The NFCC asked the questions, “If you needed $1,000 for an unplanned expense, where would you turn to find the money?”, and only 36% of Americans polled stated that they had sufficient savings to cover a $1000 emergency expense. The other 46% stated that they would have to rely on other means to take care of their emergency.

The remaining 64% that don’t have access to $1,000 for an emergency stated that they would have to turn to other resources:

• 17% of Americans polled said that they would have to disregard and ignore other financial obligations or expenses in order to pay for the $1000 emergency.
• Out of those polled 9% said that they would have to take out a loan (hopefully not a payday loan).
• 17% of Americans polled would have to depend on a friend or family member for the funds.
• 12% said that they would have to go to a pawn shop or sell their belongings to raise the capital.
• And 9% stated that they would have to take out an advance on their credit card.

The poll numbers reveal quite a bit about the current state of the American consumer. Then again, the poll isn’t completely spot on because it didn’t break down age, class level, or educational background; hopefully many of those polled were college students or young people in their early-to-mid twenties. Some of these statistics could be due to the fact that many Americans are without jobs, as of June 2011 the unemployment rate was still around 9.2%, which roughly means 30 million Americans are still unemployed. If you’re unemployed, you most likely have depleted your savings, and are living very close to the margins. Jobless Americans are obviously going to have to depend on other means to come up with the money for an emergency expense, but there may be a good portion of that 64% that are gainfully employed but have not set aside the time to set up a budget.

How to Set Up a Budget

Setting up a budget is a pretty easy process, it may require you to do a little digging at first but once you have a solid budget set in place it’s just a matter of staying disciplined with the budget and making sure you update it accordingly.

1.  Get your financial statements together.  Get at least three months of your most recent bank statements, investment accounts, any monthly bills or any information that is going to help give you a snapshot of your monthly spending and expenses looks like.

2.  Get your pay stubs together.  If you’re are a regular, w-2 employee that receives a paycheck every two weeks than finding what your take home pay is pretty easy. If you’re self-employed or own your own business than this might be a little tricky, but the bottom line is you have to find out what you have to work with, as far as income is concerned, every month.

3.  Create a monthly expense list.  This is the meat and potatoes of your budget; make sure that you break down your expenses into two categories: fixed expenses and variable expenses. Fixed expenses are thing like your rent or mortgage, health insurance, car insurance or any type of expense that doesn’t fluctuate month-to-month. Variable expenses are things like groceries, gas, what you spend on clothing, entertainment, restaurants or anything that fluctuates month-to-month. Variable expenses are the key factors when making adjustments.

4.  Do some simple math.   Just some simple addition and subtraction is needed for this step. You have to look out for whether you’re in the red or in the black at the end of every month, rather are you making more than you’re spending. If you are making more than you spending start allocating that extra cash towards your emergency fund or financial goals. If you’re in the red at the end of every month take a hard look at your variable expenses and find out what you can cut back on. Maybe investing in a coffee maker may save you x amount of dollars vs. going to Starbucks every morning, maybe you could taper back what you spend on clothing every month. Regardless of what variable expenses you want to cut back on try your best at being able to balance your livelihood and divvying enough of your take home pay for those emergency expenses.

Once you have a budget in place and you’re sticking with it, make sure that you are reviewing your budget on a consistent basis to make sure that you’re staying on track. Setting up a budget is a very simple process, the hard part is sticking with the budget, but if you want to become financially independent than you are going to practice a little self-discipline and persistence but the work should be well worth it!

Budget Tools

Most people with access to the internet can find a bunch of free tools like a Google Doc’s spreadsheet to set up a simple budget. Almost everybody that owns a personal computer has access or can get access to Microsoft Excel that is a great multi-faceted spreadsheet that can help you set up a budget.

If you have a smart phone there are a lot of different types of budget tools available for you to download. One of my favorite budget applications is Mint, which you can download at phone’s app store, or if you’re an Android user can download in the Android app marketplace.

Mint is an iPhone application that that pulls all your financial accounts together, sets up budgets for you and has the ability to set up financial goals as well. For example you can set a budget every month to only spend $80 on coffee every month, if you are in the middle of the month and you already $10 over budget you get an alert, and can see that you are over budget by looking at the budget interface within your application. It’s a great application that is worth looking into, and has definitely helped me stay track with my budget.

This is a guest post from Bobby Dee.  Bobby is a personal finance blogger and works with the top consumer credit counseling agency in the US, whose credit counselors have helped consumers analyze their budgets and get out of debt for over 20 years.

I found this cool overview of Mint personal finance software while browsing YouTube.

Are you using Mint?  If so, what do you like about this software and how has it helped you achieve your financial goals?  As you probably know, it’s become the most popular personal finance software product and it’s completely free.

Personally, you’ll usually find me recommending Mvelopes because of its unique design around the envelope budgeting concept.  Envelope budgeting is a proven method that works well for planning and controlling monthly expenses.

Mint has brought a new perspective to personal finance software.  Mint helps find you ways to save money by “comparing your needs to product, bank or service offerings” (as mentioned on their website).

Differences between Mint and Mvelopes

I’ve always been curious about the differences between the two products.  In the past I haven’t considered Mint seriously because it didn’t have budgeting capabilities.  They have not implemented a budget module in the product.

To learn more I signed up for my free account with Mint and also reached out to my Twitter network to see if anyone had experience using both products.  Wojciech at Fiscal Fizzle immediately sent me a reply message letting me know he’s used both of them and would be willing to help answer some of my questions.

So, without further ado, here are Wojciech’s responses to my questions about Mvelopes and Mint.

Budgeting Comparison

Mvelopes is known for automating envelope budgeting, does Mint have a similar capability or budgeting feature?

Mint does feature a budgeting module, and you can set it up to “roll over” from month to month, which is kind of like having an envelope, especially for irregular transactions. However, this is still a “traditional” budget setup, where you set an upper limit, not a $0 limit. It’s a small distinction, but I believe it makes a big psychological difference.

Mvelopes takes my bank account balance and tells me what job each dollar has, including regular expenses like loan payments or rent. Mint tells me how much I can spend in each category (usually discretionary expenses are what most people set up), without considering the whole picture.

Note from Jason: I think the $0 budget is important in avoiding over spending and staying on track with savings, debt reduction, etc.  For those who don’t know, a $0 budget means you find a purpose for every dollar each month and balance your income and expenses.

Favorite Feature Comparison

What is your favorite feature of Mint that Mvelopes doesn’t have?  What is your favorite feature of Mvelopes that Mint doesn’t have?

My favorite Mint feature is alerts – I get weekly summaries of my activity, as well as large deposit and withdrawal alerts.  My favorite Mvelopes feature is the program’s automatic ability to set aside money whenever I charge something on my credit card to pay it off at the end of the month.

Use Mint to manage your budget

Note from Jason: I noticed there are a lot of different alert options with Mint which I think could be quite handy for staying on top of your finances.  Examples include bill reminders, low balance reminders and unusual spending notifications.

Social Networking

Social networking or the ability to learn from or leverage cost savings from others has become a feature in some products today.  How do you think that either product provides these benefits?

Mvelopes is starting to develop some social features – currently, they have a blog that showcases “success stories” and tips, and a Twitter account. Mvelopes also has forums for interacting with other users and getting help, “groups,” where people with similar goals can join together, and “mentor” forums, where individuals of specific expertise can help you. All of these are mostly in their infancy, so their potential is just getting developed.

Mint also has a blog with some very useful tip-based posts, which is something Mvelopes is only starting to incorporate. They are also starting to leverage social networking intra-software, by providing features like comparisons to “average US spending” when budgeting. They’ve also made finances “fun” by integrating a point system for doing certain things with your money, although some of those clearly benefit Mint financially via affiliate income.

Note from Jason: I’ve become a regular follower of Mint’s blog which produces great personal finance content.  I think Mint is well ahead of Mvelopes when it comes to incorporating social networking into their product and website.  I would like to see Mvelopes make a stronger move in this area since there is real value in learning from and interacting with others.

• Follow Mint via Twitter and RSS.
• Follow Mvelopes via Twitter and RSS.

Favorite Product

Care to share which one you use today and why?

90% of our financials are currently done in Mvelopes. Prior to this year, I used desktop Quicken almost exclusively, but felt that it was inadequate in preparing us for irregular expenses and motivating us to save for various goals. Now, we have issues with neither, and we also don’t argue about money as much as we used to. It’s no longer any one person’s decision whether we “can” or “cannot” buy something – if the money’s not in that specific envelope, it’s not available. The peace of mind in knowing that everything that needs to be there will be there when I need it (or by how much we’re short) is incredible.

The other 10% of my time is spent in Mint, mostly looking at overall net worth and investment performance, as well as reading their blog.

Note from Jason:  I agree that having a set of envelopes and their associated balances helps when it comes to talking about money with your spouse.  This is the heart of our money meeting conversation each week. 

Anything else you’d like to share?

Many people shy away from pay-based tools like Mvelopes because we expect almost everything to be free these days. I can tell you that there’s no free lunch – even Mint uses affiliate-based “suggestions” that drive me nuts. The money we pay for Mvelopes has paid itself off ten-fold.

Final Thoughts

Whether or not you use Mint or Mvelopes, I hope you’ll find some of this information helpful in your use of either product, or perhaps in your decision to use one of them.  As I mentioned, I signed up to test drive Mint a little bit.  I’ll continue to explore this product and perhaps provide a review of my findings and what I’ve learned in a future post.   But for now I’m planning to continue using Mvelopes as my primary personal finance software tool.

I recommend signing up for the free trial to create test envelopes and transactions to better understand how the software works and to make sure it’s a fit for you.

What about you?  Have you had experience with either Mint or Mvelopes?  If so, feel free to share answers to any of the same questions I asked Wojciech with readers in the comments.

Special thanks to Wojciech!

Wojciech Kulicki is the blogger behind Fiscal Fizzle, a personal finance blog that emphasizes sound principles, simplicity, critical thinking, and money paradigms. Wojciech likes to show you money in new and unique ways.  Follow him via RSS or Twitter!

The article mentioned a couple of things the banks hope to get out of their recent innovations.  First, they hope they can build loyalty with their customers and second, they are hoping to attract a younger audience.  While I haven’t checked any of the new tools yet, my gut tells me the banks have quite a bit of catching up to do.  It seems like a convenient move since most banks have an online presence providing the ability to view account information.  But I’m interested to learn more about the tools and see how they compare to Mint and other personal finance software in terms of the depth and breadth of functionality

Personal finance links

Reward points

Speaking of Mint, week I came across Reward Points The Real Deal at the Mint blog this week.  This was a interesting post with a creative guide for reward points.  It brought forth some interesting thoughts about how the programs can make you feel like you’re playing a game and give you incentive to spend.  But you have to watch closely because between annual fees and more spending you may not be getting all that great of a deal.

We have a credit card in which we acccumulate airline miles.  We use the card for groceries and a few other items and pay it off each month.  While we don’t spend with the intent of getting airline miles (it’s typically an after thought as a nice benefit), we do pay an annual fee.  So, I have to take into consideration how log it’s going to take to accumulate the free ticket and determine if the annual fees are costing me more than the ticket would just by purchasing it.  I think it depends on the destination and other factors, but it’s something to think about.  Don’t forget to check out the guide to reward points.

Money and happiness

Finally, I thought I would mention the Personal Finance Hour podcast this week.  I’ve been listening to the podast for about 5 weeks now.  It’s hosted by GetRichSlowly‘s JD Roth and Bargaineering‘s Jim Wang.  They discuss personal finance topics and take caller’s questions.  This particular show really sparked my interest because the primary topic was about money and happiness and another topic was raised by a caller regarding the need for goals.

The money and happiness topic seems to continue to find its way in my path over the last few weeks.  It’s an interesting discussion because our human nature tells us that more money is good and and having more of it will make us happier.  But beyond a certain point of meeting the essential needs of life, studies show more money and material possesions don’t make us happier.

Personal finance goals

Should you have goals?  Do they really matter?  I think they do, but I don’t think it’s not always easy to identify them.  There was an interesting discussion towards the end of the show on this particular subject.  I’m a strong believer in life values forming the foundation of our goals.  Understanding our values in life will help determine our goals and make them more meaningful.  This is important when it comes to taking action towards acheiving them.

Last but not least, my article Cash, Credit, or Debit Purchases – What Works For You? was featured in the 85th Running of the Money Hacks Carnival (Saturn’s New Ring Edition) hosted by Credit Guy.

Did you come across any articles this week you would like to share?  If so, please mention them in the comments.

According to a NY Times article, Chase and Bank of America will change their debit card programs by lowering or eliminating fees, revamping how transactions are credited to accounts and letting customers decide if they want to opt out of overdraft protection. 

Many have been in the situation where you see that dreadful negative balance online when viewing your checking account.  Once you look at the details you see which transaction put you into the negative, but then also several fees, for each transaction the drove you further into the red. 

I’ll have to admit I’ve been there a few times in the past.  While the changes these financial institutions are making do make sense (the fees were inflated in my opinion), good cash flow management will always avoid the problem.

PT Money tells us some new ways to avoid bank overdraft fees.  I like the option of getting alerts or notifications by email if my balance were to hit a certain amount, or to be stopped at the register if I’ve made a mistake and my account doesn’t have enough to cover the purchase.  But thankfully, at least for these two financial institutions, people won’t be dinged as heavily.

Mint and Intuit

I learn more information this week about the Mint and Intuit plans after listening to the Consumerism Commentary Podcast interview with Mint’s CEO.  As I recently updated in my article, Intuit Buys Mint.com, Quicken online will be replaced by Mint.  So, the online service offering of Quicken today, will become Mint.  I think this is a good strategy.  It now allows Mint, who has been so successful in the last few years, to carry their model forward and incorporate features from Quicken online into the Mint product.  Mint will now have more resources behind product development which will further the potential of the product.  Note:  the latest is that it will still remain free to current and new users.

Tracking daily expenses

There was a nice article at Christian PF this week that talked about how to track daily expenses and the importance of performing this exercise.  Have you ever wondered where all of your money went?  This article discusses the common experience of looking in your wallet Monday morning and find out you don’t have near the money you thought you had.  Without a system for tracking the spending you truly never know where your money has gone.  Tracking spending, in my opinion, is a fundamental practice to managing money wisely.  

Without the ability to look at each expense, you really have no way of knowing whether or not you’re spending within your budget or spending plan.  As I mentioned in the comments, tracking expenses, whether by paper form or by software, can also be a tool used for communication with your significant other.  It’s not uncommon for one spouse to be in the dark when it comes to budget category balances, such as food/groceries. 

I’m pleased to announce my article, Overcome Impulse Buying, was included as an editors’ choice this week in The Carnival of Personal Finance #223, Financial Meltdown, a Year Later hosted by Taking Charge.

What were some of your favorite personal finance articles around the blogosphere this week?  Please share in the comments.

Mint is not shabby either.  It has been around a few years and has already gained much publicity for its features and model for helping people save money through the use of its free online software.

The business transaction builds Intuits inventory of products and allows them to absorb an expanding competitor.   They no longer have to worry about Mint soaking up users or market share from them because they are now a part of the same family.

What is Mint saying?

CEO commented in a recent blog post about the merger and how their approach could be expanded to more consumers including new spaces.

It’s a great opportunity that could bring Mint’s unique approach to personal financial management to millions more consumers and small businesses as well as the 1,800 banks and credit unions serviced by Intuit.

What is Intuit saying?

This big news is especially exciting because Intuit and Mint.com share a common goal: help consumers do more with their money with innovative, easy-to-use online services.

Having joined up with Intuit, Mint now has more resources behind their product which means it can expand and reach more people.  Apparently, Mint’s product development staff is now going to take the leading role in owning the product development road map for both organizations.

After the acquisition closes, the Mint.com team will be leading the development of both Mint.com and Intuit’s existing personal finance products, Quicken desktop and Quicken Online. The fact that Intuit has agreed to acquire Mint.com, and is leaving our team intact, is evidence that Intuit has been impressed by and wants to build upon the user experience that Mint.com offers. We’ll not only improve upon that experience for Mint.com but also bring our know-how to the Quicken product line. Destroying the Mint.com user experience does not make sense for Intuit, Mint.com or any of our users.

Questions with the acquisition

While neither company can really tell us exactly how all of this is going to play out until after the acquisition closes later in the year, it does raise some interesting questions.

• Both products operate in the same space today.  How will both products coexist?  Apparently, this is the case in the short-term.
• Certainly, Mint has features Quicken lacks and visa versa.  If each product remains stand-alone, will they adapt new features from each other?
• Could we see other acquisitions in the future?  Is this a starting trend of a consolidation of personal finance software?
• Will the products be consolidated into one application with the best of both features?  Update:  Consumerism Commentary conducted an interview with Mint’s CEO, Aaron Patzer regarding the Acquisition.  Aaron will be heading up personal finance product development for Intuit.  Apparently, Quicken online will be replaced by Mint.  Listen to the podcast here.

What is my prediction?  I think this will be much more than a business transaction.  In other words, I think we’ll either see the software grow together or become completely distinct in the respective services of features and niches of customers.  Hopefully, both organizations will not lose site of their customers and continue to look at the market place to determine what the end user really needs to manage their personal finances better.

What are your thoughts on the business transaction and what do you see for the future of Mint and Quicken?

Read more about the acquisition and what both Mint and Intuit are saying on their blogs.

• Mint.com to Join the Intuit Family
• Why Mint.com + Intuit is a Big Idea

Weekly Round Up

I’m pleased to announce my article, How to Find a New Job, was included in The Carnival of Personal Finance #222 – Live from Monticello! this week hosted by SimplyForties.

Rather than provide articles I’ve read around the personal finance blogosphere this week, I thought I would recommend some personal finance blogs I follow and have added to my blogroll.  These are blogs I find actively updated (at least 3 times per week) and base their content and financial decisions upon Biblical financial principles.

Check them out when you get a chance and subscribe to them via Twitter or RSS.  If you know of others, or would like to provide your own blog, please let me know in the comments.

• Redeeming Riches
• Debt Free Adventure
• Christian PF
• Borrow from None
• Money Help for Christians
• Bible Money Matters