In this post, I tried using my budget in the EveryDollar™ app (free version) and compared them. I tried several techniques when I started budgeting and I really hated all of them. I’ve shared my technique previously and you can download the spreadsheet template here.
The struggle that I have had was primarily never truly being able to reconcile my account balance. This seems to be because of the credit card and other delayed payment techniques. However, I kept ending up with more money than what was accounted for. Once, this was because I’d forgotten to pay taxes, so this isn’t always a good thing. Usually, it’s caused no harm.
I really struggled with sinking funds in my spreadsheet, and this was the focus of my previous budgeting post.
Basics of the EveryDollar™ App:
So EveryDollar™ was created by Dave Ramsey’s company to support their clients that are trying to get out of debt and build wealth. The free version requires you to enter everything yourself. The paid version will download your transactions (maybe). There may be some other differences such as removing ads. The Ramsey team is good at keeping it to just advertising their products but imagine your budget is a blog post with ads between your money categories. That’s the free version.
I say maybe on downloading transactions because bank security is an ever-changing environment small banks typically can’t afford custom patches, and even Intuit can’t work with every bank. I did not test this, but I use a small bank.
I also can’t speak to how it would work for actually tracking your debt snowball. I don’t have any debt to pay off so it doesn’t apply in this comparison. What I am covering is your zero-based budget and tracking sinking funds, without actually being linked to the accounts.
Setting up my budget in the EveryDollar™ App:
This was weird actually. There were some category descriptions that I confused. I somehow put my property taxes sinking fund in as if it was a mortgage. For those with a mortgage, they could be tied together, but the descriptions caused me to assume that’s where the property tax sinking fund should go, but it isn’t a monthly bill, so this really wasn’t right. I fixed it later.
I had to look through their help section to figure out how to set up a category as a sinking fund, but once I learned it, it was easy to do. It was also a little confusing if I should have had both a monthly budget and a sinking fund. This is basically how I did it before, but it seemed a bit redundant to make it two things. EveryDollar™ allows you to plan to put in monthly money as well as use from the same category and this worked almost identically to my spreadsheet and helps keep the number of line items low.
I LOVE how EveryDollar™ handles sinking funds compared to Intuit’s Mint™, which forces you to link an entire balance of an account to the “Goal” as it calls it. It just really doesn’t work the same. Goals in Mint™ aren’t intended to be pulled out of and added into at the same time. EveryDollar™ handles this just fine.
At the end of December, I made sure I could set up my exact tracked budget for that month to match exactly in EveryDollar™. I got it where it matched and everything was accounted for and then, after some difficulty, I made my new monthly budget for Jan. Unfortunately, it brought back categories I’d deleted, so I had to delete them again. I’m already weird and I don’t want that stuff on there or never had it. I think I may have fixed it but we’ll see soon.
The setup of returns to a sinking fund was strange but you can add money back to the sinking fund directly without calling in income first, so that’s great and works just like my spreadsheet.
What I love about my budget in the EveryDollar™ App:
Unlike Mint™, which uses one budget, EveryDollar™ allowed me to adjust my budget each and every month without impacting past records. I often have a few sinking funds that I contribute to in rotation or with bonuses, so it doesn’t happen every month. It even allows me to change my plan throughout the month.
This is how it should work. In case you didn’t know, budgeting isn’t accounting. The tools you need are different and the way it needs to function is different. You know the famous saying “Man plans, God laughs.” No budget ends up being exactly how you spend. You have a better shot of earning the same amount, but you’ll never spend the same amount. Accounting, is after the fact. It’s accounting for the expenses to make sure bills were paid and invoices were received and all expenses are covered by actual cash.
This process requires both, but most of these other programs really only account for your spending after the fact. This doesn’t allow you to be dynamic in your ability to handle surprises, like the burst water heater or poorly covered medical expenses that were hung up over another dispute. This is what is shown in the images. After being negative in columns I had no reason to think I’d spend in, I then needed to go adjust everything so that I could have every expense covered by CASH.
My other favorite thing about EveryDollar™ is how it handles sinking funds. Sinking funds are condensed and can adjust from month to month. The money could be combined in one bank account without double-counting anything. I believe the app sees all sinking funds as spending so this is why mine was a bit hard to understand. You’ll see below that I’m really duplicating things still but I don’t believe it’s necessary moving forward.
I’m going to keep fiddling with it until the end result makes sense. I’m also a bit nervous that using savings, except the emergency fund, seems to be ignored. This is troubling. If I overspent so much that I depleted sinking funds and dug into savings, this needs to be highlighted. Perhaps they are thinking savings transactions would only move to something making more money, but this isn’t the case.
What I don’t like about the EveryDollar™ App:
Subtotal categories. I would love to be able to subtotal all the sinking funds that are kept in one account so that I could reconcile it against the account balance.
The other BIG factor is this is not any normal type of accounting ledger. It’s very odd to see accounting done this way. Since their audience is made up of people who were never accounting before, it makes sense that they tried to make it less dense. I might be able to adjust to it but the engineer in me repels against having to toggle to see spent vs remaining vs plan. It is all still there though. In the app, it toggles as tabs, and on the website, it requires toggling by clicking on remaining/spent.
Another potential hiccup but necessary feature is that it’s very easy to change details regarding a transaction. I don’t know that I’d like always having to confirm a change, but I am concerned that I’m then messing up the accuracy.
In Intuit’s Quicken™, when you’ve reconciled a bank statement and then try to change things it un-reconciles everything so you have to confirm everything again (or it did back in 2006 when I stopped using it). These are the reasons people don’t do budgets though, so making it easier makes sense. Better to be mostly accurate with a budget than to not do one at all.
I haven’t found the ability to search for a transaction either. These are the types of features that Intuit does provide. It might be there and I simply haven’t found it yet. It was a split transaction that was throwing me off but I may have found it faster if I could search by the vendor and see both transactions across two categories. I found it but was really feeling my head split open!
I never was able to create a very good print-out either. It would be nice if it had a more complete financial report out. I didn’t spend a lot of time looking but by default, it was wanting to just match what I could see. There are some graphs available with an upgrade but nothing that’s exactly what I’d want to see. You can’t export into a .csv either without upgrading.
It’s a bit strange to me, that utilizing the sinking funds seem to count as “spending” and yet using the savings account does not. In my budget, I make sure that I move money from somewhere to cover overspending within the month. This is often planned, such as paying property taxes in December. I really don’t want it to count against my income for that month. It doesn’t make any sense for it to do so.
At the end of the month then, their little pie charts, do not show me if I really accounted for all the spending. I think they all use this same method, so this is not a negative in comparison to the other programs available but in my spreadsheet, I don’t count both my transactions into the sinking fund and then also my actual use of the money for its purpose. That’s double-counting the expense. I don’t like it and I don’t feel confident that my budget is reconciled. Perhaps they didn’t intend for you to be able to reconcile, but I do.
Would I recommend doing your budget in the EveryDollar™ App?
So, now for the real question. Would I recommend it? I think mostly yes. Many of my friends that are used to accounting ledgers I would warn about the simplicity of the view and the inability to easily find discrepancies. It’s really not a nerd tool.
Functionally, this program does what it needs to better than any other I’ve tried. And I’m serious. It works better than Quicken™ (I’m not sure it even tried to be a budget tool) and Mint™ and YNAB™ for budgets, at least at the free level. I haven’t tried the paid version of YNAB™. It does not reconcile as well as Quicken™ (which is an accounting tool) but at least as well as Mint™ and YNAB™. Now if you downloaded your transactions there might be an extra layer of confirmation available that I couldn’t see in the free version. I’d like to see them make a lock on the transaction that could be unlocked with a click, but it would provide one extra layer to remind you that you’ve already accounted for that charge.
Keep in mind, that I didn’t download the app until the last few weeks of the month so most of these transactions were entered in batches. My big issue started when I made payments by phone and had no dollar amount to correspond to. I should have retrieved the bill before allowing them to take payment but it really wasn’t the amount I was seeing on the bill. I should be able to reconcile this soon. I’m typically better at getting confirmation numbers and writing how I paid and the # onto the invoice. There were also a few autopayments that I received receipts before the bank export showed them. This is a problem no matter what software you use.
I do prefer the views of the browser version of EveryDollar™ over the App. It lets me see the Plan against either the Spent or Remaining at the same time. This is much closer to the accounting view I’d want. I’d rather see all three at once, I think, but this was less cluttered.
The more I budget, the fewer transactions I have, so personally, I wouldn’t hesitate to give this a try for a few months. Be ready for some struggles with the setup initially but that’s true for all of them. After that, it really has been fairly straightforward.
As I mentioned above, I’m still not terribly confident that my actual expenses were reconciled at the end of the month. I was able to figure out where the display numbers were coming from, but they don’t really mean what I think they mean. So, the fact that it was counting the spending out of my sinking funds against spending but not spending out of savings has me wondering if I set up the sinking funds incorrectly. The other possibility is that, like with other categories, I need to change the plan to spend out of those categories so that it doesn’t say I’m still “off” by that much.
If you decide to give EveryDollar™ a try, and you don’t like beating your head against the wall repeatedly, I would recommend paying for it (at least at first) so you have the support of setting it up. This would be especially useful if you haven’t yet learned the details of balancing a budget. It’s unfortunate to spend money when you’re trying to get out of debt, but I suspect if you’re just starting your journey, that they will save you enough to pay back that expense within the first month….Errr…eating out anyone?