Online banking has made it simple to keep track of our finances, but why stop there? Knowing your account balance is far less useful than knowing exactly where all that money goes, and a personal budget is a must in these trying economic times.
You could use a standalone budget application. These have traditionally been little more than souped-up Excel spreadsheets, but times are changing. The popularity of an application such as You Need A Budget proves that a friendly modern interface can transform a dry topic – particularly when you throw in iOS and Android companion apps.
But there’s an even simpler option than that. The newest wave of online budgeting services plugs directly into your online bank and credit card accounts to add a layer of control that can help you to save money on a daily basis. Riding on the back of Yodlee in the US, which works with major financial institutions as a go-between for all sorts of services, in the UK we now have Money Dashboard.
It tracks all of your accounts, producing graphs of where your money goes, your net spend and much more. But its most useful feature is the budget, which it can pretty much create for you automatically. Transactions will gradually be processed automatically as it learns your payees and direct debits, and before long it will be your online banking go-to when you need to save for a holiday, pay an unexpected bill or just find out whether you can afford another night out.
Of course, with identity theft such a hot topic, you should always be wary of handing over your logins. You do so at your own risk, but for its part Money Dashboard is very clear on the matter. “We use the same, industry-standard security practices as many of the world’s leading banks,” says the site, adding that Money Dashboard is read-only, so “it cannot be used for withdrawals, payments or to transfer your funds”. Your login is never actually stored by Money Dashboard; instead it’s securely transmitted to Yodlee, which provides the banking aggregation service.
If that doesn’t reassure you, our advice is simple: stick to a budgeting application that works offline with manually uploaded statements. But you can try Money Dashboard out with a demo account, which might just persuade you to sign up.
How to get started with Money Dashboard
STEP 1: Go to www.moneydashboard.com and create an account. If you’re concerned about security, click the Security button down the right side of the homepage, where you can read more about its encryption methods and how the site cannot process transactions itself.
STEP 2: When prompted to add a bank account, use the dropdown list or type the first few letters in the search box. There may be multiple entries for each bank – current, business, credit card, savings – so be sure to pick the right one.
STEP 3: The tricky bit: entering login details. This window will be specific to your bank; if you’re not sure which password or PIN belongs where, go to your online banking login page and compare the names of the fields. It might take a few tries to get it right.
STEP 4: After a short wait, your account (or accounts if you have several under the same online banking login) will be connected. You can edit the name and type and pick a colour for each. If you have more accounts elsewhere, click Add New Account from the summary screen, and repeat.
STEP 5: Click the main logo to go to the dashboard. This shows a summary of your activity, but it’s incomplete – note the Alert near the bottom saying you have untagged items. Money Dashboard can auto-categorise many transactions, but it needs help. Click Past Activity at the top.
STEP 6: Every transaction must be tagged correctly. Scan through the Tag column to spot any obvious automated errors, then click Show only untagged (top-right) to isolate those that need attention. For each transaction, use the dropdown to pick the most appropriate category.
STEP 7: For Direct Debits and recurring transactions, tick one or several boxes and click Edit to bring up more options. From here you can apply the same category tag to all existing and future transactions that match those selected, greatly cutting your workload.
STEP 8: Now the dashboard is up to date, click Future Planner at the top, and it will take a moment to auto-calculate figures based on your spending habits. Go to Budget Planner, and expand any of the categories to see your predicted spend. You can edit these amounts for future months.
STEP 9: That’s your basic budget, but there’s lots more to experiment with. Click the Help buttons next to any feature to learn how to set aside money for Savings Goals, alter your expected payday, and split transactions between categories.