The Good, Better & Best of Budgeting Software
Confession. I’m terrible with money. I don’t want to be, I don’t try to be, but I am. Now unlike many of you I’m not in debt, but that’s simply because I didn’t go to college, not because I’m wiser or more frugal than the average Jack or Jill. The funny part about this, or maybe it’s more ironic, or maybe it’s just because of this, I’ve spent the past 4 years building financial apps and thinking deeply about money management.
My background is farming. Minimum wage and blue collar work. Early on I had no money to manage really. I was living in my parents basement when I discovered this thing called programming. I took to it like a fish to water and within a year I was making in a month what I had been making in a year. Humans though (or at least this one) have a seemingly supernatural ability to dissolve and dissipate any amount of money into thin air. I was making loads of money and yet my accounts remained flat. I had an apartment I guess, a slightly nicer car, I ate out a bit more than before and went on a few more trips but my account balances remained stagnant.
With the turn of my profession from farmer to programmer I started keeping better books. I had an LLC, some 1099 contractors and in general just needed to keep a better eye on things so taxes would be easier at the end of the year. I watched my accounts like a hawk. I recorded all of my transaction ins and outs. I had graphs and charts and eventually as the business grew I started splitting my personal from my business all the way to the bank level. Chase and Capital One for business, Simple and Discover for personal.
At this point keeping the books was getting tricky. Importing CSVs from every bank every couple of days, turned to every week or so and finally devolved to just striving to balance my accounts every month.
This resulted in a load of research and development finally culminating in Tiny Bank.
Tiny Bank was my pride and joy for nearly three years before I sold it earlier this year to Lasting Bond. It was a tremendous app, it had a vibrant and eager community but it didn’t solve my problem. It honestly wasn’t solving anyone’s problem. Which leads me to the crux of the issue and this article.
“Budgeting isn’t observation, it’s saving, and saving isn’t a hack it’s a habit.”
I’d had the idea all mixed up in my mind. I’ve always thought for years that to manage or budget my money was to keep an eye on it. To observe the changes, the ins and outs. To “balance” things. This however will only ever lead to status quo. Wherever you’re at, you will stay. If budgeting is only ever observation and reaction you will never improve your place financially. You’ll never gain ground on debt or long term savings goals. You might make ends meet, but that’s a disappointing place to aim all of this effort and desire at.
I’ve spoken with hundreds of other budgeteers through the course of building Tiny Bank, and we all have the same problems. However, there is a deeper problem than that of managing our money, it’s managing our expectations around what we can or should be doing with our money. If you ask 100 folks how they do or should budget (and I have) you’ll get 100 different answers. There is no one size fits all. Not because budgeting is hard or you just have to keep searching and trying all the apps and solutions until you find one that sticks, it’s because we all think that if we watch our money we are “doing it right”. In reality however all you’re doing is watching your habits act themselves out. You’re just a spectator of your financial life as it plays out and until you step out of that role and assume your position as the conductor every single one of these apps and ideas around how to manage your money will leave you feeling overwhelmed, disappointed and ultimately giving up to sit and watch in the stands once more.
To combat this and begin to help shift our thoughts and expectations about our money around I’ve distilled my observations down into a few key points which ultimately are and will be the guiding and driving force behind the apps and community I will be building and leading to truly solve this problem for all of us.
Observation №1
Good budgeting is hard work adjusting bad habits. These habits may, and often are simply in ignorance rather than blatant stupidity, but either way they must be broken and good ones set up in their place. This takes work, especially early on.
Observation №2
There are no shortcuts. No matter how much we want there to be, there just isn’t. Every budgeting app and its brother want you to believe it can be automated and automatic, that good budgeting can just happen. It can’t. It never will. It’s like working out, unless you do the work you won’t see the results. Period.
Observation №3
There’s hope. Every single budgeting app out there today is a pendulum swing between point 1 and 2. Either really hard work, which you quit using after the first week, or else so little work you never engage or care or change. This then leaves an incredibly saturated market with a ripe, wide open middle ground. A perfect balance between purposeful engagement and sensible automation.
From these observations then comes another list of applications or guiding principles which will lead and constrain proposed solutions down a narrow trail of meaningful engagement and long term commitment resulting in healthy financial habits and expectations set to last a lifetime.
Application №1
All proposed features, solutions and designs must be defensible from a enforceable positive habit forming perspective. No more, “It would be nice”, “I’d really like to see” or “I haven’t yet seen”. The only all consuming question to answer with every choice is will it foster, encourage and enforce sustainable savings habits?
Application №2
Any solution must work well for the majority solving an objective problem. Catering to bad habits and lazy resolve is what landed so many of us here in the first place. It’s a fine line between building something people will continuously use and building something that provides real value over mere perceived value. When your mindset is misguided and your expectations are off it’s easy to dismiss the solution thinking your problem isn’t being solved when really the application may genuinely be helping you, it just hurts too much early on to see it. In short, solve the root problem in the most painless way possible.
Application №3
To sum it all up then whatever we build must be a perfect blend of pain with purpose. Easy enough to use consistently yet powerful and opinionated enough to provide genuine long term results. The goal is to save money, to not lose it, to refrain today so we may indulge tomorrow. However this happens, whatever actually lands before our eyes and fingers, it must do this.
So that’s the theory and summary of the years of thought, research and development. To budget well is to save. Taking control of our finances is to stop simply watching money go in and out and start controlling ourselves where it’s going. All money must be spent, as little as possible of that money should be lost.
So how do we do this? What’s the proposed actual application? This is where we finally get to why I’m writing this article. I’ve already started and have been actively building and using a simple application called Tiny Money, and as of this week I’m open sourcing its development.
Tiny Money is actually a suite of three apps, one of which, the actual budgeting app, is open source. The other two are a large bank data digestion API and a micro-service API for the open source app. The one handles crunching all the numbers and collecting all of the bank information in real time while the other handles user accounts, authentication and notifications. It’s likely in the near future the micro-service will also be open sourced or at least that I’ll be inviting in key contributors to help build out additional features.
So what do we have today and where am I hoping to go tomorrow? Today Tiny Money is a basic transaction aggregation application. It’s merely a helper app for other services or systems you may already be using. Think of it as a live stream or inbox of sorts for your finances. Money comes in and goes out and you can hide those transactions as you’ve engaged with them however you see fit. (For me that looks like adding them to our YNAB budgets.)
Clear as mud? You can check out a demo here.
Up next is replacing my reliance on those other services and systems. Replacing their shortcomings with a single solution that works for all of us. This is also why I need you, or rather those of you that are developers and designers. To create issues, submit PRs and engage in directional discussion. If there’s one thing I’ve learned from all the attempts that I’ve made at this it’s that I cannot build this alone. There are too many moving parts, too much time and financial expense, I need help.
So try it out, download the repo and sign up for an account. Let’s solve this problem for all of us and let’s really solve it this time.
Proposed Future Features
For those who care and want to know the specifics of where my mind is at in regards to the specifics of Tiny Money’s future. Here it is.
Budgets, Bills and Goals
The obvious and primary next feature is conquering budgets, bills and goals (collectively known as targets).
Budgets are flexible recurring expenses. Think restaurants, groceries, electricity and movies. Budgets are flexible in that you can make relatively painless efforts to decrease the money lost in these categories. You can eat out less, coupon more and adjust the A/C by a degree or two. This is where most of your work is going to be done month to month to start winning back your money.
Bills are fixed, recurring expenses. Think apartment rent, car lease, health insurance, 401k / IRA contributions. Bills are fixed in that you’re going to have to make some significant lifestyle changes to win back money being spent here. Things can be adjusted, and not all contributions here will need work, but generally these items are harder to adjust, however they also carry the biggest wins. (Think downsizing to contribute more to your IRAs, debt repayments, etc.)
Goals are wildly variable and designed only to suck up any leftovers. They are non recurring “safe houses” for all the unknowns and adventures of the future. Things like saving for a car replacement, that European vacation you want to take next year and gifts for your relatives this holiday. Goals are always seen as good. Some may seem either unwise or unfortunate but it doesn’t matter at this point. You won’t reach every goal but you can and should strive to. Goals are really the whole point of budgeting. Life long financial happiness and security. Covering your daily bills and budgets in such a way as to have as much left over for as long a time as possible to spend on all the “extras”.
What exactly these targets will look like within Tiny Money is still being worked on. I envision it as a simple swiping and designating of transactions to any one or multiple of these targets. Splitting things into specific bill, budget and goal categories or “envelopes”. Keeping interaction and engagement to a minimum leaving you to the rest of your day. Just enough involvement and commitment to matter, not so much to make you quit.
Notifications
This is the area I’m honestly most excited about. Positive reinforcement through passive acknowledgement. Daily, weekly, monthly and yearly reports holding you accountable and informed as to your finances. Easily digested, easily engaged with. The repetition keeps the habit growing while the ease increases friction for would be quitters. The only required action is swiping yet the value you’re getting is immediate, sustained and measurable.
If you’ve made it all the way here wow, thanks for your time and interest. Now get involved. Let’s make better choices with our money together. My inbox is always open. hi@tyler.chat
