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  For some of our expenses, like the mortgage and utilities, the money gets withdrawn directly from our account automatically.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