best budgeting apps

Top 3 Budgeting Apps in Canada

When you are at the point of knowing that you need to start budgeting, where do you begin? Is finding the right app going to help you create a budget and stick to it? Do you need to use the “envelope” system, or should you go back to basics and make a budget book? The answer is going to vary, based on your abilities and preference, but budgeting principles are relatively the same with any option.

If you are looking for a budgeting app to help you organize your finances, I’ve listed the Top 3 that I would recommend for a few reasons: They are simple to use and are a good place to start tracking expenses and monitoring income levels to help create and stick to a positive budget.

Apps:

1.   Mint: This app would be the most popular, both from my own experience and from what I have heard from others. It is an integrated app that allows you to link your bank accounts, and investment accounts to allow you to see all of your account balances and transactions in one space. The Mint app will provide your net worth and spending history. Mint will automatically categorize your expenses and allow you to manually adjust any allocation errors. One of the biggest advantages is that it is free and easy to use.

2.   YNAB (You Need a Budget): This is another popular app that you can link your bank accounts to, or you can opt not to. It allows you to manually set up a budget, fill in your income, expenses, and balances in your bank accounts. This app will analyze your spending and help you to stay out of debt. YNAB has a free trial period, but you will need to pay a monthly or annual fee after the 30-day trial ends.

3.   Spending Tracker: This app does not link your accounts. It is a simple tool to track your spending habits to help you discover where your money is going and readjust your budget accordingly. You manually enter your income and expenses and create a budget. It is a simplified app that is user friendly for people with limited technological capabilities, and is a free app to use. 

Other budgeting methods:

1.   Write your budget down: On our website (wecanhelp.ca) we have a couple of free budget sheets that you can download and use. Seeing your income and expenses on paper for the month helps you see where your money is going, and where you could make some changes, if needed.

2.   Envelope system: This system isn’t as functional in today’s world where most want to receive an automatic debit payment. You could certainly keep your income in your bank account to cover the automatic payments that are deducted (always leaving a buffer balance for the unexpected). 

     You could then withdraw the balance you have after those expenses, and split the remaining funds into your discretionary expense groups in their own envelope. Write down what you spent the funds on as you go throughout the month on the envelope and analyze if you are overspending on underspending to see where adjustments need to be made to your budget.

3.   Separate savings account: Alternatively, you could have a separate savings account that you can easily make deposits to, but you can’t easily withdraw from. This method has you transfer your excess funds after expenses into a separate savings account. Usually, the savings account has an interest rate to help earn a few extra cents. The longer you keep the funds in the account, the higher interest incentives are throughout the year to encourage ongoing deposits.  

Where do you stand financially?

Budgeting and saving allows you to prepare for the unexpected and keeps money in your pocket. There is nothing worse than having a surprise charge go through your bank account disrupting what you have allocated for the funds in your account, and then the account goes in the negative, causing an NSF bank charge and missed payments.

If you can create a budget that covers all your expenses, allows you to save each month and service your debt payments, you’re on the path to financial success.

The best advice I wish I could pass on to anyone struggling with debt is; credit is not free money. In some situations, people are living off their credit to cover a shortfall in their income. Using credit for purchases is your most costly method to purchase a want or sometimes a need.  At the end of the day, the purchase is keeping you poor and making the banks rich, because the interest being charged will surely cause more harm than good. 

With interest rates increasing and third tier lenders charging interest rates in the range of 35% – 49.99%, you need to heavily consider if your purchase on credit is worth it, or necessary. Borrowing at a high interest rate is NEVER worth it and can cause a vicious cycle of keeping you in debt trying to pay back what you initially borrowed.

How to budget and set savings goals.

1.   Start with your net income that you make each month. Always base your budget on your lowest pay if your hours or income fluctuates. Excess income that you would make for overtime or bonus etc, should be used for additional savings, and goals.

2.   Figure out your fixed expenses. Payments that are fixed and are paid each month that really do not change include: rent or mortgage, power, insurance, car payment or transportation cost, and groceries.

3.   Figure out your variable expenses/discretionary expenses. This category can be adjusted to fit your income level. Remember to include your subscription fees, and bank fees. These costs tend to be forgotten about as they are low amounts and automatic.

4.  Don’t forget about your annual expenses – motor vehicle inspection, changing winter tires, property tax etc. (average that cost over the year and factor it into your budget as a monthly savings amount).

5.   Determine your balance (income – expenses = balance). From the balance amount you would sort out debt repayment and savings for future goals.

Is it time to speak to a Licensed Insolvency Trustee?

If you are in a position where your budget can cover your cost of living, debt repayment and allow you to save for retirement, keep up the great work! If your income can cover your cost of living, but servicing your debt repayment is a struggle then this might be a sign to reach out to a Licensed Insolvency Trustee to discuss your options so you can have a fresh start.

About Author

estate manager New Brunswick, Maritimes, Amanda Sherwood

Amanda Sherwood

Amanda started with Allan Marshall & Associates Inc as an Estate Manager in 2008 where she learned and gained valuable knowledge about the industry. In 2022, Amanda received her Chartered Insolvency & Restructuring Professional (CIRP) designation and attained her license as a Licensed Insolvency Trustee (LIT)