Envelope Style Budgeting by MoneyWell

Having graduated and lived on my own for a while now, I have come to understand the importance of setting a budget. There are an overwhelming number of apps and sites and methods to help in setting a budget, and it can quickly get overwhelming sorting through all of those different resources. While many apps have their own new system of budgeting, sometimes it’s important to take a look back at more traditional methods of budgeting.

MoneyWell is a recently updated budgeting application that has done just that. MoneyWell utilizes a traditional form of budgeting known as “envelope budgeting.” Read on for more information about how this technique translates to digital format and some of the great features available in the latest release of MoneyWell.

Understanding MoneyWell

This review feels a bit backwards as I often discuss some of the features before going into explanations, but MoneyWell requires an explanation before-hand or the features don’t make a lot of sense (as I found when I first tried out the app).

MoneyWell is based upon the envelope budgeting method. Back in the day, before computers and all of the credit and debit cards, people would often set a budget using cash and envelopes. Each envelope was dedicated to a certain category, and the money put into that envelope was the budget for whatever time period was chosen.

The folks at MoneyWell saw a problem with most other financial tools, in that most apps use reports about budget generated at the end of the month. MoneyWell, on the other hand, utilizes the envelope system and allows you to proactively budget. You are able to check the current status of your budget and then spend accordingly.

Setting Up MoneyWell

Like many budgeting systems, MoneyWell is great to use once it’s set-up. Unfortunately, the initial set-up is cumbersome at times. The first step is, of course, to set up your accounts. You can add bank accounts, credit cards, investments and more. In theory, you are able to link with any online accounts that already exist, although this only worked for about half of the accounts that I tried it with. My bank account did not connect automatically so I have to set up the account manually which is quite a pain.

Adding a Bank Account

When setting up accounts, if you have a loan or credit card account that isn’t used in daily cash flow, you can uncheck the button that states “Account Option: Include in cash flow” and it will not be included.

After the accounts are set up, you can go ahead and add the initial buckets. Buckets are the “envelopes” of MoneyWell and include income buckets and expense buckets. Start by adding income buckets so that you know where the money is coming from. If you don’t have a steady paycheck coming every month, MoneyWell recommends budgeting for months when you make less rather than months when you make more. The budget is easy to adjust if needed, so start conservatively and increase when appropriate.

Adding an Income Bucket

The final set is to set up the expense buckets. This is where you must go in and determine the categories of spending that you need to budget for and the amount that you allot to each category. MoneyWell utilizes event-based budgeting, so rather than setting up a certain amount for “dining” every month, you would set up different “events” for estimated spending. For example, if you go out to dinner every Friday night you would set up an event like the one below.

Expense Transaction - Weekly Occurrence

Special Features

MoneyWell offers a few unique features that make using this app a great way to budget. First, let’s discuss the benefits of event-based budgeting in a bit more detail. At least within the variety of budgeting applications that I’ve tried out, MoneyWell is the only one that utilizes envelope and event-based budgeting. The greatest benefit of event-based budgeting is definitely the ability to simply revise the budget after it’s been set the first time. Rather than figuring out the amount to budget for dining after you stop eating lunch out every day, you can simply delete or revise the event.

Event based budgeting is great for frequently occurring expenses but also works well for infrequent events. MoneyWell supports events that occur as infrequently as once a year. You are also able to work to save money for certain events. Say, for example, you want to start budgeting money to save for a new car. You can set up a bucket that occurs only once but is filled every week or month. This is great for wishlist items or annual expenses such as Christmas gifts and taxes.

Taxes - Once a Year Expense With Monthly Filling

MoneyWell offers a very powerful currency calculator in the newest version. The currency feature allows you to keep within budget even when traveling abroad. If, for example, you purchase an item using Euros, you can record the expense as Euros. Then MoneyWell utilizes the currency exchange rate to convert the transaction to whatever currency your account is set to. You can also utilize a third currency if the bucket has a different currency setting.

Currency Conversion

Finally, MoneyWell offers unlimited usage of smart filters. If you are good about “tagging” transactions with metadata of your choosing, the smart filters are a great benefit. For example, if you need to find all transactions tagged “work,” a smart filter can help you out. You can also search by payee, date of transaction, amount, memo and more. The sheer amount of ways to sort and search through transactions is incredible.

Smart Filter Options

These are just a few of the impressive features provided in MoneyWell. Check out the app to try out the interactive reports, calendars, Lion-specific features and more.

Final Thoughts

Of all of the apps that I’ve tried budgeting with on a variety of platforms, MoneyWell is definitely the most intriguing. I think that for me, getting down to the nitty-gritty details of my budget will definitely help me to stick with it. Getting through the set-up of MoneyWell was definitely a tiring experience, but this isn’t a fault of the application. Rather, it’s a necessity for this style of budgeting.

Using the application is a generally pleasant experience. MoneyWell offers an interface that is significantly less cluttered than other applications out there. While this is a generally nice feature, it does occasionally make it hard to find what you’re looking for, particularly when using a less common feature.

In the grand scheme of things, MoneyWell’s unique budgeting style makes it easy to stick with. While it’s difficult to get started, it’s incredibly easy to maintain and track your budget. My biggest frustration is definitely that several of my accounts won’t link automatically, but MoneyWell tends to add financial institutions and accounts fairly quickly when requested by users. To sum up, this is the first budget application I actually see myself possibly sticking with.


Summary

A full-featured budget application designed for envelope-style, event-based budgeting.

9
  • Yehohanan82

    Still available for two days within the mac legion bundle : http://maclegion.com/software.htm?app=moneywell&rel=icon

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  • Kevin Carson

    I invested in Moneywell back in 2010 and got on with it well. I stopped using it for awhile and was looking to start again and now think I’m going to try YNAB. Moneywell 2.0 is Lion or Mountain Lion only. For various reasons, I’m still on Snow Leopard. So I’m stuck with version 1.7.3. Also, the iPhone app for Moneywell is only compatible with Mac version 2 only, so it is not available to me. Piss poor to drop support for those of us on Snow Leopard, which is not that old.

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