The buzz about Mint exiting the market has sent shockwaves through its user base, leaving many in search of a worthy alternative. Whether you've been a dedicated Mint user or are just diving into the world of budgeting apps, we've got you covered in this episode.
The silver lining? There's a plethora of apps ready to empower you in taking charge of your spending and to help kick start your savings journey. However, with the sea of options out there, navigating through the information overload to find the perfect app for you can be a bit overwhelming.
If you're search for a budgeting app has left you feeling overwhelmed, you are not alone! Trying to navigate through various options can be frustrating and time-consuming, especially if you're not sure which one will work best for your specific needs. Instead of feeling empowered and in control of your finances, you might find yourself feeling lost in a sea of choices, unable to find the right fit. It's time to simplify your search and discover the tools that can truly make a difference in your retirement planning.
In this episode of The Year You Retire, hosts John Bever and Jim Uren dive into the world of budgeting and tracking expenses in retirement. They stress the importance of having a well-structured spending plan in retirement and provide practical insights for managing finances. They share their personal experiences with budgeting tools, offering relatable anecdotes that make the conversation engaging and informative. The episode highlights the need for open communication and seeking professional help when facing financial disagreements as a couple.
It also delves into the security of budgeting apps and presents a range of tools and apps that can simplify financial management in retirement. Through their friendly and approachable discussion, John and Jim aim to help you simplify your spending and achieve a more financially stable retirement. Whether you're looking to improve your budgeting skills or explore alternative tools for tracking expenses, this episode provides valuable insights and practical advice to help you navigate the financial aspects of retirement with confidence.
In this episode, you will:
- Learn what you need to do before choosing a budgeting tool.
- Explore easy options for tracking your cash spending.
- Discover some of the most popular tools and apps to help you tack your spending.
- Learn what features may be the best fit for your spending style.
- Discover strategies to help keep your data secure.
The key moments in this episode are:
00:01:29 - Importance of Tracking Expenses
00:06:19 - Tracking Spending Methods
00:10:22 - Monthly Summary of Spending
00:12:14 - Overcoming Financial Challenges
00:13:09 – When Couples Can’t Agree
00:14:21 - Ensuring Security in Budgeting Apps
00:16:53 - Tracking Cash and Budgeting
00:18:37 - Managing Budget Busters
00:23:38 - Planning for Medical Expenses in Retirement
00:26:03 - Importance of Financial Planning
00:26:56 - Tools for Simplifying Financial Management
00:29:22 - Most Popular Budgeting Apps
00:32:08 - First Tracking Tool Used
00:35:19 - Summary and Tips for Budgeting
Discussed on the episode
Investopedia – Best Budgeting Apps
NerdWallet/Harris Survey – Most Americans Have a Monthly Budget, But Many Still Overspend
Clever Real Estate – Credit Card Debt: 1 in 4 Americans Fall Deeper Into Debt Each Month
Summary of Popular Budgeting App
YNAB(You Need a Budget): Best if you don’t want to link a bank account. Platform: Web, iOS, Android. Review: YNAB is known for its zero-based budgeting approach, which means you give every dollar a job. It has a strong emphasis on helping users break the paycheck-to-paycheck cycle and save money. The app is user-friendly but comes with a subscription fee. Many users find the cost worth it for the financial insights and support it provides. Prompts you to make a decision about how you allocate your income. Best for creating and managing your spending plan.
Empower: Platform: Web, iOS, Android. Review: Empower offers both budgeting and investment tracking. It's more suitable for users with a focus on long-term financial goals, retirement planning, and investment management. The budgeting aspect is not as robust as some dedicated budgeting apps, but it excels in investment tracking.
Goodbudget: Platform: Web, iOS, Android. Review: Goodbudget uses the envelope budgeting method to help users allocate money to different categories. It's great for those who prefer a more hands-on, manual approach to budgeting. The app is particularly popular among couples or families who want to track shared expenses.
PocketGuard: Platform: Web, iOS, Android. Review: PocketGuard provides a snapshot of your financial situation by tracking income and expenses. It categorizes your transactions and helps you set budgeting goals. Users appreciate its simplicity and ease of use. It has a free version with a premium upgrade available.
EveryDollar: Platform: Web, iOS, Android. Review: EveryDollar is Dave Ramsey's budgeting app. It follows the principles of his financial philosophy, the Baby Steps. It's straightforward to use, with a focus on budgeting and paying off debt. The free version is limited, while the paid version offers more features.
Simplifiby Quicken: Platform: Web, iOS, Android. Review: Simplifi is Quicken's mobile-friendly budgeting app. It offers automatic transaction categorization, bill tracking, and goal setting. Users find it intuitive and appreciate its reporting features. It comes with a subscription fee.
Wally: Platform: iOS, Android. Review: Wally is a free budgeting app with a simple interface. It tracks your expenses, helps you set savings goals, and provides insights into your spending habits. While it lacks some advanced features, it's a good choice for basic budgeting.
Remember that the effectiveness of these apps depends on your financial goals, preferences, and needs. The best budgeting app for you may not be the same as someone else's. It's essential to try a few different apps to see which one aligns most closely with your financial situation and goals. Additionally, new apps may have emerged or existing apps may have updated features since my last update, so it's a good idea to research the latest options and reviews to make an informed choice.
Jim Uren:This is The Year You Retire podcast for people who want their first year of retirement to be right on the money. Your hosts are me, Jim Uren and John Bever, CERTIFIED FINANCIAL PLANNER™ professionals with Phase 3 Advisory Services. Retirement is one of the happiest times of life, but getting the most out of it requires you to be properly prepared.
Listen along as we explore the financial topics, tips, and strategies that will help you make your first year of retirement your best year yet. Now let's get planning.
John Bever:Do you want to ensure you won't run out of money in retirement? As one client commented, “I don't want to live too long, so long that I'm forced to cut my fun budget.”
Have you wondered if you are spending too much or if you are forgetting something? Underestimating your actual expenses could very well jeopardize your retirement lifestyle.
Do you know where your money goes? Have you looked at how you spend your income? Forgetting to account for surprises and unforeseen emergencies can just add to the stress of thinking about budgeting. The very popular app called Mint has also just been retired by Intuit. So today we're going to cover tools you can use to help you track your expenses so you can take the stress out of spending.
Welcome to The Year You Retire. I'm John Bever and we have Jim Uren with us today. We're your hosts, and we're going to tell you why we're excited about budgeting. The first thing is I don't like the word budgeting. So I use the word spending plan. Jim, why are you excited about this?
Jim Uren:Yes, I agree. And as you alluded to John, this, was kind of big news that Mint is no longer available for people. And a lot of people really liked that program.
John Bever: Oh yeah.
Jim Uren:And so I'm excited to delve into some of the alternatives that people can switch to if they found themselves orphaned right now. And as you said, John, understanding where the money's going is a key factor in helping people prepare for the year you retire.
John Bever:Indeed 3.6 million Mint users are looking for something else into it. It said, Hey, use credit karma, but it is different. And so we'll just have to see how this all settles out.
Well, continue to listen so you can learn how to simplify your spending maze. We will cover where to begin and how to simply build your spending plan. We're going to explore tools that others use to track their spending and summarize where their money goes each month.
So we always like to have a little trivia. Jim, how many Americans budget their income? That's the question. Four answers:
- A – 20%
- B – 40%
- C – 60%
- D – 80%
How many Americans budget their income?
Jim Uren:Good question. My guess is it would depend on their definition of budget. My guess would be closer to 40% are actually doing budgeting in the terms I'm thinking of, but what's the answer that you found?
John Bever:Yeah. And actually semantics is part of that. The answer is actually D, 80%. Debt.com survey in 2023 reports that more than eight out of 10 budget, and I'm putting that in air quotes, budget their money. A recent Harris survey found the number to be 74%.
However, it is one thing to budget. It's another to live on that budget or make it work or that the budget is reasonable. So the Harris survey also found that 83% of Americans overspend their budget, which brings us to question number two, how many Americans carry a credit card balance month to month? We're going to use the same numbers
- A – 20%
- B – 40%
- C – 60%
- D – 80%
What do you think?
Jim Uren:Oh boy. I don't know if I want to know. I'm hoping it's 40 or maybe less.
John Bever:Yeah. Well, the answer is C 60%. A 2023 survey by Clever Real Estate found that 61% do carry a balance with 23% increasing the balances month-to-month.
And you know what, this survey is well after the COVID pandemic, which really kind of messed things up a little bit. We're back to normal now with all of this so that's a pretty good stat. So there's a disconnect, obviously 80% have a budget, but it only works for about 40% percent or half the people.
So how do you live on that budget? We'll talk a little bit about that. So just like food, it's one thing to say you're on a diet, but another to actually live on that diet. So just as successful dieting builds strategies for parties and celebrations, a good budget has strategies for the budget busters of cash, spending, repairs, medical emergencies, inflation, etc.
So the most important thing though, is starting with tracking your spending.
Jim Uren:Yes. And as we think about the year you retire and living in retirement, that debt can be a killer in retirement. So you really want to do all you can to avoid carrying credit card balances in retirement. And a good way to do that is to make sure that you've got a very accurate spending plan that includes those occasional and unexpected expenses that do arise.
John Bever:Yeah. And I do like that term “spending plan” rather than “budget,” because for some reason, there's just these negative connotations to “budget.” Maybe not to the CFOs out there in the world, but that's the minority. Most people don't like that. So Jim, any other terms that you have heard or used for budget that you find helpful instead of that budget word?
Jim Uren:I'm with you. I do like to try to use the term, “spending plan” because it is a little bit more optimistic, right? It's things I get to spend on as opposed to not spend on.
John Bever:Yeah, and it's really part of wealth planning. I mean, as we do a financial plan, which is designed to help build and preserve people's wealth. So really it could even be thought of as, you know, it's just wealth planning is really what we're doing.
Jim Uren:Absolutely. Absolutely.
John Bever:So building an emergency fund is a top priority for over half the population. That's also what we found, which is interesting and that's good. People do understand the importance of an emergency budget, which means though that over half do not have enough funds for an emergency reserve when we put all these numbers together. So we'll talk a little bit about that too.
Jim Uren:That is a little scary. And so thinking about that, John, where do we begin?
John Bever:Okay. Well, if you haven't really approached this yet, the first place to begin is not to start with the glitzy app. That might seem like, Oh, let's go get the app and run with this thing. But no, the first thing you want to do, you want to start with where you are.
You want to look at what you're spending your money on. So many advisors suggest you start by making a budget, but we suggest you start by tracking what you're actually doing. So don't try and pull some numbers out of thin air or look at what the average spending rate is on different things. Actually look at what you're spending money on. And we found that the easiest place to start with is by understanding how you currently spend your money.
So you want to take a look at, are you mostly credit card spenders, debit card spenders, automatic payment spenders, or cash spenders? So you want to take a look at that. How do you typically do the most of your spending?
And, you know, for people that use debit cards, almost primarily, almost everything is in the record of the checking account. So actually taking a look at your spending can be as easy as looking at the checking account, and then plugging into different categories. So that's what we would want to do. That's the first place to start.
Jim Uren:Excellent. So what would be the next step, John?
John Bever:You want to start tracking your expenses, how you spend your money. So we figured out how we're going to do this. Am I using the credit card mostly? Am I using debit card cash? Now you start tracking.
So for digital spenders, you're going to select a computer app or a phone app for efficiency. Because if you're digital, you're comfortable with digital, you can actually bring some connections together that will make this a little bit easier.
If you're a big cash spender, you want to start saving receipts. And even if you're not a big cash spender, if you have enough cash spending that's going out that you should really track the categories, start saving those receipts. And if you want a lot of detail in this, if you're a person that just has to have the detail, then you might want an app that actually has a web based version where the data is shared and you can look at it either way because you might be a little frustrated by looking at your little phone screen.
You also want to include your spouse or your partner in the process. If you have shared accounts, expenses, definitely want to be doing this together. And if you choose a manual method, you want to be sure that you're saving all your receipts for recording and a good, and get a good scanning app, which will speed up that recording.
Now, Pam and I, that's my wife. We're a little old school, we're cautious of the phone, we're receipt savers, but what this does, this forces a good review. And even though we still spend a lot of cash, what it does, it gives us a reason to actually talk about some of these things as we go through it.
So Jim, how do you and Jenn track in your household?
Jim Uren:So we tend to be receipt savers and then most of that gets entered into Quicken. And, uh, that, that's a pretty clunky program, but it's helpful if you're a business owner because it does help you with tax time. But I am finding it kind of clunky and I'm actually considering maybe trying one of these other apps for some of the more general cash, because I don't like this accumulating receipts and then all of a sudden you realize you're three weeks behind.
John Bever: Or three months behind!
Jim Uren:Yes. So John, how do you suggest tracking cash?
John Bever:Yeah, that that can be a big issue. So the first thing is, if you spend very little cash, like my youngest daughter, she hardly spends cash at all, then you could just have a budget category. This cash doesn't have to be split out into all the other categories.
If you regularly spend cash, then you should use multiple categories. And start broad, just kind of say, okay, groceries or even food, entertainment. And if you need to hone that down into tighter categories, you can do that after the fact. But try not to overwhelm yourself with too many categories on the front end for cash.
Jim Uren:Great. So we'll start, obviously, then tracking spending based on our most frequent method of spending. Then we're going to determine how to track our cash expenditures. So once now got that data that I've been collecting in those steps, what is next John?
John Bever:Okay, so now you're going to run a monthly summary of your spending. Now, we have a client that when they started doing this, they actually did it weekly. And the husband and wife sat down weekly. So you can do it weekly if you want to. For me, I think monthly works fine. For many people, monthly works fine.
And in that monthly summary, you're going to identify the categories for your spending. And if you're married or have a partner, you want to do this together and you want to do this for a good 6 to 12 months because there's some things that are going to come in occasionally. So you want to clean up the categories over the next 6 to 12 months and then adapt the software categories or if you're doing this on paper, adapt those categories to your actual spending habits.
You want to learn how to electronically link your accounts if you're using a software or an app, because this will save you quite a bit of time. You might not like the categories as originally designed, but most of the products will allow you to make some changes.
And you're just going to learn by doing. So jump in. Don't be afraid of this. It might feel overwhelming at first. You might be a little lost the first couple of times you do it, but that's okay. It'll come together.
And then you're going to review that monthly summary. It reveals areas that you forgot to include. Especially those budget busters, and it also informs you of the stealth stealers. Those categories that add more to your spending than you realized.
And this is really important because we can have some of those categories that people don't realize. I remember working with one particular client early on and They said, “Yeah, we eat out a little bit.” And when they actually tracked it, they found out that they were spending about three times as much when they ate out as what they thought they were doing. So this is an important part is the tracking part.
Jim Uren:And that is helpful. And if we do that, uh, if you're like most of us, you may find that you've got some real problems with your spending. So John, what do we do when we do that review and we figure out I'm spending way too much?
John Bever:Yeah. Like that family was like, “Help! I had no idea I was spending so much.” Well, it's a good thing. It's good to be disturbed because when you're disturbed, you're going to make a change, right? If it's the ostrich with the head in the sand, you don't even know, you're not going to make the change that's necessary.
And this is so important in retirement because it's not like you can just go out and get another job for the next 20 years, right? So we have to get this right on the front end.
Don't stop tracking with this. Also, if you, if you feel overwhelmed, you made a mistake or this category just seems out of control, don't stop tracking, keep tracking. And if it leads to disagreements about finances with, you know, your spouse or your partner, you know, recognize that those disagreements are often one of the major reasons cited for divorces. You want to work through that and you can work through that. So you want to continue the conversation in the difficulty, continue the tracking in the difficulty, and you will learn how to make those changes. And in some cases, it's important to sit down with a marriage counselor, and that's perfectly fine.
Jim, with your background in education and counseling, you certainly know how important that is. Do you have any insights for us on what a couple might do if they're just finding that they're kind of at a crossroads, they realize that they're spending too much in a category, they can't agree how to resolve this? What are your suggestions?
Jim Uren:I would concur. Certainly a marriage counselor can be helpful. It sometimes seems maybe minor if otherwise, generally the marriage is fine, but it can still be very helpful.
Sometimes even a financial advisor like ourselves can help at least set some of the parameters. One of the recommendations is, of course, to have an agreement upon how much you're willing to spend without consulting each other. And that can be helpful.
And although it can be hard, a lot of the latest research is suggesting that couples who combine their accounts actually tend to have a lower rate of divorce. So rather than just keeping everything separate financially, those who combine, which does require more, obviously, discussion and agreement, but that can help.
So I know too, John, kind of switching gears a little bit, one of my concerns is I know I'm not alone when I think about these apps, they all look good, but what about security? That's a big concern that we've got today. How safe are these apps from that standpoint?
John Bever:Yeah, that's a really, really good point.
Well, obviously the most secure app is one that is offline, but that's not always practical. If you're offline, then you're going be doing a lot of data entry yourself. So what you want to do is you want to make sure that what you use incorporates bank level security and encryption. And you can find that out by looking into the details of the app and oftentimes in the FAQs.
So if you use any kind of account linking, downloading, electronic tracking, you definitely want to do that. I know some of the apps, they'll actually understand what store you're in and will prompt you to plug in something into the app. So you want to be very aware of the security that you have there.
And you can search the internet. There are many good articles about this. Really, this is a complicated area. It's too much to cover in this podcast, but there's a lot of good resources on the internet.
For example,I just did a quick search before this podcast articles in the last 12 months. I queried, “What is the most secure budgeting app?” – U.S. News, “How Safe Are Budget Tracking Apps and Software?” Forbes, “Best Budgeting App”. Fortune, “The 10 Best Budgeting Apps”. Nerd Wallet, “The Best Budget Apps”. Motley Fool, “Are Budgeting Apps Safe?”
So there's plenty of resources out there to go ahead and take a look at, to make sure that what you're using is recognized as secure. And if you need to, take a look at the FAQs and some of the details on the program. And if you need to, actually talk with someone who's an expert in the industry on security with the internet.
So what works for me, I pretty much stay offline. So call me old school. Call Pam and I old school, but, we still do operate with a manual entry. I'll tell you what's good about it. It forces us to talk about things and we do operate with a central account. And we also have some of these categories that we just put a budget amount out there, and it's really up to each person to spend however they want to within that category.
Jim, any other thoughts that you have for what works for your household?
Jim Uren:I would agree with that. We, as I said, use Quicken and so that's not a lot of connectivity that we sync with bank accounts, but we're not syncing on a daily basis with some of these apps. But as I mentioned, I'm getting a little antsy. I'm wanting a little bit more convenience. So that's one of the reasons I'm excited about this episode.
And so tell us a little bit more, John, about tracking cash for those who still use cash. Because some people use cash and other people use very little cash. I tend to be a hardly have any cash on me type person.
John Bever:And I tend to be a big cash spender. So there's two differences right there. So if you need to track cash a little bit more frequently, or if you're having some challenges with it… Number one – Envelopes. It's an old system, but it works really well. And this is the physical envelopes. So you actually pull out several envelopes and categorize them, name the categories on there and divvy up the cash on the front end. You get paid, you take out $500, you divvy it up between the categories, between the envelopes. And then when you need to go spend something, you grab that envelope.
Or what some people do with the envelope system is they put the cash in, and then when they come back from the store they reimbursed their wallet with that amount of money. You'll figure out what works for you, but envelopes is one way.
Second thing we talked about is collecting receipts for recording. We've hit this a couple of times, but that's a really important thing if your cash is more than just an occasional expense here or there.
I have a client, incidentally, who keeps a notebook in her car. And this goes back over 30 years. When I first met with her, she was a beginning teacher and she keeps a notebook in her car because every time she's spending cash, she's out somewhere. And so she comes back and she gets in the car and records what she spent. And that's how she does it rather than being a receipt saver.
But the important thing is, however you do it, try to keep it simple. You can always add more categories in the future.
Jim Uren:That is very helpful advice, John. But to throw a wrench in the works, we've all had this experience, right? Where we're humming along and then all of a sudden there's a big, what we call a budget buster comes along, right? I got a $1,000 car repair or something, and then it gets really discouraging. What do we do?
John Bever:Let's start with the credit cards, because that can just alone be a budget buster across categories. People just pull out the plastic, slap it down, boom, away they go.
A 1999 study by Professor Drazen Prelick of the Sloan School of Management. looked at irrational spending behavior focusing on spending habits that are imposed by self-imposed spending rules. So I say, “Hey, I'm going to limit my spending in this category.” So for example, like concert tickets, I'm never going to spend more than $200 on a concert ticket. Might not be practical, but that's going to be my limit. In the study they compared cash buyers to credit card buyers in a silent auction. They found that those using credit spent more than twice the amount as cash buyers and frequently broke their own spending rules.
Well, one conclusion is that we spend more when we disconnect the pleasant buying experience, and there is a pleasant buying experience, from the unpleasant paying task. And this has proven out in many stats since that study.
So if you find it very difficult to rein in your spending, you might want to switch to spending cash for a while. That way you're getting that immediate recognition and the unpleasant task of paying for it. I know for myself, if I spend cash, I'll typically spend less than if I'm even going to use a debit card. So in extreme cases of uncontrolled spending, we actually recommend locking up the credit cards for a period of time.
Now in this digital age, that might be almost impossible. So an alternative is to lock up the credit cards except for one, and have that one have a low credit limit on it so it really forces you to almost immediately experience the negative side of buying.
And I know for some people, the buying experience it's almost like a drug for them. It's a way that they actually get the endorphins going. There's research that indicates that. So if you find that you have a deeper problem with this, again, this takes us back to seeing a counselor, a therapist to help you work through that.
Jim, would you address how to handle some of the specific budget busters since you brought them up? – Repairs vacations, whatever, taxes.
Jim Uren:Sure, I'll give it a shot. So, one option, of course, is what we'll just call a slush fund. And that's simply, you know, you have a category or your big ticket items, whether that's your house, appliances, autos, boats. Things that boy, when there's a repair, it can be pretty big.
And when we help folks put together their spending plan one of our rules of thumbs, for example, on the house is that we'll often have them budget about 1 to 2% of the value of the house. So if you have a $500,000 house, maybe each year we'll have you set aside $5,000 in anticipated repairs.
Now, the older, the home, the higher, the percentage, you might have to get closer to 2%, the newer, the home that might be much lower. If it's literally a brand new home, you might be able to get away with less, but anticipating the fact that at some point you will have to have repairs for your house, your car, et cetera.
And so just have that as a spending category where that money is being set aside each month. Um, similarly, we, uh, use escrow, right, for annual expenses. If you own a home and you might escrow, um, your monthly payment, so they're taking your, your money and setting it aside for your property taxes, your insurance premiums, etc.
You can do something similar. A lot of banks, for example, I know like our credit union, we can create kind of separate categories. So we can create, for example, a vacation account. And we can just say, “Hey, every month, you know, set aside a couple hundred dollars to go into that account.” And so we can see that accumulating. And then when it's time to go on vacation, we can say, “Okay, this is how much we've got in our vacation fund.” And so the perk of course, is that we can spend that guilt free, but we also know that's our limit.
And then you can also set up physical or digital accounts as well. So that are somewhat like an envelope system. So for example, we do this with our grocery budget. I do most of the grocery shopping. That's usually one of my Saturday morning tasks. And so we actually, every month, we have a separate credit union that we send money from our main credit union over to every month. And that's my grocery budget. So I literally have a debit card that's just for groceries.
But what that does is that limits my spending because I know I've only got so much money in there. And so by the end of the month, I've got to be more careful so that my card doesn't get declined at the grocery store. And I always joke, inevitably, there'll probably be a client behind me when my card gets declined at the store.
But that's one of the ways that we limit our grocery budget so that I can keep track of that and make sure I'm not overdoing it in any given month. So those are some options.
John, the other big one though, that can really, really throw a wrench into the works is medical expenses. Medical can be a big issue in retirement. What suggestions do you have when it comes to these medical expenses?
John Bever:Yeah. And when we say big, it can be 20, 30, $40,000 of unexpected expenses. You know, a lot of this depends on the plans that you're in. So one of the first things to do is to just take a look at the plans that you are in and recognize that in retirement, your retirement healthcare is typically very different than your group plan.
First of all, recognize there's a difference between Medicare Supplement and Medicare Advantage. Traditional Medicare A and B plus a supplement plan typically is going to cover more of your expenses than Advantage plans. Advantage plans may be cheaper on a monthly basis. But there's more nickel and diming in there.
So with an Advantage plan, you need to definitely have that slush fund that is just for medical and that needs to have quite a bit of money in there just for the Advantage plan, maybe even as much as $10,000 that you can tap in the event of a large emergency.
Also recognize that the premiums do increase with age and inflation. So that's a part of this is that your premiums for those products are going to go up over time. And so that needs to be built into the plan also. So then how do you handle things like vision and dental and hearing where they might not be covered by your Medicare supplement (typically not) and what you may get with the Advantage plan might not cover much?
Some people actually take out separate policies for these, but as an example, my recommendation for my clients that don't have separate dental is to just keep $20,000 set aside just for dental at some point in time. Now they might not use that money for 10 or 15 or 20 years, but it's there just in case.
And we earmark that and there's different ways that people earmark it. Sometimes they'll put that, you know, into a treasury direct account and buy iBonds. Sometimes they'll have that be a separate account at the bank if they're earning a good interest rate on that. Sometimes we'll just have that parsed out in the plan, which we can do that. We can actually parse out these goals for the future in the financial plan. And so we know it's part of the whole portfolio, but it's already been accounted for.
Then there's the big one, which is long term care. The end of life care can be very expensive. If you don't have any insurance for that, you know, paying out of pocket, you're looking at usually at, at minimum $6,000 a month, upwards of 12 and $15,000 per month.
So that becomes a planning issue. That's going to be very hard for you to self-fund. And so that's an important thing to talk with your financial advisor about. We do make that part of every one of our plans that we do for our retirees. And watch for a future episode on that long term care.
So with medical, it's almost a whole separate topic unto itself of how you deal with that, but definitely having some kind of a slush fund available for that, recognizing increases that are going to happen, and then evaluating the type of coverage that you have. Those are the things that you would need to look at for that particular area.
Jim Uren:You mentioned Medicare, John. We also have an episode, episode five, “Navigating the Medicare Maze.” And that is a helpful episode too, for folks who are thinking about the year they retire.
Now let's jump in, John, to the specific apps and tools that you can use to simplify this process. With, as you mentioned, I think over 3 million plus Mint users that are now orphaned, what are some of our options?
John Bever:Okay. And this is the fun part.
You know, this is where people want to start, but we're finally getting there. And so tools to consider one of the oldest tools, think about this, one of the oldest tools. is envelopes, not the software, but we talked about before. Great for those not using smartphones, works well for people who are very tactile processors. And you know, my mom used envelopes, we used envelopes early in our marriage. So, hey, if it works for you, that's great.
Second tool. Maybe a paper ledger or the electronic version of that, which is a spreadsheet. Particularly for those with an engineering brain that can work very, very well.
Third tool might not have thought of this, but it's a scanner. So if you are actually going to be a receipt saver, then you want to get one of these scanners and they'll actually categorize based on if the scanner can read the place that the receipt is fun from. It'll actually categorize that for you.
And then lastly, the spending and budgeting apps. So some of the most popular budgeting and tracking apps are YNAB. That's Y-N-A-B all in caps. Next one, Simplifi. Now that's Quicken's product. Now it's very different. It doesn't look like Quicken. It doesn't operate by like Quicken, but it's offered by Quicken. Third one, Goodbudget. Now this formerly was Easy Envelope Budget Aid. Next Empower. This was formerly Personal Capital.
Next one, Wally. Next one, EveryDollar. Next one, Monarch Money. Next one, Zeta. That's Z-E-T-A. Now that's designed for couples and is very helpful, along with another one called Honeydue, which is also very beneficial for couples. And then Credit Karma, the replacement for Mint. So if you're a Mint user, you've already received information on this. They want you to switch over to Credit Karma. If you're not a Mint user, if you're looking at starting something brand new, certainly you want to take a look at Credit Karma.
Jim Uren:And the good news is all of these apps are available both on the iOS, Android, and a lot of them on web platforms. So that is good. You've got a lot of options.
John, in the final minutes, we've got, let's just highlight maybe the top three most popular apps, what did you find there?
John Bever:Right. Well, it's no longer Mint. And not going to do Credit Karma because we don't know the jury's still out on Credit Karma.
So we're going to start Goodbudget. It has a free version. So this is great for those that are thinking, you know, I just don't want to spend anything for this. It's a free version, not just a trial. It doesn't sync with any financial accounts. So that's good for those that are most concerned about security or may have limited security knowledge. How do I make these things work?
You do have to manually add account balances. You assign money to envelopes, which is again, is a good transition from those that are on physical envelopes, but maybe want to transition and try an electronic or digital format. And the free version does allow you to operate on two devices.
Now the paid version allows unlimited envelopes and accounts plus up to five devices. This is a great place to start if you're just getting familiar and don't want to spend money to start with.
Now, the next one is YNAB, and that actually stands for You Need a Budget. So, just forget it says budget, right, like you need a spending plan, YNAB.
Best if you don't want to link a bank account, and they do have a desktop option. So, YNAB is also known for its zero based budgeting approach, and what does that mean? It means you give every dollar a job, it's got to go somewhere. It's very good at helping users break the paycheck-to-paycheck cycle and to save money.
The app is very user friendly, but it does come with a subscription fee. It's not very much, it's fairly nominal. Many users find the cost worth it for the financial insight and the support that it provides. It prompts you to make a decision about how you allocate your income. And it's really best for creating and managing your spending plan.
Presently, it is one of the highest rated apps on Apple store and Google Play. And you can try it out for free. For 34 days, not 30 days, not 31, but 34 days. And here's a neat one. College students can use it free for up to one year. So this was not available in that version when my oldest went off to college, but if it was, I would have definitely recommended that for her.
Third one, Simplifi. Great detail like Quicken. Remember this is a Quicken product, but it is totally different than Quicken has a very different feel. So you can connect all of your investment accounts. So if you're looking to be more detailed with this, Simplifi is a great way to go.
You can connect all your investment accounts, not just bank accounts. And the investments dashboard is more robust than the other apps that are out there. However, it only gets mediocre ratings in Google Play store. So there you have it. There's three ideas for you to start with based on where you might fit.
So Jim, I got a question for you. What was the first tracking tool you used?
Jim Uren:So the first one we used was actually a folder of just grid paper. And we would track everything. And when we first got married, I was actually, um, I still had a year of college to go when I got married, so we did not have very much money and we budgeted everything.
Including, I remember, my wife would budget for our Christmas tree. I think at the time we budgeted $36 a year for that tree. And so we would literally set aside $3. We'd write down $3 every month in our sheet so that we had that ready to go at Christmas time.
I will say I've played with YNAB a little bit. There's a lot of strengths with that one. It's a little bit harder for folks whose income fluctuates greatly.
Jim Uren:But if you've got a more steady income, that's a little bit better.
I've not used Simplifi, but I will say one of my disappointments with it, because I am a Quicken user, you would think Simplifi and Quicken could actually integrate. They do not.
John Bever:No, they don't.
Jim Uren:So don't let that throw you. If you're a Quicken user, you'll get no benefit by Simplifi. It's not like they can talk to each other. So those are just some options.
Okay, John, now a final quiz question. What is the most popular tracking tool of all time?
John Bever:Okay. Let the listeners think about that.
Well, it's actually paper. It's the first tool that most people use. And Jim, you just mentioned it. Yeah. You had a folder. For Pam and I, we had a fancy spiral bound, that I don't know where she got it from, that had the 12 months and all the grids were there. But again, it was paper and it had little pockets that we could put the receipts in.
But I'll say this, it is quickly losing the number one spot. Especially among the younger generation. And best feature about paper is it can't be hacked. The worst feature, it's very limited and very time consuming. So we do recommend you take a look at these digital apps.
Jim Uren:And you need to make sure to enable what's called the multi factor authentication if they have that. And I would try to focus on apps that do. That's just simply a double check, a way to help protect your data, protect your phone. And so we strongly encourage you to use that feature.
John, anything else that the listener should be thinking about?
John Bever:Yeah, there is. I referred to this earlier, and that's scanners.
So if you're a receipt saver, you might want to consider a receipt scanning app that links to your budgeting app. There's mixed reviews on these, but it doesn't cost very much to try it out. Some of the examples are Expensify, Klippa, that's with a K, K-L-I-P-P-A, Shoeboxed and Verifi. Now most of these do have a monthly cost, but the time savings is definitely worth the cost because you can imagine it takes quite a bit of time to manually enter.
Many budgeting apps actually include a scan feature now. This wasn't available many years ago, but they're now starting to include those. Most do have a limit on the number of scans per month, so you want to be sure to choose one that fits your need. And of course, you also need to look at the flexibility that you have in customizing your categories, not only with these scanning apps, but really with all of the digital apps that you'll be looking at.
Jim Uren:That’s great. So lots of great information today.
John, maybe just give us a quick summary.
John Bever:All right. So first thing you want to do, if you haven't done this before, consider how you spend. Do you spend with cash, debit cards, credit cards? Then from there, you can pick a tool – paper, desktop, or mobile app. Try something. Don't worry about, you know, trying something that's not going to work. Okay, if it doesn't work, you can try something else.
Then you want to really get into the process of tracking your expenses on a regular basis. And then the most important step, number four, is to review the spending at least monthly, and don't give up on this.
Next thing, address your budget busters. If they crop up, if they're there, then you can address those budget busters by maybe using cash, setting up escrows, adjusting your spending plan, maybe even having multiple accounts at your bank or credit union. Credit unions are very good at allowing you to have multiple accounts with no additional cost or reduction in your interest rate.
And then be sure to evaluate how the tool is working. You know, it's easy to kind of get stuck on something. “Hey, it's what I've always done.” But be aware of what's out there and take a look, because you might find something that's going to make you a little bit more efficient.
All right. Well, we always end our podcast with something we're thankful for, but before we share what we're thankful for, Jim, what do we have coming up on the next episode?
Jim Uren:So the next episode should be very helpful. We're going to be focusing on what we call the 7 Primary Retirement Predators. So we're going to discuss the seven things that are the biggest challenges that people face as they plan for and prepare for the year you retire. So you're not going to want to miss that because you're going to want to make sure that you protect yourself from each of these seven retirement predators.
So John, what are you thankful for today?
John Bever:Well, I would say that I am thankful for the programmers and developers that have created these tools, you know, digging into this a little bit deeper. I mean, there's a lot of creative people out there that have worked to put together these apps that really are useful and really helpful. I’m just thankful for those programmers and developers and creative types that have put these things together over the years.
Jim, how about you?
Jim Uren:I would agree. I am thankful for them, but I'm also thankful for my wife. When we first got married, I did not want to do this at all. I just thought, let's spend money. And boy, it really changed because I remember again, when we first married, didn't have a lot of money, and I think I needed to buy some shirts or something for work. And, you know, she said, “Hey, we've already got money set aside for that.”
And then that was when it clicked. Rather than being restrictive, this is actually freedom giving, right? Because I could go spend that money without feeling the stress because we already had money set aside in our clothing budget. And so I'm really thankful for her and giving me that initial perspective on just the freedom that a good spending plan can provide.
Well we hope you've enjoyed this episode and that you've gained some practical insights into what budgeting tools may work best for you as you put together your spending plan and as you prepare for the year you retire.
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We look forward to having you join us for the next episode. See you soon.