How to find budgeting Nirvana with Mint.com

This guest post from Geoff Lennon is part of the “reader stories” feature at Get Rich Slowly. Some stories contain general advice; others are examples of how a GRS reader achieved financial success — or failure. These stories feature folks from all levels of financial maturity and with all sorts of incomes.

Though I've been a GRS reader since early 2007, I've largely been a quiet observer. I've often wanted to participate more actively in the discussion and community that J.D has established over the years, but for whatever reason, I never have.

But recently, when J.D. wrote about the Mint.com signup process, I finally felt I might have some unique insight to offer. In particular, it was his comment below that brought me to the keyboard to contribute:

The [Mint.com] Budgets section lets you, well, erect a budget to keep your spending focused. I haven't had time to play around here, so I can't comment on its utility. I'm hoping that Mint will allow me to put my beloved Balanced Money Formula (or some other broad budget framework) into use.

Since I use Mint for this very purpose — putting the beloved Balanced Money Formula into use — I wanted to share my approach in detail.

Finding the Middle Way

Prior to learning about The Balanced Money Formula on GRS, I regularly struggled to find the level of detail at which I should budget, a decision I know many of us deal with at some point or another. In my search to find “what works for me“, I flirted with the budgeting extremes.

When I started to budget, I tried to allocate and track every dollar I spent using very specific (read restrictive) categories. You probably won't be surprised to learn that this system quickly crumbled. Maintaining such a detailed budget took far too much time and didn't really provide me with much meaningful data for analysis.

On the other end of the spectrum, frustrated by failing in my first attempt, I completely stopped in my effort to track my spending…at any level of detail. This wasn't a very effective approach either.

When J.D. reviewed the Balanced Money Formula a while back, I saw it as “The Middle Way” of budgeting. It's not so detailed that your budget strains under its own weight, but it's also just structured enough so that it provides instructive data that can help you to course correct your spending and saving habits when necessary. (Hmm…The Middle Way of budgeting. Perhaps J.D. is my personal finance Buddha!)

As a quick recap from J.D. (who got this from Elizabeth Warren), The Balanced Money Formula suggests that “ideally, no more than 50% of your paycheck should be spent on Needs (and keeping them below 35% is best). Of the remaining amount, at least 20% should be devoted to Saving, while up to 30% can be spent on Wants.”

Finding the Middle Way with Mint

Since The Balanced Money Formula is tremendously flexible and easy to implement, you could certainly use an off-line method to manage it (e.g., Excel spreadsheet, ledger, etc.); however, I've found Mint to be a great tool for this framework, mainly because it automatically brings in my debit and credit card transactions for categorization, a major time-saver.

When Mint brings in your transactions, it works to automatically select an applicable category, often with mixed success. (Sometimes my monthly train/subway pass is read as Subway and posts as a Fast Food transaction!) However, if you have regular interactions with the same vendor (Gas Station, Grocery Store), you can apply rules such that a specific category is automatically, and more accurately, applied. Or, for more ad hoc transactions, you can manually select the appropriate category.

As for categories, Mint has many to choose from — perhaps too many. The image below doesn't quite do them justice, as each of the categories has a number of subcategories as well.

You'll notice that Needs, Wants, and Savings are not in the standard list of categories. As a result, you'll need to create them in order to establish your Balanced Money Formula system.

Creating new categories is easy.

On the Transactions tab, select a transaction and the “Category” drop-down. From the “Uncategorized” Category, select “Add/Edit Categories”, and on the following screen, select “Add a new category” to create Needs, Wants, and Savings, etc.

The Balanced Money Formula in Mint! The Balanced Money Formula in Mint!

Once you've created your new categories (I also use a Giving subcategory to track my charitable donations), it's time to review your transactions and to bucket them accordingly.

A few caveats:

  • I've found that the usefulness of Mint in categorizing your transactions is directly correlated to the percentage of your spending that is on a debit or credit card.
  • Check transactions are also easy enough to manage. But if you primarily use cash, this process will be slightly more difficult (unless of course you keep detailed notes on your spending. I do not).
  • Since I mostly use a credit card, I assume that any cash I get from the ATM is going to a Want and not a Need (probably not 100% accurate, but it's close enough for the Middle Way).

Once you've updated your transactions, for at least a month of historical data, you're now ready to review your spending against targeted budget levels. There are two ways to conduct this review.

Trends

Select the Trends tab and choose the Spending Graph (By Category).

The Balanced Money Formula in Mint!

At first glance, doesn't look so great, does it? One solid block of Uncategorized spending. Really useful, Geoff! Fortunately, Mint enables you to easily drill into the subcategories we just created.

Clicking the chart refreshes the data and shows your spending by Balanced Money Formula subcategory.

The Balanced Money Formula in Mint!

With this update, you can now quickly review your spending in the high-level categories and assess how well you're tracking to budget. As you can see in the above, my Savings are well on track this month; but then again, my rent check hasn't been cashed yet, so the picture will certainly change by month-end.

If you want a more precise understanding of the data, mouse over a section of the pie chart to see the number of transactions and your overall spending in the category (including % of total spending).

Compare these results to your budgeted percentage and you're on the Middle Way.

Budgets

For those wanting even more precision — mainly the ability to track to specific dollar budgets each month for each category — you can use Mint's Budgets functionality. While I won't review this functionality in detail, as the Trends view largely provides me with the level of detail I require, some may be interested in this view.

Based on the percentages you're targeting (converted to dollars), create budgets for each of the Balanced Money Formula subcategories. Mint will now track your spending (through categorized transactions) to your budgets throughout the month, providing another visual reminder of how well you're keeping to plan.

The Balanced Money Formula in Mint!

A Final Meditation

While rich data and glossy charts from Mint are interesting to look at, and can indeed provide helpful insights and motivation, it's important to remember that they're only part of the solution. This approach is only useful if it helps guide you toward making improved spending and saving decisions which are more fully aligned with your goals and objectives.

With that, and with these tools and approach at your disposal, I hope you too are now on your way to finding budgeting nirvana by walking the Middle Way with GRS, the Balanced Money Formula, and Mint.

More about...Budgeting

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Derek
Derek
9 years ago

That’s a pretty great idea!

Right now, I have my mint.com set up for only 8 categories or so, and it works very well for me. Since we are agressively paying down debt, we do not have a “fun” or “play money” category. Thus, if we ever splurge on something like a movie, it gets taken out of our grocery fund. It’s working out pretty great for us thus far. After all, we paid off $3,000 on our student loans last month! 🙂

Nicole
Nicole
9 years ago

Nifty! Good for you!

tnsp
tnsp
9 years ago

Could this be implemented using tabs? That way, you can maintain detailed transaction categorization (food, transportation, movies, etc.) while still dividing between needs, wants, and savings.

AC
AC
9 years ago

I see some folks swear by this and others YNAB. What is the difference? Which one is better?

Kimberly
Kimberly
9 years ago

Perhaps this is what I need to do. My budget is very specific because I feel the need to track every little thing. But with a full time job, a small business on the side, two kids and a life, I have a hard time keeping up with it.

However, I wonder if I could make three main “categories” with subcategories underneath to provide me with that level of detail. For example: Need (category) with Mortgage (subcategory)? What do you think? Is this getting too detailed?

Alison
Alison
9 years ago

This article really hit home for me. Thanks Geoff for taking the time to write it up. I have been using Mint for about a year but am new to GRS and the BMF. This will help a lot.

indio
indio
9 years ago

I have my own spreadsheets set up 8 years ago, when I first started to get a handle on my finances, so I’ve been reluctant to evaluate any of the online sites available today. Losing the historical view or transferring the data seems like anightmare. Also, when I read about all the hacking that is happening on a daily basis, for example NASDAQ’s announcement about its highly secure email system being hacked over the past year, I’m reluctant to use online tools. Now that you’ve detailed the path to financial enlightenment, I will be sure to take a look at… Read more »

Beth W
Beth W
9 years ago

Great post! Now I’m going to start an account at mint.com.

Geoff
Geoff
9 years ago
@Derek

$3K in student loans paid off last month, that’s outstanding! Very impressive.

8 categories is still a very manageable number from my perspective…still easy to maintain but provides some good insight into spending patterns.

Best of continued luck with the debt repayment plan…seems like you’ve certainly been very successful to date!

Thanks for your comment.

Geoff
Geoff
9 years ago
@Nicole…thanks!
SupportingParents
SupportingParents
9 years ago

This is one of the best articles I’ve read on here! I am an avid Mint user and this is so helpful to change my micro-budgetting into something so much easier to use. I could never figure out how to increase spending in one area and take it away from another without completely re-doing the budgets for that month. Thank you for adding in the instructions on how to change the categories into something that worked for you, I’m going to change my Mint around today and see what happens. I agree with #4, I would like some subcategories to… Read more »

Mike
Mike
9 years ago

Thanks for this article. I have heard of mint.com, and even looked at it. Not being a detail person, it sounded perfect for me, but I still needed a bit of direction, concerning the “how to” which this post gave me.

I will be setting up my own mint account today!

Quest
Quest
9 years ago

@#5 ~ Same here. I use my own spreadsheet that I set up 3 years ago. It works like a charm for me. Although I find the premise of Mint interesting, I figure if it ain’t broke don’t fix it.

brokeprofessionals.com
brokeprofessionals.com
9 years ago

I too worry about the mint.com security. At the same time I haven’t really heard any complaints and I already do so much of my other banking online…..so I’m not sure why I have that worry to the degree that I do. I do not think the balanced money formula is right for our family because we owe so much ($160k) in student loans….I think we need to keep “wants” at like 10% of our budget.

Geoff
Geoff
9 years ago

@Kimberly It certainly took me some time to get over the need to ‘track every little thing’ as well…so I know where you’re coming from! Especially with how busy you are, I’d definitely advocate for a ‘lighter’ approach to budgeting…it certainly helped me and I’m nowhere near as busy as you are! As for your question…since the ‘Needs’ category is already a custom subcategory under ‘Uncategorized,’ it doesn’t look we’re able to create a secondary subcategory under the ‘Needs’ subcategory we created. However, what might work for you is the use of a ‘Mortgage’ tag…you can still categorize the transaction… Read more »

Geoff
Geoff
9 years ago
@indio

Great points RE: the drawbacks to using Mint.com…data security is certainly a concern that many share (rightfully so).

Also, if you’re experienced with budgeting and have a lot of historical data, it would be unfortunate to lose that information.

As J.D. would say…do what works for you!

Thanks for your comment.

Leah
Leah
9 years ago

One big question (and this doesn’t just apply to mint users): What do you do with transactions that might be split into sub-levels? For example, say I go shopping at Super Target and spend $100. Maybe $60 was on groceries, $30 was on DVDs and board games, and $10 was on clothes. That doesn’t come across in the CC statement, and I might not remember unless I categorize immediately. Does that mess with the budgeting system anyone else uses? I haven’t figured out how to work this in my system (I use excel charts). I do like the interface you… Read more »

Geoff
Geoff
9 years ago
@SupportingParents

Thanks, so glad you enjoyed the post!

Please let me know if you have any questions as you work through updating your budgeting approach on Mint, would be happy to help you work through any setup issues, etc.

As for the subcategory question, I’ll point you to my reply to #4 Kimberly…not sure you can create a subcategory under a custom category like ‘Needs,’ but you can apply a tag for ‘Clothing’ and track spending by tags if you’re looking for additional detail.

Hope that helps!

Geoff
Geoff
9 years ago
@Quest

I have to agree…if your current approach is working for you, keep it up!

Geoff
Geoff
9 years ago
@brokeprofessionals

Agreed, that was my thought re: the data security concerns…the fact that I already have a lot of other online financial data (e.g., investment accounts, banking, etc.)…reduced my anxiety a bit.

RE: your comment about the Balanced Money Formula…I think that the formula is very flexible…you can tailor the %’s to meet your family’s needs. If 10% is the target for ‘Wants,’ then you can manage to that number each month. The %’s that Elizabeth Warren provides are just a starting point that can certainly be modified to your personal situation.

Thanks for your comment!

Geoff
Geoff
9 years ago

@AC From what I understand, YNAB is a desktop application…a piece of software which you download onto your PC (~$60 I believe), whereas Mint (free…w/ ads)is an online service which you use to aggregate your financial data from multiple online sources. This is why several readers are posting (very valid) concerns about data security…by using Mint, you’re relying on them to safely manage/protect your data ‘in the cloud.’ While I’ve not used YNAB, from the reviews I’ve seen, I believe it operates a bit like Quicken or other desktop budgeting tools. Looks to have very robust functionality and has received… Read more »

Pat S.
Pat S.
9 years ago

I’ve had a great experience with mint. Before I signed up, although I had a budget, I was rarely able to carefully track my expenditures. Since I use a rewards credit card to pay most of my bills, which I pay off monthly, Mint has been great, as it automatically categorizes my expenditures by category, and instantly tells me when I get close to my category limits. I recommend Mint, or a program similar to mint to everyone who asks about a good way to start a budget.

Geoff
Geoff
9 years ago
@mike

Thanks for your comment.

Glad my post could provide the ‘how to’ that you needed in order to get started!

Best of luck with the set-up process.

Please let me know if you have any issues during set-up…I would be happy to help work through any questions you might have.

Sara
Sara
9 years ago

This article provided an interesting application of mint’s functions to categorize transactions. Thank you for sharing. I prefer an approach that I think does the same thing, but sort of the opposite: I use mint’s regular categores for each transaction, but have added “needs,” “wants,” and “savings” TAGs. When you’re on a particular transaction, click on “Edit Details.” There you will see your tag options. If you click on “Manage your tags,” you can add new tags. This way, each transaction ends up being categorized in the traditional sense (e.g., clothing, gas and fuel, mortgage, television), but ALSO tagged for… Read more »

Geoff
Geoff
9 years ago

@Leah Thanks for your comment, great question. Mint does allow you to split transactions (‘Transactions’ tab…select a transaction and choose ‘Split’), such that you can spread a line item (e.g., Target CC charge, etc.) across multiple budget categories. However, as you mentioned, it can be a challenge to remember how much of the total was Want v Need…one way to address that (though not ideal) would be to keep your receipts in those instances and to ‘true-up’ Mint.com every so often (weekly/monthly). Hopefully the receipt line items would be descriptive enough for you to allocate to the appropriate category. Unfortunately,… Read more »

Jacq @ Single Mom Rich Mom
Jacq @ Single Mom Rich Mom
9 years ago

Leah (#17) – one solution would be to ring each of your categories through as different transactions on your credit/debit card. I just do a rough split myself on most things though – a couple of bucks here or there doesn’t usually matter.

lulu
lulu
9 years ago

I recently left mint because it was too hard to do the balanced formula – every little item had to be recategorized. I use yodlee now, which is only slightly better. At the very least, you can rename categories and set up rules to send your most frequent transactions into the correct bucket. Still a lot of line-item recategorization, but not as much. Also, they separate budgets into ‘fixed’ and ‘variable’ expenses, which roughly translate into needs and wants in practice. What I’d really like is a program that kept its own automatic categorization, but allowed you to designate ‘supercategories’,… Read more »

Geoff
Geoff
9 years ago
@Jacq

Great point!

Your ‘rough splitting’ is very much aligned with the ‘lighter’ budgeting approach that many enjoy…agreed that getting the split down to the last penny isn’t critical.

Thanks for your comment and insight!

Josie
Josie
9 years ago

Wow! Great Article. I have just begun to use Mint and refine my categories. But when I get the Trends at the end of them month, I don’t have really anything to evaluate it against other than my history. Adding the Balanced Money formula is the piece I have been missing. I think this method is going to help me out enormously with getting a better handle on my spending and savings. Have you considered letting Mint know about this? I think an integration of Needs, Wants and Saving as Main Categories and then subcategories of groceries, utilities etc would… Read more »

Geoff
Geoff
9 years ago

@Josie

Thanks much for your feeback. So glad to hear you found the article to be helpful!

Please let me know if you develop any questions when working to apply these changes to your current budget format, I’d be happy to help sort out any issues.

As for letting Mint know about the approach, I tweeted them the article this AM, but will follow-up directly as well to see if they would consider a more direct integration.

Agreed that having the additional subcategories below Wants/Needs, etc. would be very helpful for many of us.

Thanks again for your comment!

Geoff
Geoff
9 years ago

@Sara Thanks for your feedback, great point! Mint ‘tags’ are indeed an excellent way to accomplish the Balanced Money Formula, while also maintaining insight into the more ‘tradtional’ categories such as Utilities, Rent, Groceries, etc. I actually used tags to manage this for a while, but decided that categories worked best for me. Overall, think it was automation that lead me to categories…that is, Mint can automatically apply a category based on rules, but tags need to be manually applied each time (as far as I’m aware). Since I strive to keep a low maintenance budget, this made the most… Read more »

Geoff
Geoff
9 years ago

@Lulu Thanks for your comment, great points. Agreed, initially, it does take some time for Mint to get smart on how transactions should be properly categorized. After several months though, I’ve found that it’s now much more accurate at selecting Wants/Needs. Also, to minimize the line-item upkeep, I generally select multiple transactions (use ‘Edit Multiple’) and apply the category I want…this saves a lot of time. To your point about ‘super categories,’ I’d point you to @Sara’s comment (#24) about using standard categories (Rent/Utilities), but then applying ‘tags’ for the Balanced Formula areas (Wants/Needs). That approach might provide the balance… Read more »

Brad Hall
Brad Hall
9 years ago

One of the main issues with Mint.com is that they provide a ton of charts and graphs to help you track your spending but they all require a somewhat default classification system. It does fine if you allow it to track Burger King as Fast Food like it wants to. Then it shows up correctly in the budget tabs as well as the different trends such as Spending -> By Merchant. Almost every problem thats not “mint can’t find my bank” in the forums comes from people trying to force their own idea of how mint should work. Please take… Read more »

PigPennies
PigPennies
9 years ago

#17 – @Leah, I use Excel spreadsheets as well, and this happens to me often (mainly because I have a very detailed budget, so it’s easy for one transaction to be for multiple things in my budget). I have no idea how you’d handle this using Mint, but it’s really simple in an Excel spreadsheet. Every few days I enter the recent transactions showing up on my online bank and credit card statements, and I categorize them. If a purchase falls under multiple categories I just break it up. So, if I have a line item that says 2/6 –… Read more »

Zach
Zach
9 years ago

Great article, thanks Geoff!

Hannah
Hannah
9 years ago

I’m a big fan of mint. I don’t budget, though this article is inspiring me to at least set it up and see if I learn anything.

One thing I love on mint is the goals feature. It allows you to set goals and measure your progress. The interface is great!

Carolyn
Carolyn
9 years ago

I use Mint for more traditional budgeting, and I’m inspired by the way you hacked it for your use! I wish there was a way to tag transactions or give them double categories, because I’d love to use both of our systems combined! I’m glad you shared a new method for using Mint with so many people, I think you’ve probably made some converts 😉

Geoff
Geoff
9 years ago

@Zach @ Four Pillar Freedom

Thanks, glad you enjoyed it!

@Hannah

Agreed, I really like the Goals feature in Mint too, it works great!

Hope the article helps in your assessment of whether budgeting with Mint will work for you or not. Best of luck.

Please let me know if you have any questions, would be happy to help.

Geoff
Geoff
9 years ago

@Carolyn Thanks for your feedback, glad you enjoyed the article! While you can’t ‘double categorize’ a transaction, you can certainly combine the use of categories and tags. As an example, a trip to the movies could have an ‘Entertainment’ category, but you could also apply a ‘Wants’ tag…that way you could see the $’s spent on ‘Entertainment’ v ‘Restaurants’ within Wants, but still ‘roll-up’ to Wants if you wanted to. This method can also provide very useful information and analysis if you’re interested in a bit more detail in your budget. Tags can be created on that ‘Transactions’ tab…’Edit Details’… Read more »

Geoff
Geoff
9 years ago

@PigPennies

Thanks for sharing your insight on how to manage ‘split’ transactions!

Glad you’ve found a budgeting tool/approach that works best for you.

Perhaps my decision to use Mint is driven partially by the fact that I spend most of my workday developing analysis in Excel!

Geoff
Geoff
9 years ago

@Brad Hall Thanks for your comments. I’ll agree, to some extent, with a few of your points…though I’ll disagree with a few as well. 1) Agreed, for many people, Mint will probably be easiest to use when used ‘out-of-the-box.’ However, I think that spending a few minutes customizing the system to better meet your unique, personal budgeting needs is well worth the effort (hopefully it won’t take years – or even hours – for our fellow readers to develop a custom set-up!). While I can’t speak for them, it’s my hope that Mint would generally be supportive of this custom… Read more »

Ryan
Ryan
9 years ago

This is a really good idea. I’ve always liked the balance money formula, but could never find a way to actually keep track of it easily.

I’d probably edit this approach though and simply tag things as want, need, savings, if that would work. I just like seeing the total I spent on certain categories over time.

Geoff
Geoff
9 years ago

@Ryan

Thanks for your feedback!

Absolutely, if you’re interested in tracking spend data for specific categories over time, applying custom tags for Wants/Needs,etc. would be a great solution in Mint.

Best of luck in designing/finding an approach that works best for you!

Edward W.
Edward W.
9 years ago

Hey Geoff, Great post. Your post struck me because I went through basically the same relationship with mint. I tried to use their categories and then stopped caring. Then I read “I will teach you to be rich” did sort of a similar thing reconfiguring of the bills. I reduced my budgets to about 6 (bills/rent, irregular expenses, transportation, spending money, Groceries,self-improvement). I don’t really label my savings because they are already budgeted and sent to my savings accounts automatically and I can track them in my bank accounts within mint. Keep up the good work and maybe keep us… Read more »

SupportingParents
SupportingParents
9 years ago

Geoff, I spent about a half hour today changing my categories around and I’m loving the new “needs, wants, savings, etc.” categories. First, I think I was micro-managing to a fault… I really had no idea what I was spending on “fun” but could tell you to the penny how much I shelled out for Movies. With this method, I have a much clearer picture (less is more right?!) about how much of my check is going to things I need and how much I’m really saving. I was surprised to see that I am saving 3x the amount I… Read more »

SupportingParents
SupportingParents
9 years ago

I just read that people are looking at how to split transactions in Mint. There is a very simple way… when the transaction is showing on the “Transactions” page, click on the line item and there will be a button that says “edit details” and to the right is a button that says “split transactions”.

Leah
Leah
9 years ago

Thanks, everyone, for your great responses! I used to this when I hand recorded receipts (into a composition notebook!). I automatically download my CC data. I just started doing it, so I think I can adjust to separate the transactions since I’m not too far in yet. I’ll probably just download the monthly CC data, keep the receipts that will end up being split (via estimation, thanks for that idea!), and then add extra lines to split those few transactions.

Kelley
Kelley
9 years ago

I have a quick question for anyone who may be reading. When reading Your Money or Your Life and charting income vs. expenses…would you consider mortgage prepay as an expense or savings? Where would this fall under needs, wants, savings under Mint.com? I’m inclined to say savings since I view pre-paying the mortgage as a negative bond. Anyone care to comment?

SupportingParents
SupportingParents
9 years ago

@Kelley #48:

I would count the mortgage prepay as an expense because you still owe money. You are saving on interest but technically savings (for me) is money set aside to use at a future time. Since the money is going out, not coming in, it is an expense that in the long run will save you interest money.

However, if you like the idea of the pre-pay portion as savings you could use the basic mortgage payment as an expense and split the transaction so the extra portion is savings.

Kathy B
Kathy B
9 years ago

Thanks for sharing Geoff, however, I found Mint annoying as it would not interface with a couple of my accounts.

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