You probably tried one of the many budgeting apps or at least tracked your expenses in Excel? Why do we almost always stop? 🤔 It is because detailed budgeting adds no real value to our lives. The quality of the apps has nothing to do with it.
In fact, some are excellent with top design (Copilot, Monarch or Finanzguru); they read in your bank data and have nice features. And your bank offers a tool for expense tracking. Categorize your expenses, set goals and look at the charts. Take charge of your money! And similar calls to arms.
So why is it that none of the budgeting apps is a real success? Or the other way: why does almost everyone, except the outliers, stop tracking and budgeting after some time? 🧐 What, in comparison, DOES WORK for everyone? Read on. 😎
1. We are different but budgeting apps are the same for everyone
100 people will have close to 100 opinions on money and how they want to spend it; everyone is either more of a spendthrift or more of a tightwad. In relation to money we have different levels of patience and different perspectives on risk and time. But all the apps offer the same solution: tracking and planning of your expenditures. 😴
2. Precise tracking of each expense is impossible
Cash was king; now everything is digital. Downloading your transactions is easy and assigning them to categories should be easy. But still: you scratch your head with “was this 29.33€ three weeks ago a restaurant, bar, gift purchase or groceries? Ugh, no clue.” And then you also realise that it probably doesn’t really matter. And it doesn’t. What about the 50 from the ATM? Or splitting transactions between categories? Good luck! 🤮
3. Even automatic expense tracking will require manual interventions… forever
Some are selling rule based algorithms as AI that magically assigns your costs to correct categories. But it doesn’t. It will work fine as long as you are dealing with Starbucks, McDonalds or your standard grocery store. But good luck automatically sorting 10 Amazon purchases between different categories. Ok, you could put them to “Internet purchase”, but what is the point? Or “cash expense” for that 50 from the ATM? Useless.😐
Knowing exactly vs knowing roughly
What is the added value of knowing EXACTLY how much you spent on restaurants, for groceries or for books, movies and takeaways in the last year? 🔬 Would be maybe maybe maybe a cool FYI, but … averages are fine and require less effort.
Almost everyone eventually stops tracking peanuts and is budgeting in a relaxed way. You track expenditures for a couple of months, establish averages, and then slowly phase out, or track only specific categories.
Conclusion: Are budgeting apps good for anything?
They are great to help you understand general spending behaviour and they totally make sense for a couple of months. But that’s probably it. They work longer for extremely disciplined people, but not for the rest of us. And that is because 100 hundred people have 100 opinions about money.☝️
Finally, what DOES WORK? 😎
Establishing your base works. Your fixed spend is defined by the amount of money you burn each month and in any case. This works for everyone. After you establish your base you are better prepared for any decision or budget that comes on top.
A basic rule for having a stress-free finance related life is to live below your means. And to do that you need to know how much of your “means” (=income) is burnt by your fixed costs.
That is what fixxo, personal fixed costs analyzer, is for. It will help you determine how much you spend in any case and this works for everyone.