Budgets are fantastic tools to allocate your monthly income against certain items and keep on track with your spending. I have used budgets for many years and they have indeed helped me manage my money better.
I have an Excel spreadsheet that has my income at the top from which I deduct all my expenses, leaving me with a remainder figure. At the moment that remainder is in theory quite large thanks to all the cutbacks I have made in my quest for financial freedom. But the quandary I find myself in is that the remaining money I actually have left always seems to fall short of this hallowed total.
When I budget, I have all the usual categories such as utilities, car, entertainment etc but I have two overarching types of outgoings which I call ‘fixed’ and ‘unfixed’. In the fixed category I have expenses such as electricity direct debits, council tax, and mobile phone account. The unfixed category is the one that I have eating out, groceries and lunches. The idea is that these expenses will vary on a monthly basis and are unfixed.
The thinking behind these two categories was to differentiate between fixed regular monthly payments that I must make every month and unfixed discretionary spending that I have always struggled to keep track of and control.
Over the years I have tried to keep track of these ‘unfixed’ categories and have always failed. I either get bored or don’t want to take the time to track my expenses. I have had various short periods of time where I have tracked it but that has always fallen away and I find myself back at not tracking these and simply assigning some broad sweeping category called ‘eating out’ or similar. Even if I did the exercise of adding up my expenses, by the time I get round to it, it would be too late and I’d have already spent the money and blown the budget.
I have long since been on a hunt for a tool that can assist me with assigning expenses to my budget and actually keeping track of what I’m doing as I go.
Enter the app called Emma. I downloaded Emma for my iPhone about three weeks ago and have been using it on a daily basis.
The idea is that you give it access to all your accounts and credit cards and it keeps track of everything and automatically assigns items to a budget you input into Emma. I must say so far so good. After some initial troubles getting my Barclay Card account on there, it has been very easy to use. I can open it and see my balances live and also all my outgoings. It does little reports every week to highlight spending and alert you to areas you may have splurged.
I put the budget data from my Excel sheet into it without much trouble whatsoever. On the pro version, there are more budget categories, but to be honest, I feel I can live without them for now. I can see me buying the pro version at some point
I have not had such up to date spending data ever. I can see that I have £51 left of my ‘eating out’ budget with 8 days to go until the end of the month. With that kind of insight into my spending, it really does help me make real decisions on my spending.
Emma also removes the hassle of logging into multiple accounts to check balances and has that data in one place. I think this is one of the best features and certainly makes that leap of faith that one must take to give over all your banking passwords worth it.
Another useful feature in Emma is it works out how much money you have left before you are paid again. I think this is the clever bit as it features prominently on the first page as a huge reminder of what not to spend.
In the era where most transactions are via contactless payment, this is a great tool and one I would highly recommend to anyone wanting to take control of their budget and expenses.
There is also an investments section that is clearly a very useful tool in the same way that the bank accounts are. Sadly, none of my investment accounts is supported and I have not really delved into this section in great detail. However, for the simplicity of having all your pension and investment account in one place, I think Emma is great.
I am at a point after 5-6 months of trying FIRE that my finances are in good shape. I do believe that if I had met Emma before, I would have become far more aware of my finances and taken action much sooner. By action, I mean living with my means, actually knowing how much money I have to spend and feeling in control.
I would thoroughly recommend giving Emma a try.