Should I Use a Budget Spreadsheet or Financial Software?

How do you keep track of your finances? Most people know they should use a budget, but few actually follow through with it. The first key to successful budgeting is knowing where your money goes. How much did you spend last month on food? If you don’t know the answer, how will you budget for food this month?

There are numerous ways you can track your finances, but in this article we’ll take a high-level view of the options. The main comparison we’ll discuss here is using a spreadsheet vs using financial software.  Here is a brief overview of the pros and cons of each:

Pros and Cons of Using a Spreadsheet

The main thing I like about using a spreadsheet is the flexibility and control it gives me. I can design my worksheets however I want, not constrained by the pre-built features of a specific software product.  If I want to keep it simple, I can do that. If I want to make complex calculations, the sky is the limit. It is also free as long as you have Microsoft Excel, or you can use Google Spreadsheets for free.
I’ve previously discussed a video I created that demonstrates how I use my budgeting spreadsheet. Click through to watch the video and download my free budgeting worksheet.  If my worksheet doesn’t work for you, there are many different types of templates available if you do a search online.
While I prefer a spreadsheet, this may not be the right choice for everyone. One drawback is you have to manually enter every transaction, where financial software can import them automatically. I like this because manually entering transactions makes you really focus on your financial situation, but it does require more time and commitment to the process. Another drawback is you may need to learn a little about Excel if you want to have more advanced reporting features.

Pros and Cons of Financial Software

There are at least two types of financial software:  desktop software and web-based software.  There are many options for both types, but I will only mention a few of the top choices here.
For personal desktop financial software, one of the most well known products is Quicken (available for Mac and PC). This and other products like it have an advantage over spreadsheets in that they can connect directly to your bank and import transactions. This can save you a lot of time. Then, you just need to go in and make sure transactions are categorized correctly. It also has powerful charts, reporting, and forecasting features.
Another product gaining traction in the market is YNAB (You Need a Budget), which is also available for Mac and Windows. If you’ve tried Quicken and didn’t like it, you may want to give YNAB a shot.
One drawback to desktop financial software is that there can sometimes be a monthly connection fee, depending on your bank.
Web-based Financial Software – By far the most popular web-based financial software is, which is also owned by Intuit, the maker of Quicken. One immediate advantage to is they have an agreement with banks that let’s you connect to almost all banks for FREE.  You can pull in transactions for all your accounts and view them in one place, set up budgets, get email alerts for unusual spending, etc.
One drawback to is you are limited to the “parent” budget categories that they have predetermined for you. This is fine if your budget is simple and you can fit within their system. If you need a highly custom budget, this may be a deal breaker though.
Some people are concerned about privacy and security when it comes to As for privacy, the only issue is they do make money by advertising to you, so advertisers may see financial statistics that include your data, but it is anonymous. As for security, uses the same encryption and security technology as your bank does (see the security info page).
One interesting company to arise recently is This company is both an online bank, as well as software that helps you budget. As with any online bank though, a drawback is not having a physical location. Still, you may want to take a look at this. There are other similar companies popping up, and even some regular banks are starting to include budget tracking technology.


The options can be overwhelming, but finding a solution for tracking your finances is an important step to financial freedom.  My advice is find something that works for you and get to actually using it!

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