New Transaction Entry

As promised, I’d like to start showing you some of the new features I’m working on with the redesigned NeoBudget.  First, lets take a look at the new transaction entry.  I posted public video on Facebook that demonstrates this new feature.  Let me know what you think, and if you have ideas for improvement.

Watch the video on Facebook.

Posted in Announcements

NeoBudget Reimagined

As many of you may already know, NeoBudget started as a hobby project of mine when I couldn’t find an online budgeting program I liked. Since then, it has grown into something much more. Up until recently my time spent on the project has been limited to evenings and weekends. I’ve always been active to maintain the site with patches, security updates, and support, but very little new development has happened for several years.

That all changed in August, and I’m excited to finally be able to tell you about it: I quit my day job. Since then, I have been able to split my work days equally between freelance programming and working on my own projects. That includes lots of time dedicated specifically to NeoBudget.

All this extra time has been spent creating a completely new version of NeoBudget from the ground up. Over the years I have learned a lot about how people approach budgeting and that has helped direct my vision for this next version. While the overall look of the site will feel familiar, I am making some revisions that will greatly improve the NeoBudget experience. These changes are still in development, and it will be several months before I’m ready to release it to the public. But things are progressing swimmingly and I couldn’t keep it a secret any longer.

Over the next few weeks, I’ll be writing blog posts and sharing videos to highlight some of the changes. I would love your feedback. While I can’t promise that every idea you contribute will be incorporated, I will certainly take everything into consideration. The more people I hear from, the better the end result will be.

Here is some of what I’m working on to whet your appetite:

The transaction entry screen has been redesigned and streamlined. There are now simply four different types of transactions: Expense (subtracting money), Income (adding money), Move, and Transfer (between NeoBudget accounts).

The transaction entry screen is being redesigned and streamlined. There will be four types of transactions: Expense (subtracting money), Income (adding money), Move, and Transfer (between NeoBudget accounts).

The import will be much simpler. You will be able to drag and drop QIF or OFX files anywhere inside of NeoBudget to add them to your accounts.

The import will be much simpler. You will be able to drag and drop QIF or OFX files anywhere inside of NeoBudget to add them to your accounts.

The "Unallocated" envelope will no longer be required. Instead, any transactions that are imported but have not been allocated to envelopes will be visible with the red "Unallocated" button at the top, which lets you easily allocate them when you're ready.

The “Unallocated” envelope will no longer be required. Instead, any transactions that are imported, but have not been allocated to envelopes, will be visible with the red “Unallocated” button at the top, which lets you easily allocate them when you’re ready.

Posted in Announcements

How Do I Make A Budget?

10 steps to making a financial budgetWith the state of the economy the way that it is today, many people are attempting to learn how to make an online budget (http://money.cnn.com/magazines/moneymag/money101/lesson2/index.htm). It can be difficult to live on a budget especially if it is the first time you have ever worked with any sort of budget. If you have been budgeting for years, you may just be looking for an easier way to manage your finances.

Before you start your financial planning, gather up all of your financial papers. Organize them into categories. Have a category for your house: including the utilities, insurance and repairs. One category for your car: including the cost of insurance and maintenance. Also gather your credit and medical bills. Having everything organized prior to starting will make the process much easier for you.

To be practical, include a category for a little fun in your life, typically named, “entertainment”. That will include the occasional dinner out, seeing a movie, or perhaps visiting an attraction out of town. Other practical expenses you shouldn’t overlook will likely include: food, clothing, school supplies and other such items. As you start, you’ll likely need to make adjustments over the weeks and months to help fine tune your true expenses and categories.

OK, you’ve got your categories set, and are entering the numbers, but what makes for a good budget, and how should it be allocated? Here are recommended numbers:

  • Housing (36 percent of net income)
  • Food (12 percent of net income)
  • Automobiles (12 percent of net income)
  • Insurance (5 percent of net income)
  • Debts (5 percent of net income)
  • Entertainment/Recreation (6 percent of net income)
  • Clothing (5 percent of net income)
  • Savings (5 percent of net income)
  • Medical/dental expenses (4 percent of net income)
  • Miscellaneous (variable expenses) (5 percent of net income)
  • School/Child Care (6 percent of net income)
  • Investments (5 percent of net income)

For details on the above recommendations, please visit: http://www.crown.org/Library/ViewArticle.aspx?ArticleId=751

Many financial institutions offer free online budget software, but that doesn’t necessarily help you with your day-to-day transactions with cash. Do you use a credit card, debit card, cash, or a mix of the above to manage your daily purchases? Whatever your response, you’ll need to devise a tracking system to help you stay on top of your expenses. This is where NeoBudget can help. It’s easy to set up and use. It acts like an online cash envelope system. For a simple review, and helpful worksheets, click on the link: https://neobudget.com/budgeting/

A spending plan is only as good as what you make of it. It will only work if you choose to live within your means and spend wisely. Exercising self-control is key to getting your household in order. Spending outside of your means has to stop if you ever want to be financially responsible. Make your budget, keep your budget, work your budget, and it will work for you.

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Posted in Budgeting

Fixing A Broken Balance

If it’s been a while since you balanced your budget using the “Balance” tab in NeoBudget you might be in for a surprise. Hopefully everything will work just fine, but if there was any data entry or bank error along the way it’s very likely that your bank statement won’t match the amount that NeoBudget shows.

The most likely reason for this is that you missed entering a transaction somewhere, or mistyped a transaction amount. The best way to fix this problem would be to go through your bank statements and match up each transaction one at a time with NeoBudget. But who wants to do that, right? I mean that would take forever.

The simpler way to fix this problem is to create a fake transaction in NeoBudget. Lets say your bank statement says your balance should be $1000, but NeoBudget shows $1025. You will need to create a transaction that will bring NeoBudget in line with your bank statement. In this case, you would go to the Subtract tab and create a debit of $25. This will subtract $25 from your budget. Your balance will now be $1000 which is the same as your bank statement. Now when you go to the Balance tab in NeoBudget, you can select all the transactions and it should balance.

A better way

“An ounce of prevention is worth a pound of cure.” – Benjamin Franklin

To prevent this from happening in the first place, be sure you’re using the Import Wizard in NeoBudget instead of manually entering transactions. This will prevent you from mistyping any amounts.

Also, be sure to balance your budget every time you update NeoBudget. The whole purpose of the Balance tab is to help you catch errors. It is much easier to catch errors when you only have a handful of transactions that you’ve just entered, rather than hundreds for the past year. So, take a few extra minutes after you update your budget and be sure to balance it!

Posted in Tutorials

Credit Cards and Envelope Budgeting

I often have people write asking how to handle credit cards with the envelope method of budgeting. Many people use credit cards to rack up reward points and pay off the balance at the end of the month. There are two methods one could use, and NeoBudget users have successfully been using both methods. Which one will work for you really is a matter of preference.

Method #1 – Separate Accounts

The method that is most true to the envelope method of budgeting is to keep track of your credit card in a separate account tab from your checking account. You can download your credit card statement in a format supported by NeoBudget (currently QIF, OFX, and QFX which most banks and credit card companies support). Then import that statement into NeoBudget just like you would your checking account. The difference is that your credit card account will always be negative.

Throughout the month, your credit card account will keep getting more and more negative. You can create envelopes inside this credit card account to track different categories of spending. For example if you use your credit card only for gas and groceries, just create those two envelopes.

Now at the end of the month, you can look at the negative balances and know exactly how much to transfer from the corresponding gas and groceries envelopes in your checking account.

For example, lets say you have a $250 credit payment due. Looking at your credit card account in NeoBudget, you can see that $150 was spent on gas and $100 was spent on groceries. When you pay your credit card, simply record this transaction in your checking account and take $150 from your gas envelope in your checking account, and $100 from groceries.

Method #2 – Same Account

Another method that has been used is to track your checking and credit both in the same account in NeoBudget. The benefit of this is that what you see in NeoBudget already accounts for your spending on your credit card. So if you have $200 in groceries in your checking account and you spend $150 on a credit card, your envelope will say $50 even though you haven’t yet paid your credit payment.

To do this, simply import your credit card statement directly into your checking account in NeoBudget just like you would your bank account statement.

There are two pitfalls to watch out for with this method though:

First, this makes balancing your budget very difficult. You can’t just go down the list and compare transactions with your checking account. You need to look at both accounts and add the ending balances. It can get tricky and confusing if there is an error somewhere.

Second, when it comes time to pay your credit payment, you have to fudge the books a little bit. Since you’ve already recorded all the transactions in your account in NeoBudget, when you make a credit payment you are really just transferring money from one account to another. And since both accounts are tracked inside the same account in NeoBudget, it’s a wash. You either don’t record the transaction at all, or you record it twice: -$250 (the payment from your checking account) and +$250 (the payment into your credit card account).

You also need to track interest. Usually this will show up in your credit card statement as a separate line item, so it should import just fine as if it were another transaction.

Conclusion

I recommend method #1 as it’s easier to track. But I know of many people who use method #2 successfully. It really boils down to doing what works for you.

Do you have a method that I haven’t mentioned? Please let me know!

Posted in Budgeting, Tutorials

Paycheck Budget Planner

Planning your budget can be a daunting task, and this is often the reason people never get around to sorting out their financial life. Thankfully, NeoBudget offers some tools that make this very easy. Using the income allocation tool in NeoBudget, you can easily determine how much money you need each month to pay your bills and meet your savings goals.

This tool can even figure out your monthly budget for irregular or long-term expenses. For example, auto insurance is often a semiannual (6-month) bill. NeoBudget will figure out how much you need to save out of each paycheck in order to have enough to pay that bill in 6 months. No more panic when the bill comes due!

1. Enter your paycheck information

The first thing to do is go to Settings and click on Income. You need to create an entry for each regular paycheck that you receive. This doesn’t need to be a fixed amount each month, but this tool assumes a fixed amount. (Handling irregular income is covered in another post.)

Click on “New Income Source”:

Screen-shot-2010-07-22-at-11.11.13-AM

Now you’ll see the Income Editor. Enter the name of your employer, and the amount of each paycheck you receive. You also need to specify the pay frequency. The most common payment frequencies are shown which includes every other week (bi-weekly), twice per month (semi-monthly), and weekly. This is used in the budget calculations later.

Screen-shot-2010-07-22-at-11.11.33-AM

2. Enter fixed expenses

Some expenses that you have are easy to figure out. You may know that you spend $50 per week on gas, or that you want to save $25 per week for eating out. In the example below, we have a bi-weekly paycheck (every two weeks) and we’re saving $50 out of each paycheck for eating out.

Each column represents a separate paycheck for the month. Notice the headings “1st check,” “2nd check,” and “3rd check.” Notice that the 3rd check is highlighted in green? That’s because when you’re paid bi-weekly some months have three paychecks and some have two. You don’t need to worry too much about that, because NeoBudget handles the complex math needed to average it out. In general, you can be assured that if you use this tool, things will average out and be fine.

Screen-shot-2010-07-22-at-11.13.24-AM

3. Enter complex bills and savings goals

Not all of your envelopes will have such simple savings goals. For example, your mortgage envelope might include all the expenses related to your home. By clicking on the “Edit” link in the “Budget” column, you’ll see a budget calculator that helps your calculate your monthly savings need to meet your goals.

In this example, I know that my monthly mortgage payment is $984, I have an annual property tax bill of $1250, and every six months I have to pay homeowner’s insurance of $312.50. By entering all these values and specifying the frequency of each expense, NeoBudget does all the complex math to calculate your monthly budget. This is the amount you need to save every month to ensure you have enough money to pay these expenses.

Screen-shot-2010-07-22-at-11.15.10-AM

4. Fund your monthly budget from your paychecks

Now that you know how much to save each month, you need to fund it from your paychecks. You can click on the amount and it will automatically distribute it evenly across your envelopes. Or, you could do it yourself if you want to save more from the first paycheck and less from later ones.

You may notice in the example below that the three paycheck allocations don’t add up to the monthly budget amount. Remember that the 3rd paycheck column is a bit special, in that you don’t get that paycheck every month. NeoBudget calculates the amount you need from each paycheck spread out across the whole year. So you may get two bonus paychecks (3rd checks) in a year, not every month.

Screen-shot-2010-07-22-at-11.15.21-AM

Concluding thoughts

Using this tool, now you will know that you’ll have enough money to cover your expenses. When you record your paychecks as you’re updating your budget, simply choose the income source and paycheck number from the list, and the amount will be automatically distributed across your envelopes (see below).

Screen-shot-2010-07-22-at-11.53.41-AM

Posted in Tutorials

Money Saving Tips

If you look hard enough you’ll find all kinds of practical money saving tips. But it really boils down to one simple principle: spend less than you make. Sometimes it’s the simplest concepts that elude us, or at least they’re the most difficult to live out in daily life.

“Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”- Charles Dickens

We live in a society defined by debt. Credit is easy to obtain and easy to abuse. It doesn’t matter how great your financial counseling or how low an interest rate you get, if you spend more money than you make then simple arithmetic will catch up with you sooner or later.

NeoBudget provides tools that help figure out your monthly expenses and allocate your income to cover those expenses. If your expenses are higher than your income then you need to either eliminate some expenses or increase your income. Both are valid responses, but often it’s easier to eliminate expenses.

So what are the best money saving tips?

There are many techniques one could use. In my budget, I treat savings as if it were a bill that is paid automatically. I make regular payments into my IRA, my 401k, and my emergency fund. These are automatically deducted from my checking account each month. If it were left to me, I would often find another use for my savings payment each month. Treating savings as a regular, recurring bill removes the decision process. It just happens.

Of course, before I figured out how much money I could save each month, I had to tally up my monthly expenses and compare that with my income. That’s where the NeoBudget income allocation tool helps.

How about some practical ways to save money in daily life?

When it comes to the practical ways to save money (that is, reducing your expenses so it’s well below your income), there has been a lot written about this on various personal finance blogs. Rather than come up with my own list of money saving tips, I’ll refer you to these for further reading:

Posted in Tips

Maintain A “Fun Money” Envelope

Many people believe that a budget is a just way to restrict your spending and “tighten the reigns.” While this can certainly be a helpful use of a budget in some situations, a budget should not be viewed as a way to squeeze all the fun out of life. I’ve found in my own life that having a budget has freed me to give more and spend more on fun stuff than I would otherwise.

Last summer, I wrote a guest post on the FMF Blog titled Freedom From Budgeting. I encourage you to read the article. It explores the freedoms that come from having a good budget in place.

Your budget should reflect reality, not your wishful thinking. It is unrealistic to think that you’ll never spend a penny on having fun. So, why not budget for this? I recommend creating a “Fun Money” envelope in your budget. My wife and I each have individual envelopes for this purpose. This is money that we can spend on whatever we want without needing to ask each other or feel guilty for busting the budget. I usually use mine for things like buying an occasional iPhone game or stopping at Brueggers Bagels for a coffee while running errands.

The point is that having such an envelope can really liberate you. If you tend to overspend on frivolous things, this envelope will reign you in and give you an allocated amount each month to spend. If you always feel guilty for spending on fun stuff, then this envelope will liberate you from constantly feeling like you’re busting the budget by buying a coffee.

Posted in Budgeting, Tips

Transaction Import Wizardry

Before I had created NeoBudget I tracked my budget in a spreadsheet. This worked well, but it was very time consuming. My normal procedure was to print out my bank statement, then go down the list and enter each transaction by hand. Without fail when I reached the end I had mistyped a transaction or two and had to spend some time tracking it down. All told, I would spend about and hour or two every week updating my spreadsheet. I thought there had to be a better way.

The Import Wizard

When I created NeoBudget, one of the first things I wanted was the ability to import my bank statement directly. The import wizard in NeoBudget does exactly this. It has cut the time spent updating my budget down from 1-2 hours to 15 minutes per week.

Here’s how it works. It’s a simple four step process:

Step #1: Upload your statement

import-example-1

Step #2: Select the transactions to import

import-example-2

Step #3: Assign each transaction to envelopes

import-example-3

Step #4: Confirm that everything looks right

import-example-4

Manual Transaction Entry

Of course, it’s also possible to manually enter transactions. There are any number of circumstances where you might want to record a transaction before it clears the bank. My wife often records our grocery purchases right away so we can keep up-to-the-minute track of that envelope. I also record all checks we write so they come out of the budget immediately (you never know how long it will be before someone cashes a check).

To do this, simply click on the “Add $” or “Subtract $” tabs at the top of the page.

A question I frequently hear is: “Will I end up with duplicates for some transactions when I manually enter something and later import transactions from my bank?” NeoBudget is smart enough to notice duplicates. On the second step of the import wizard, NeoBudget will notify you of transactions it thinks you might have already entered into your budget. You can make the final judgment call.

import-example-5

The import wizard is a real time saver. For me, it saves at least an hour a week over my old spreadsheet budget. It’s just one of ways NeoBudget helps take the sting out of budgeting.

Posted in Tutorials

Assigning Transactions To Envelopes

Recording a transaction in NeoBudget is easy, yet powerful. You can take all of the funds from one envelope, or split it across several envelopes. This tutorial shows the process of recording a “Subtract $” transaction in NeoBudget (essentially, a debit).

First, click on the “Subtract $” tab at the top of your account page. You can also get here through the import wizard when it comes across a debit or charge transaction.

Enter all the details about the transaction such as whom it was to, the date, and any other details you wish to remind yourself of later.

Next, enter the amount of the transaction. If you are in the import wizard, the amount will be added for you automatically. Note that the “Save” buttons are disabled and that the “Remainder” shows the total of your transaction. The “Remainder” is the amount of the transaction that has not been assigned to an envelope. The buttons are disabled until the “Remainder” is $0.00 meaning that the entire amount has been distributed to envelopes.

In the case shown in the image below, we have set the amount to $68.45 but have not said which envelopes to take that money from, so the “Save” buttons are disabled.

subtract-money-allocation-1

The final step is to say which envelopes the money should be taken from. In the example below, we are taking the entire amount from Groceries. However, you could just as easily take $10 from Clothing and $58.45 from Groceries.

subtract-money-allocation-2

Once you have assigned the entire amount, the “Remainder” value will be $0.00 and the “Save” buttons will be enabled, allowing you to save the transaction and continue using NeoBudget.

Posted in Tutorials
Who We Are
NeoBudget is an online envelope-based budgeting system. It provides a nice visual experience that clearly displays your financial situation.