvelopes is the way it allows me to create my spending plan and then use that to fund my envelopes on a regular basis.  I also like that it is an online system which means that I don’t have to worry about backups.  Mvelopes is also fairly easy to use.  You don’t have to be a computer genius to figure it out.  They have online help and tutorials that answer most of the questions that have arisen. 

What I want in a finance tracking system.

Since I’m asking for ideas, it only makes sense that I tell you what I want the system to do.  Here are some of my thoughts:

1.  It should support the envelope system of budgeting.

Overall, I like using the envelope system of budgeting so, whatever I move to has to support this approach.  This is why we chose Mvelopes in the first place.  It is built solely around this methodology.  I’d like a system that either recognizes the concept of envelopes or at least can be configured to emulate the behavior.  If the system isn’t designed around the use of envelopes, then I’d like to see or be told how someone else set it up.  I don’t want to have to recreate the wheel to get it to do what I want.

2.  I want a software-based system.

I suddenly realized that I might be assuming that everyone thinks like I do and likes software.  This is probably not the case.  I’m sure there are some out there that still like to do things by hand.  I am not one of those.  The system I choose will have to be software-based.

3.  It needs to have a way to automate the loading of transactions.

I think that if Mvelopes still automatically downloaded our transactions or supported a methodology where we could easily upload our transactions instead of having to manually key them, then I probably wouldn’t be looking for an alternative system.  I’m not picky about how the system handles this as long as it is easy and eliminates the manual entry.

4.  I need to be in control.

I want to be able to enter an adjustment in one envelope without it affecting any other envelope or account.  I want more flexibility than I have now within Mvelopes so that my financial management system can adapt to real life.  Unfortunately, things in the real-world get kind of messy and complicated at times.  The system needs to give me the control I need to handle the unusual circumstance.

5.  It needs to be easy.

A system that requires a doctorate in computer science to operate will not work.  I believe that one of the keys to financial success is consistency.  It is impossible to consistently manage your money with a system that is difficult to use.  By nature, we humans avoid things that are painful or difficult.  I don’t want to dread using the system.

6.  Some decent reports would be nice.

I don’t use a lot of reports, but a few decent ones would be nice.  It is great to be able to print out a copy of the budget or the balance in each or our envelopes.  Occasionally, we like to print a register of transactions by envelope for a specific date range to analyze a situation.  Other than that, we don’t typically get too fancy with reporting.

Please let me know ideas on a new system.

I hope this is enough information to give you an idea of what I’m looking for in an alternative to Mvelopes.  I am very interested in how others are doing this.  I sincerely hope to find something that is easier for my wife and I to use and that takes less of our time.  Once I come up with a new system, I will post an article letting everyone know how it works for us.  Hopefully, there are others out there that can benefit from what I learn.

Please feel free to let me know your suggestions by leaving a comment below or you can email me at jeff(at)mysuperchargedlife.com.  Thanks!

Photos by Gunnar Wrobel and David Boyle