Monday, February 4, 2008

Control your finances and budget with Buddi

There’s been a lot of chatter in the Mother’s Lounge recently about budgeting and money, especially with all these great posts about monthly menu choices. Many commenters and writers have asked about different ways of creating and tracking a budget and Nancy briefly mentioned Buddi, an open source (meaning it’s free and made by a community programmers in their free time), cross platform (it works on Windows, Mac, and Linux) financial management program that I use and love. Today I’ll show you how to get started with Buddi so you can take control of your budget and money.

Getting started
First, you’ll need to download and install Buddi. There are two ways to install Buddi in Windows: download an installation program or download a standalone .exe file. You’ll probably want to get the installation package. It’s easier to work with. Just click next a whole bunch of times until the program is installed.

You’ll also probably want to use the internet banking features for all your banks, credit cards, and investments. You could wait until the institution sends you your monthly statement, but why waste trees and put off account reconciliation until the end of the month? You can reconcile on an ongoing basis, as I’ll explain below.

Initial set up
The basic premise of Buddi (and finances in general) is to keep track of where your money goes. Your money can sit in a bank account, credit card account, stock investments, CDs, your wallet—wherever. When you spend money, you move your money from one of those accounts to a budget category. For example, when you buy groceries with a debit card, you move $50 from your checking account to the grocery category. When you get a paycheck, you put money in your bank account from a budget category.

When you first open up Buddi you’ll see a screen with 3 tabs: My Accounts, My Budget, and My Reports. The accounts tab shows your bank and credit card accounts; the budget tab shows your budget categories; the reports tab makes statistical reports (duh).

You obviously won’t have any account information or budget categories. You’ll need to set those up first. To create accounts, go to Edit -> Create Account. Choose the type of account you want, a name, and an initial value. If you want more account types (like CD, for example), you can add those under Edit -> Edit Account Types. You can change from the British/Canadian spelling of “chequing” in Edit -> Preferences -> Locale.


As you add all your accounts you’ll notice that they are nested in categories, as shown (click to enlarge the picture):


Now that your accounts are set up, you need to create budget categories, which also follow the nested idea. Switch to the My Budget tab, go to Edit -> Create Budget Category, and make categories. It’s best if you set up your parent categories first, like Salary, Church, Car, Entertainment, Personal, School, Utilities, and whatever else, and then add categories with those as parents. In the end you’ll have something like this:


Transactions and budgeting
Now that all your accounts are set up, you can start adding transaction information. On your My Accounts page, double click on an account to open it and add information. If, for example, I just bought $45.23 of groceries at Costco with my ING Orange checking account, I’d double click on that account and fill out the information like so:


Easy enough! Repeat the same process to add any type of transaction: income and expenses. Choose the order of cash flow between accounts and/or categories, put in the information, and save it. You can go back later and edit the transactions if there are errors. You can even set up recurring transactions in the Edit menu.

Buddi doesn’t just track your expenses though—it’s a budgeting and reporting program too. In your My Budget tab you can set your budget limits for each category each month, as shown:


Your net income/loss is shown in the bottom right corner. Buddi budgets on a monthly basis (in this case… you could change that to weekly, biweekly, quarterly, or yearly), so for March you need to enter the same values. Rather than type each amount again, you can go to Edit -> Copy Values to Next Period to copy everything to the March column, changing different category amounts as needed.

Once you have your projected budget set and records of your actual transactions saved, you can use the various reports on the My Reports tab to see how close you were to your budget. Voila! You have a full fledged budgeting system!

My Buddi workflow
There are a lot of financial management programs out there. Some, like Quicken and Microsoft Money, cost money and can connect to your bank accounts online and show you real time balance and transaction information. Others, like Buddi, are free but lack that backdoor connection to your financial institutions, meaning you have to keep track of every single transaction.

This is good. This lets you see everything that’s going on with your account and lets you remember transactions that you may have lost receipts for.

Here’s how I work with Buddi. I keep every receipt possible until I can input the information into the appropriate accounts, after which I get rid of all the receipts (unless I need it for a gift, return, church reimbursement, or whatever). During the month I check my different bank accounts online to see if the transactions have cleared. If they have posted online, I mark the transaction in Buddi as reconciled and keep going. The reconciled option is not enabled by default—you’ll need to go to Edit -> Preferences -> Show ‘reconciled’ checkbox for transactions.

I generally bring both Buddi and the bank website up on the same page and go down the two lists item by item, adding missed items to Buddi as necessary. In the end I have an accurate view of my total net worth, and a clear idea of how my budget is working.

For power users, there are a few plugins that let you import and export CSV spreadsheets that you can download from your financial institutions or previous financial software. You can read more about Buddi at Lifehacker, where they also have a plethora of financial advice.

So, Buddi has worked great for me for the past year and I’ll continue using it. I haven’t even touched its budgeting capabilities—our budget has been “spend as little as possible.” Maybe I’ll start actually budgeting since Buddi can do it so well.

Good luck getting your finances in order!

Guest writer Andrew Heiss has almost graduated from BYU and is ready to put a steady cash flow into Buddi. Wait. No. He’s ready to be a grad student and continue to have a sporadic cash flow. It makes financial recordkeeping (and life in general) a lot more interesting.

5 comments:

Nancy said...

I love that he mentioned our budget as being "spend as little as possible." Seriously we only ever spend money on tithing, rent, food, insurance, and gas.

That's about it. Occasionally we will spend money on a date or buy a gift...but that is super rare.

Except for Christmas and birthdays. Oh, and the beginning of each semester is also a big hit (text books!) and also when car insurance is due.

We seriously spend no money. I'm a penny pincher and have been since birth--in fact, that's a good topic for a post. :)

Andrew Heiss said...

Oh, a few things I left off...

Transferring money between accounts is really easy, for credit card payments or other types of transfers. Just choose where you want the money to come from and go. Buddi will update both accounts at the same time so you don't have to double record anything.

It also might help to have some catch all categories for errors. For example, I just found that I made an error in my credit card records of $10.33, in my favor. I have a special "Oops" subcategory in my income category for those. I also have an "Oops" expense category for errors that go the other way.

Andrew Heiss said...

Also, in my budgeting example screenshot, I left tithing blank. That's not the case :) I just put in random amounts in random fields.

kimberlee said...

Andrew,
thanks so much for doing this little tutorial for all of us. I really appreciate it. I just had a question - I have Quicken on my laptop. Are there advantages to using Buddi over another financial software tool?

Andrew Heiss said...

Quicken works... the only problem I have with it is that it costs money and is continually updated to reflect the newest tax laws and stuff (and adds lots of other expensive, unneeded features)

The reason I use Buddi is because it can't connect to CapitalOne, UCCU, ING, or any other bank/credit card account I have. Transactions rarely get past me, even the recurring ones, because Buddi won't get the info from the internet and mark transactions as cleared without me ever seeing it happen.

That, and Buddi is free :)