Summary
- NerdWallet is an excellent, free application for consumers looking to budget and track their spending.
- Some banks like Chase and SoFi offer expense tracking functions within their apps, but they might not offer the full functionalities of apps dedicated to budgeting.
Review of Budgeting Apps
I never seriously approached budgeting until last year when my daughter was born.
Previously, I had a sense of what my household’s cash flow looked like (paycheck as cash in, credit card bills as cash out essentially) and tried to budget casually by downloading transaction data from my Chase and Amex credit card accounts and consolidating the data in Excel.
This was quite a labor-intensive approach that started out as a monthly job and gradually turned into a quarterly job and then subsided into the dark…
With an anticipated move and potential changes in cash flow dynamics of my household (paying rent at our new place and receiving rent once we find a tenant in our previous place), I decided to attempt to take the reins again but this time with the help of a service if possible. This led me to Mint.
As bad luck would have it, Mint announced that it was shutting down less than a week after I linked all my accounts and categorized all my past spending and set automatic rules for future transactions. Sigh.
Not sure if it’s supposed to make me feel better, but I didn’t run a comprehensive research process when deciding to use Mint (I was familiar with the app and I liked that it was free).
Unsurprisingly, I again chose to put off any meaningful research and signed up for a 3-month free trial on Quicken Simplifi.
Now with my trial ending shortly and recent issue connecting my Marcus account on Simplifi, I felt that Simplifi wasn’t slick enough for the ~$48/year that I’d have to pay.
So, I wanted to find a more affordable (preferably free) migration option that would give me enough visibility into my cash flow patterns. Below is my short documentation on the process.
How to choose a budgeting app
I collected a list of budgeting apps that were recommended and rated on a few articles. I realized that it was going to be hard to compare all of these apps in depth without committing a lot of time to it. I had initially wanted to do a matrix of all the features, but it wasn’t as simple as doing the research online and would have to entail actually using each application for 2+ hours in my opinion.
I believe in efficiently allocating my time relative to the value that I could be getting, so looked at 1) Apple App Store ratings and 2) what the costs are. YNAB and Monarch Money were the top-rated budgeting apps but carried a hefty fee of ~$100/year and I didn’t think I needed complex functions. So, I decided to give the app with the next highest rating and offered at no fee, NerdWallet.
Setting up NerdWallet
I downloaded the iOS app, followed the user onboarding (chose to skip credit monitoring and providing my SSN), and linked my Amex, Chase, and SoFi accounts that I wanted to sync (linking Marcus led to error messages to my frustration).
UI/UX – my first impression was that the app was busy like some people mentioned had mentioned on the internet but not enough to turn me off. There is a lot of advertising for other services, but I mindful that this is a service that has a lot of costs associated with it (linking accounts) and I’m getting it for free.
Expense categorization – I found that the automatic categorization was pretty good, on par with or better than Quicken Simplifi in my opinion. It was pretty simple to apply the same rules for specific merchants.
All in all, I spent around two hours from start to finish. Below is how I categorized my expenses based on my needs, it may be different for others, but I think it’s helpful to write down the different buckets that you’re putting different types of expenses as you go through the process so that you can be consistent in your categorization.
My Expense Buckets for NerdWallet
Income – tax returns, cash gifts, paid leave, rental income, W-2 income, secondhand sales
Internal transfer – any internal balance transfers and positive change related to credit card payments
loan payments – credit card payments (negative balance change from bank account)
Mortgage – mortgage payment
Bank fees – annual memberships, insufficient fund fees, foreign transaction fees, late fees
Entertainment – newspaper subscriptions, media subscriptions (Spotify and Netflix)
Groceries – Costco, bakery purchases, Venmo payment at farmers markets, supermarkets, Instacart (including credit), returns from these merchants, coffee machine-related purchases, cash rewards from credit cards that I consolidate most of my groceries spending
Dining – cafes, restaurants, Uber Eats, DoorDash
Shopping – clothing, household goods, furniture, Target, Saks Fifth Avenue, IKEA, Nordstrom, etc (unless I know it’s directly related to childcare for a recent Target or Etsy purchase for example)
Pets – N/A because we don’t have pets.
Home improvement – Home Depot, Ring/Ring Pro, appliance parts, appliance repairs, gutter cleaning, handymen fees, and other rental property related expenses.
Health – gym memberships, gym equipment purchases, healthcare spend (non-pediatrician), pharmacy, physical therapy, One Medical membership
Personal Care – all beauty spend, haircuts
Services – financial-related subscriptions, LinkedIn subscription, accountant fee, lawyer fee
Transportation – tolls, car shipping fee, parking, car-related repairs
Childcare – pediatrician spend, infant formula, toys, clothing, etc
Insurance – auto, renters, homeowners, landlord insurance
Government – fees related to vital records, vehicle registration, business registration, Global Entry, tax payments
Travel – airfare, hotels, Uber, rental cars, CLEAR subscription, fees for immigration overseas
Rent – rental application fee, deposit, rent
Utilities – mobile phone, Eero subscription, Waste Management, broadband fees, international roaming fees
Other – UPS, USPS, library fees
Conclusion
- So far, the experience has been good given that I’m not paying for anything. I would recommend that you start your budgeting process with NerdWallet since it’s free and simple.
- One thing that I’d like to get back to is how accurate the syncing is – pending transactions on my Amex Marriott card appear to be not syncing quickly but I’m not sure if this will be a recurring issue.
- Also, I noticed that SoFi allows users to sync different accounts, broadly budget, and track spending as well. This is something that I’ll be writing about in the future as well.
Resources
NerdWallet – The Best Budget Apps for 2024
Reddit – Yet another review from a 10+ year ex-Minter, 4 yr Simplifi user
Reddit – personal capital / empower tool is a mess
Consumer expenditures in 2022 : BLS Reports: U.S. Bureau of Labor Statistics