Whether you’re saving for the future or a trip, or just trying to make ends meet, a solid budget helps get you there. Actually seeing what you spend and what you owe helps you build a good credit history and score. Your ability to manage your budget is only as good as the budget you’ve created. To help, here is a list of the best budgeting apps and tools for Canadians.
What Is Budgeting?
At its core, budgeting is the creation of a financial plan. But it’s more than just a plan. It is about looking at your overall income, as well as your fixed and variable expenses. Then, you create a way to ensure you have enough money to live while saving for a rainy day and the future.
Why Is Budgeting Important?
Having and maintaining good credit is vital for qualifying for loans and mortgages. To get good credit, you need to use, maintain and pay off credit debt. In other words, you need to buy stuff.
It might seem a bit backwards, but yes, you need to spend to get credit. And you need money to give you buying power. How do you do that? By budgeting – and making sure you aren’t spending that which you don’t have.
If you budget properly, money should always be available to pay bills. Quality budgeting will have you covered, even if an unexpected, significant, expense pops up. You never want to carry so much debt that you can’t afford to manage life as it happens.
Canadians carry a lot of debt. We are given a lot of credit, and we use it. On credit cards alone, Canadians carry an average of $4,000 in credit debt. And that’s not including what people have tied up in loans and mortgages.
Some of us rack up credit cards to their literal end. In fact, far too many of us do. It’s all fun and games using money that isn’t ours until it runs out and we have no way to pay it back. Then, when we really need the money, it’s not there. That’s why budgeting is so important. The best way to prepare to manage life’s unexpected expenses is to budget wisely. And, to not overspend in the first place.
The 50/20/30 Rule
This method of saving was popularized in the United States. But it is absolutely applicable here in Canada.
Breaking up your expenses as wants, needs and savings is the best way to lay out where your money should go. Half of each paycheque goes to needs. This includes groceries, housing and utilities. In addition, consider your vehicle under the needs category, because you have to be able to go buy the groceries and get to work!
Only 30 percent of your pay goes to your wants. This includes almost everything else. For example, entertainment, shopping and any hobbies you might have.
Savings are vital to budgeting. All of the budgeting in the world won’t matter if you don’t have money set aside for a rainy day. Twenty percent of your paycheque should go to savings, both accessible and long-term for retirement.
How Do I Make A Budget in Canada?
There are different ways to master a budget. It depends on how much help you want or need. Thankfully, in Canada, we have access to a host of budgeting apps and tools you can use to plan your budget.
Apps are great for convenience and ease. If you’re not handy with numbers, the benefit of budgeting tools ensures accuracy. They also give you peace of mind you have a quality representation of your budget and the impact different aspects of your expenses and habits. For some, relying on a budgeting app or tool might just be too far out of their comfort zone. For those types of budgeters, a good ‘ol pen and paper will do. As long as you have a budget, it’s best to use the tool that works best for you.
DIY Budgeting App
You don’t necessarily need to hire someone to help you budget, especially if you have good self-control. There are lots of online budgeting tools and free budgeting apps you can download to help guide you. Some of the more popular budgeting apps are Mint, GoodBudget, and Debt Manager and Tracker. These tools are great visuals. You see where your money is going and how it’s being used. By tracking expenses, you can better manage and distribute money to make sure you’re saving and paying debts, and still be able to eat.
A financial planner provides advice on how to manage your money. They are well versed in the market, and provide recommendations on savings, investments and insurance tools that will fit into your budget. Overall, financial planners are a great source of educated advice for your financial strategy.
Their primary role is to make sure your money is set up in a secure way that is best designed to successfully meet your own specific goals.
A financial coach isn’t interested in selling financial products. Their interest lies in working with clients through the process of setting up a financial plan and helping them adhere to it. A financial coach works with clients to improve their relationship with money. They do this through guidance and educated support.
If your debts are unmanageable and paying them down, much less off, seems like an impossibility, it might be time to consider credit counselling. A credit counsellor helps advise you and work with you to get your debts under control, once and for all.
What Is Credit Counselling?
A credit counsellor helps people who in over their heads in debt come up with a debt management plan. Then, they go to your creditors on your behalf to offer a repayment plan that they will accept. Typically, you pay back less than creditors would have received if the debt had been paid in full. The alternative for them is that you default. And that way, they never get any money back from you. For that reason, creditors will entertain a plan presented by a credit counsellor. Often times, creditors waive your interest payments, but not your debt owed. However, each plan looks different based on individual circumstances.
What Does Credit Counselling Do?
At its core, credit counselling ensures your creditors stop bugging you and your debts get paid. By the time you go to a credit counsellor, you have likely already exhausted all other options to get your debt under control. A credit counsellor supports your efforts to rid yourself of consumer debt and get you back on the path to liquidity.
A credit counsellor sits down with you to go over the entirety of your debts. They discuss what a reasonable monthly payment would look like, that you can manage. Then, they approach your creditors on your behalf to negotiate payment terms.
To you, it will feel like a consolidation loan. All of your debts are rolled into one monthly payment. The difference is that this process is a legal one, and you work with a licensed insolvency lawyer. Because of this, once you go to credit counselling, your credit is affected.
Best Online Budgeting Tools & Budgeting Apps in Canada?
There are many budgeting apps and tools on the market. But it can be hard to know which one to choose. Some are free, but others require a fee. It is important to note that, many of the free tools allow you to upgrade to a paid service that offers more oversight and tools.
Here are a few of our favourites online budgeting tools and apps for Canadians:
Free Online Budgeting Apps and Tools
The Mint budgeting app is a favourite because of its versatility and ease of use. You can track all of your spending in real-time, and get a bird’s eye view of your weekly expenditures. In addition, Mint gives you a current look at your credit score. So, you always know your financial health. This budgeting app is completely free. And the fact it also gives you notifications of bills coming due, and the ability to pay them, makes it a go-to for many Canadians.
One of the great things about GoodBudget, is that you can sync accounts with anyone you share funds with. That way, you know what the whole family is spending. GoodBudget is a great app for saving for large expenses. It’s also great for tracking and paying off debts. This budgeting app has both a free and paid option. Which one you choose depends on what makes the most sense for you and your needs.
Similar to Debt Manager mentioned below, this budgeting app provides an overview of the entirety of your debt status. And it advises you of upcoming due dates to keep you on track. In addition, this tool offers debt management calculators, including Pay-Off Date, Loan and Mortgage calculators. One of the best features of this app is that it provides a ‘debt-free’ date you can focus on, as long as you continue to pay down your debts religiously.
Spendee tracks your spending. This top budget app is for the more visual person who likes seeing things laid out in simple terms. It buckets your spending into categories so that you can see how much of your money is going where. If you’re someone who travels regularly for work or travel, this app also gives you the option of inputting different currencies.
Stack is associated with MasterCard and gives you rewards and cash bonuses for spending. This budget app also gives you a real-time look at your spending habits to help you budget and prioritize your spending better. You get weekly and monthly reviews of your expenses to help you budget and save.
Expensify is a Visa-based budgeting app that is more commonly used by businesses. It helps track budgets and expenses. But, it also tracks receipts, mileage and other business-related expenses. Whether you have a small enterprise or a large one, this budget app provides a way to help manage budgets while keeping an eye on the bottom line.
Paid Online Budgeting Apps and Tools
This is a great budgeting tool for managing cash flow. Debt Manager includes the ability to track money that is owed to you as well as what you owe. In addition, it groups debts by the debtor, creditor and individual, shows your transaction histories and provides reminders of payments due. The app is free but has a paid option for premium options.
Mylo is a neat app that rounds up your purchases and then invests the overage. It is totally hands-off and doesn’t require you to change anything about the way you spend. The money it invests is taken in such small amounts you won’t even notice you’re investing. While this budgeting app is free to use, the manager of your portfolio charges a low, flat fee of $3 a month.
You Need a Budget is an app that helps you set up a budget, and learn how and why to execute it effectively. There are four rules it asks you to follow in order to build an effective and manageable budget. This way, you’re not just budgeting; you’re learning how to do it at the same time.
How to Use Budgeting Tools and Apps
Any of the above apps will work on any type of phone. But there are some that are better on iPhone and others that are better for android. For an iPhone, we recommend YNAB or Goodbudget. For android, Spendee and YNAB are the best choices.
If you’re in a relationship and want an app that you can easily use with your partner, Mint is the best choice. It offers great ease of use and a look at your joint budget so that you are able to co-manage it and have full visibility.
For consumers who need a good expense tracking app, your best bet is going to be, again, YNAB. If receipt tracking is your primary concern, Expensify is going to be the app that will give the best ease of use and options.
The Best Budgeting Apps and Tools for Canadians
Whatever app you choose, rest assured that it is as safe and secure as any online banking apps you’re likely already using. No, they are not 100% risk-free. So, practice good digital hygiene. Ensure you use trusted electronic sources (your own computer or phone, for example) so you can trust the security of your budgeting app.
Budgeting has come a long way with the introduction of apps. Now you can track your spending and see, in real-time, the effect that spending is having on your budget. Whether you enlist the help of a professional, these budgeting tools are a great asset to take advantage of to set up and keep yourself on a budget.