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1 Reason Your Budget Calculator May Be Your Worst Enemy

By Justin Loiseau – Mar 22, 2014 at 9:30AM

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If you're bored with your budget calculator, here are three simple steps to take back control.

Keeping track of your money with a budget calculator has never been easier -- and that's a huge problem. Here's why, along with three simple steps to keep you on a path to profit.

Automation station
Budget calculators are abounding. Every major bank has an app for you to follow your finances, and third-party providers are jumping on the opportunity to add your accounts to their systems. Intuit's (INTU 3.33%) Mint is undoubtedly the most famous, but a search for "budget calculator" on my Apple iPhone brings up 184 results, from a gasoline consumption estimator to a wedding budgeter.

Source: author; Intuit's Mint is the budget calculator of choice for 10 million users 

The best budget calculators are the simplest. You enter your account information, it syncs with their software, and you're given a comprehensive view of your earnings, consumption, cash, and anything else your heart could desire.

And that's where it ends for most folks.

Activate your account(ing)

Source: Flickr, Stuart Conner. 

Budget calculators can be a lot like that workout machine gathering dust in your house. At first, it sounded like a great idea, so you got one. But all too soon after, the novelty wore off. You got busy. It was a hassle to go down to the basement. You found a new TV show. Whatever the reason, that grand plan got pushed to the back burner, and you were left with a large hunk of metal lurking in some forgotten room.

To keep your budget calculator from becoming your next Bowflex, here are three simple steps to staying active with your accounting:

1. Make it a habit


Every two weeks, a reminder pops up on my computer to review my finances. This is the difference between an idea and a habit. By setting a schedule for yourself, you're essentially creating periodic opportunities for success. That little nudge is all I need to begrudgingly open up my budget calculator and look at just how much I've spent on chocolate in the past 14 days.

If you have email or a phone, creating reminders is ridiculously easy. Add one to your Google calendar, write a task in Microsoft Outlook, or have Siri set one up for you on your iPhone.

2. Keep it relative
Earnings and spending don't mean a thing by themselves. To make your budget calculator work for you, keep everything relative. First, keep finances relative to time. If you see spending increasing over time, ask yourself whether you can afford it. If earnings take a dip, see where your revenue is wrinkling.

Second, keep budget items relative to one another. It might seem like an unnecessary splurge to get a haircut twice as often, but if that's only an extra $20 compared with the $700 you're spending on rent, keep things in perspective. If that extra haircut makes you feel good, keep it in the budget.

On the flip side, if you're looking to save money and there's major spending on a category you could cut back on, like lodging, it might be time to consider a cozier crib.

3. Set goals
A major part of active accounting is proactive accounting. In the words of my little league baseball coach, "Don't just stand there -- do something!" Every budget calculator review should include lessons learned, whether it's "That mocha Frappuccino double shot vanilla really wasn't worth it" or "I guess it did help to have that job."

Creating future precedent based off past learnings is the easiest way to make your budget calculator increasingly useful. Keep your goals simple, attainable, and easily accountable. You'll feel great when you achieve them, and you'll have even made or saved more money in the process.

Justin Loiseau owns shares of Apple, Google, and Intuit. The Motley Fool recommends Apple, Google, and Intuit and owns shares of Apple, Google, Intuit, and Microsoft. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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