David Sawyer is allegedly a guest poster at Monevator, but he seems to have gotten hold of the front door keys. Having already written several articles for us since publishing his debut, RESET, he’s now back to tackle UK budgeting tool Money Dashboard – one of his nine underrated tools for seekers of financial independence.
Sitting through a two-hour-long meeting. Eczema. That strange repetitive farty-clicking sound your nine-year-old makes in the recesses of his mouth.
Giving a staff member a ‘could try harder’ in their annual appraisal.
In modern life there is a long list of things that we simply do not like. They range from mild annoyances to activities that send shivers down our spine.
When we reach the sanctuary of our homes after a tough day at the office, we don’t want to be adding to them. Instead we pass the time on social media and watching boxed sets.
Even if we do summon the strength to do something self-improving, we choose our challenges carefully. Perhaps we read, phone a friend, scan a blog post, or pick up a podcast.
What we typically don’t do is make like an accountant, crack open a spreadsheet, and track our expenditure.
Sure we may have read Robert Kiyosaki’s Rich Dad Poor Dad and imbibed the “take good care of every penny coming in going out of your pocket” mantra.
Sounds good, but he retired when he was just 47. I bet he doesn’t do it anymore?
Why not budget?
It’s funny, but among my friends I know no one who tracks their income and spending like me.
Yet most of those same people works for organisations with someone tracking all the money coming in and all the money going out.
This person is called the finance director – an important support to the CEO.
You wouldn’t run a business without someone looking at the books like this. So why then don’t we do it in our personal lives? Which is more important?
When I point this out to my friends, the usual excuses roll out:
- I don’t know how to do spreadsheets.
- Life is for living (take aim, FIRE!)
- We always have enough, why do I need to know where every pound goes?
- That’s boring.
For most of my adult life I agreed. Until a few years ago, I never realised how much my family was blowing every month on things we didn’t need or want.
Then things changed.
Over a few months in the summer of 2017 we saved £900 a month, and diverted that money to our investments.
Zzzzzz. Yes, I know. It’s snore-inducing. It’s worthy. It’s not enjoyable.
On the flip side though, proper budgeting gives you a complete handle on your money – in most cases for the first time ever.
And if you use Money Dashboard it turns pain into pleasure.
David’s 13-point plan to mastering your budget with Money Dashboard
Other budgeting websites/apps exist. If you’re a fan of the US FIRE movement like me, you’ll have heard of Mint and You Need a Budget.
UK residents can use them, too. But the last time I tried, they didn’t sync with all my bank accounts. I gave up after a while.
Note: Monevator founder and editor The Investor owns shares in Money Dashboard.
Never used a budgeting website before? Closest you get to tracking your money is logging in to your current account every six months?
Here’s my 13-point plan to get you started.
#1 Get Martin Lewis’s Budget Planner
Go on to Money Saving Expert and download the ‘spreadsheet version’ of Martin’s Budget Planner. It is an Excel document, but don’t let that put you off.
It’s split into 13 categories and 90 subcategories. In each of the 13 categories you can add a further three or so subcategories of your own, if you really want to break down your spending. Unfortunately, you can’t change the existing subcategories.
Download it to your computer/Dropbox/Google Drive ready for the next step.
#2 Current account
Analyse your current account statements for the past year. Online or paper. Work out what you’ve been spending your money on.
Click the ‘What you spend’ tab at the bottom and fill out the subcategories in Martin’s Budget Planner (not too many or you’ll be creating work for yourself). Assign monetary values to each subcategory. Save this version.
This is ‘spendy you’.
#3 Amend and save a new version
Now have a look through every line item, chat with your partner/family and see where you can change your spending, normally to reduce expenditure but occasionally to increase it in line with what you want out of life.
This is ‘aspirant you’. Save this new version.
#4 Sign up to Money Dashboard
- It’s free.
- It’s fun to use.
- Your passwords are safe. Everything’s encrypted.
- Know that they do anonymize your data and sell it on to, for example, market research companies – but you don’t get owt for nowt as they say.
#5 Sync all your accounts
Sync all your accounts to Money Dashboard. Every current account, savings account, and mortgage account that you have.
It doesn’t take too long and they usually work first time with no hassles. (The only thing that’ll slow you down is finding all your passwords!)
#6 Set your budgets
Go back to your ‘aspirant you’ Budget Planner – that second version you saved with the more efficient spending you aspire to.
Now replicate the categories (Martin’s) and subcategories (some of Martin’s and all of the ones you added) in Money Dashboard.
To do this, click ‘add budget’ and type in the relevant category from Budget Planner. Then press ‘add tag’ and allocate the tags (subcategories) to the budgets (categories).
Repeat this multiple times.
Just name your budget category (in line with Martyn’s), set a budget for that category, and allocate the appropriate tags (Click to enlarge)
Adding your own tags in Money Dashboard enables you to replicate the pre-populated subcategories in Martin’s Budget Planner rather than finding similar-sounding Money Dashboard ones. This is crucial as you’re cross-referencing between your modified Budget Planner and Money Dashboard when you’re using the budgeting feature.
Set all these tags to be the same colour/type/icon so you can identify them.
By now you’ll notice your ‘transactions’ in the middle of the dashboard. Click on the ‘transactions’ tab at the top and they’ll go full screen. This is anything going into or coming out of your multiple accounts.
Transactions are important. By tracking all your myriad bits of moolah, Money Dashboard gives you a true ‘one pot’ look at your money (top left on the dashboard). And by money, I mean all that which is not invested.
As yet, Money Dashboard is no equivalent of the stateside Personal Capital, a truly one pot analysis of all your money.
However, more financial providers are hooking up with Money Dashboard all the time.
So, for instance, if your pensions are with PensionBee, a holistic overview of all your money in one place is possible.
For me (a Vanguard and Fidelity user) that dream will have to wait.
(Please Money Dashboard link up with these two global behemoths. Not to go all Kevin Keegan on your Edinburgh-based ass, but: “I’d love it if you did that.”)
#8 Tag your transactions
Every few days (or once a week if you like) go into your transactions, click each, and then tag them.
If you tick the box marked ‘Tag similar transactions’ it will remember for next time, so that when you log on seven days later after you’ve done another shop at Aldi, it’ll already have the transaction tagged as, for example, ‘food and household shopping’.
Of course, it’s not always as simple as that. If you buy a lot of gear from Amazon it’s unlikely to fall under the same tag every time, so un-tick the ‘Tag similar transactions’ box and tag each Amazon transaction.
#9 Splitting transactions
Whether you want to use this feature depends how anal exact you are.
Say if you were a fictional 47-year-old male from Glasgow who went to Lidl at Christmas for a mammoth shop.
On that trip, let’s say there was everyday ‘food and household shopping’, a big slug of ‘Christmas’ shopping and five January birthday cards (‘birthday cards and prezzies’).
You would go to the transaction, hover over the cost (in this case £242.34) and click ‘split transaction’. Then divide it three ways.
Splitting transactions in Money Dashboard is easy, albeit splitting £1.82 into three may be taking things too far! (Click to enlarge)
#10 ‘Offline Sources’ accounts
Aside from the obvious budgeting and one-pot benefits of Money Dashboard, for me this is where the gold lies – the ‘Offline Sources’ accounts.
These are accounts you set up and modify manually in Money Dashboard.
For instance, you could have:
- VAT owed
- Invoices out
- Corporation tax owed
- Dividend tax owed
- Pocket money
- Rental income
- Cash in the house
- Accountancy fees owed
This facility is most useful if you have different sources of income or own a business. (I used to get confused with all the tax I owed for different accounting and financial years, due at wildly different times of the year).
Most of you will be salaried but many people do have complicated financial lives, and this feature gives flexibility to bend Money Dashboard to your own ends.
Hell, it would be a bit Heath Robinson and you’d still have to track this elsewhere, but you could even now use Money Dashboard as a net worth tracker by setting up two offline sources accounts:
- Value of investments
- House equity
Leaving that aside, to give an example most people can relate to, say you and your partner share your money and have a pocket money system where you each get a certain amount a month in order to give you that much-needed guilt-free discretionary spending.
Here you would go to ‘accounts’, ‘add account’. Press ‘select my bank’ and scroll down to ‘offline sources’. Name it, for example, ‘David pocket money’ and add an ‘opening balance’. In this system you would assign a minus to the pocket money because it’s money that’s in your bank accounts but not available to spend.
Similarly, if you owe money, such as taxes, remember to stick a minus before the ‘opening balance’.
#11 Hiding accounts
We are now entering the nether regions of Money Dashboard. Skip this bit if you’re not a power user.
Say you want to have an account in the accounts side bar on the left-hand side, but for some reason you don’t want to have the money in it showing in your overall balances because it confuses matters.
Go to ‘accounts’, ‘edit account’ then toggle-to-off the bit that says ‘include in total balances’.
This could be perhaps a mortgage account you want to monitor but don’t want to show in your overall one pot figure (‘net balance’, top left in Money Dashboard).
#12 Balance history
Not for everyday use this one, but a neat feature to use every few months. It shows the ‘trendline’ of your overall balance and each account.
Up is good. Down not so much.
#13 Back to where we started
After you’ve used Money Dashboard for a while (and note it won’t work for you if you don’t take the transaction-tagging seriously) it’s time to find out whether the ‘aspirant you’ second version of Budget Planner has become a reality or remains a pipe dream.
How frequently you want to do this is up to you. Some do it monthly. I’d suggest waiting three months before you check your spending, or only check the big varying line items such as ‘eating out’ or ‘food and household shopping’ every 30 days.
We do it yearly. Irksomely, the overall ‘budget’ figure only goes back six months, so if you click on ‘budgets’, ‘previous budgets’ you won’t get very far analysing your yearly spend versus budget.
To get around this, I (virtually) whip out Martin’s Budget Planner, open Money Dashboard and click on ‘transactions’. There’s then a bit at the top, above the transactions, where you can change the filter.
I set it for January 1 to December 31. Then I tap in the first of 65 subcategories and see if what I spent matches what I wanted to spend. Sixty five taps later I know where we are.
The every-12-months frequency works for us because we have a lot of one-off costs – seemingly every week.
For instance, deposits for holidays and holiday spending (we like our holidays!) exits our current account throughout the year. Unless we take a yearly look at spending in areas like this, we can’t see the wood for the trees.
Our next step is to analyse what we’ve spent in each subcategory and decrease or increase the amount allocated to each one in Martin’s Budget Planner (that colourful spreadsheet).
Our 65 subcategories (tags) form part of 12 budget categories. Make sure you go into the budget section of Money Dashboard and update the budget for each of your budget categories.
Last, there will be yearly and monthly costs that go up and down as inflation hits or you make efficiencies or change providers. Don’t wait until the yearly budgeting extravaganza.
Make sure you update both Martin’s Budget Planner and the budgeting category in Money Dashboard to reflect the modified cost.
(Note: You do not have to use Money Dashboard with Martin’s Budget Planner like I do. But having used both separately and together, I highly recommend it.)
Money Dashboard’s minor annoyances
There are minor annoyances with Money Dashboard.
I’ve already mentioned you can’t look back at the entire budget for more than six months, which is not ideal for yearly budgeting.
In addition, you can’t add transactions. I get why this is. But what it means is every time you pay for something using cash (a rarity, admittedly) you find yourself trying to find a random high-value transaction you’ve left untagged, to split and allocate a set amount to the tag category.
Also, some account transactions sync almost real-time, others (from different financial providers) take longer.
This is no-doubt due to factors beyond Money Dashboard’s control, but if you’re transferring money between two of your own accounts, it can mean your one pot figure is out of whack temporarily.
They say whatever you track becomes a focus.
There’s a lot to the financial independence movement. But efficiency, making best use of your money, and developing good habits would be up there in the top 10 key pieces of the picture.
Developing the habit of tracking every pound that comes into your family and goes out is an obvious way to get a handle on your spending and grow your wealth long-term.
As I say, you do it at work. Why should home be less important?
Websites/apps like Money Dashboard (in my case coupled with Martin’s souped-up fancy-coloured Budget Planner) make this boring task less time-consuming and more fun.
The information you glean helps you spend more intentionally, relax about your money, and siphon more into growing your stash to reach FIRE a few years earlier.
Well @TI I did it, I won the bet – I managed to go through a whole Monevator guest post without mentioning my book!
David wrote the UK’s first financial independence book, RESET: How to Restart Your Life and Get F.U. Money. It’s available today on Amazon at £8.17 for the paperback, £2.95 for the Kindle and, if you buy the Kindle first, £3.49 for the audiobook.
If you’d like to find out what else David has to say, he puts out a weekly newsletter. If you sign up to his email list, you can get the first 8,000 words of his book for free. You can also read his other articles on Monevator.
Coda to the Codicil
Oh damn… How much do I owe you?
Do you track your spending? With Money Dashboard? Have you tried it? What other budgeting apps do you use? Let us know in the comments below!
- In case you’re wondering I’ve never received a bean from the Edinburgh-based company.