How To Use Money Management Software

If there’s one thing everyone wants, it’s more money — or, failing that, the ability to do more with the money they have. Money management software has proliferated over the past few decades precisely because people want to use computer technology to more precisely monitor their spending, save money more easily, and even do their taxes, banking, and investing.

But money management software, like most tools, is more useful if you have the skills you need to use it properly. First, you’ll need to decide what features you need from your personal finance tool — some robust, desktop money management software solutions offer a full range of personal finance features, like banking, investing, budgeting, tax accounting, and more. Others focus on just one or two aspects of personal finance, like budgeting and account monitoring. 

So, you may need to combine multiple money management and budgeting apps in order to get the functionality you want, especially if you want to do everything via smartphone apps or web-based services. You’ll also need to choose a budgeting method if you plan to use your money management software for budgeting. 

Decide What Features You Need

Money management software generally offers some or all of a range of features, including:

  • Banking services like account monitoring, balance reconciliation, and electronic bill pay
  • Budgeting features to limit spending and monitor cash flow
  • Financial forecasting features to estimate future financial needs for retirement, weddings, college tuition, and other looming major expenses
  • Investing help ranging from stock quotes and portfolio tracking to buying shares of stock

Many money management programs, especially software designed to run on a desktop computer, offer users the ability to generate reports that can help them drill down into their spending categories or slice and dice the data to get an overview of their spending habits, identify unhealthy spending patterns, and more. When choosing money management software and budgeting or investing apps, you should first think carefully about what you need from the program. 

Are you interested in tracking your financial health across checking and savings accounts, credit cards, loans, investments, and even real estate and other property? Then a robust, desktop money management software program might be for you. Do you just want to know how much you have left for discretionary spending this week or month? Then a simplified app like PocketGuard might be for you. Or, maybe you want to use both — a robust program can help you pay bills, set and achieve long-term financial goals, pay down debt, and do your budget every month, while a more streamlined app can help you keep your spending within limits on the day-to-day, without the need to keep a constant eye on the rest of your net worth numbers.

Choose a Budgeting Method

Once you’ve chosen your money management software tools, including any budgeting or investing apps, it’s time to choose a budgeting method. Did you think that using personal finance software would free you from the need to make a budget? Well, it doesn’t. Although, it does eliminate the need to manually track spending and income in a spreadsheet or on paper, which can make tracking spending much easier.

If you’re the kind of person who likes tracking every penny (and has the mental fortitude to actually do so for longer than a few days), then a strategy like zero-sum budgeting might work for you. If you’d rather not track every penny, but still want some peace of mind in knowing that you’re covering your essential expenses and saving towards your financial goals, a method like the 50/30/20 rule might be best. The 50/30/20 rule asks you to allocate 50 percent of your income for essentials, 20 percent for savings and debt repayment, and 30 percent for non-essentials. Using this method, you can pay your bills, save for your goals, and give yourself a monthly spending limit for unnecessary purchases. There’s no need to track every penny — as long as you stay below your spending limit, you’re good. Budgeting apps can help you track your spending so you’ll know when you’re getting close to your limit.

If you need to get a handle on your personal finances, money management software can help. Choose the right software and use it judiciously, and you can’t go wrong — as long as you have the self-discipline to stay within your spending limits.