As you’ll see in the following video, now you’re ready to start truly managing money with Mint.

If you have any questions about Mint.com, meet me in the comments section.

Related Posts:

• The Key to Getting the Most from Mint.com
• Getting Started With Mint.com
• How Does Mint.com Keep User Information Safe?

Who else would benefit from this post?  Why not forward a link to my site? And if you haven’t done so already, you can subscribe to this blog by clicking here.  Two or three times a week, you’ll receive ideas and encouragement for using money well.

If a tool was available that served as a financial roadmap, showing you clearly how to live within your means, be generous, and save or invest for future goals, wouldn’t you use it?

And if this same tool helped create a sense of financial teamwork and trust in your marriage, wouldn’t you use it?

What is this magical tool?

Why, of course, it’s the lowly, much maligned, much misunderstood budget – or, as I prefer, Cash Flow Plan.

It’s what enables us to live out the third of my 11 principles for simple, meaningful success: Plan to Succeed.

What Rich People Know

When some people think of a budget, they think only certain types need one. People with lots of debt.  People with a low income.

The wealthy?  No way, or so they think.

In fact, one of the most interesting findings from the classic book, “The Millionaire Next Door,” is that over half of all millionaire households use a budget to guide their finances.

As authors Thomas Stanley and Wiliam Danko explain, “Planning and controlling consumption are key factors underlying wealth accumulation…Operating a household without a budget is akin to operating a business without a plan, without goals, and without direction.”

Succeeding to Plan is Planning to Succeed

Haven’t ever used a budget?  You could start today.

I walk through the four steps to setting up and using a budget in the Budget Quick Start Guide that’s available for free on the Resources tab of my site, so I’m not going to repeat them here.  You’ll find my Recommended Spending Guidelines there as well, which will help you develop your plan.

The Guidelines cover four different size households (1-, 2-, 3-, and 4-person households) and nine different incomes, ranging from $30,000 to $150,000.  Just find the one that most closely resembles your circumstances.

You’ll see that these are ideal plans, meaning they assume no debt other than a reasonable mortgage.

If you have other debts, you’ll have to adjust your spending in other categories to allow for the debt payments.

But, But, But…

Whenever someone comes to me with a financial dilemma – they’re deep in debt, can’t find any money to save, can’t stop fighting about money with their spouse – I always ask whether they’re using a Cash Flow Plan to guide their household finances.  The vast majority of the time, the answer is no.

And the “no” is often accompanied by a quizzical look as if I didn’t understand the question.  “But what I was really asking…”

I did understand.  It’s just that I need more information.  Objective, factual information.

To be sure, there’s a ton of emotional stuff involved in managing money – temperaments, moods, stressful circumstances, the emotional imagery used in advertising.  We often get in trouble with money when emotion overrides logic.

A well-designed Cash Flow Plan gives us the logical, factual information we need to live within our means, be generous, save and invest, avoid debt, and spend smart.  Assuming there’s enough income to meet basic needs, that’s true for every income level and household size.

Are You the Type?

I firmly believe everyone would benefit from the use of a budget.  Rich or poor, young or old.  Everyone.

It isn’t drudgery, and it isn’t something you go on like a diet.  It’s simply the single most powerful tool available for successful money management.  Why not start putting this tool to work in your life today?

What questions do you have about using a budget?

Other posts in this series on the 11 principles that lead to simple, meaningful success:

• The Purpose of Money (Principle One: Know Who You Are)
• How to Recession-Proof Your Career (Principle Two: Earn Diligently)

Who else would benefit from this post?  Why not forward a link to my site? And if you haven’t done so already, you can subscribe to this blog by clicking here.  Two or three times a week, you’ll receive ideas and encouragement for using money well.

For those interested in giving Mint a try, I’m showing how in a series of short instructional videos.  In the video below, I’ll show you one of the most important steps for getting the most from Mint – how to set up a plan for your income and expenses.

If you have any questions about using Mint, ask away in the comments section.

Related Posts:

• Getting Started With Mint.com
• How Does Mint.com Keep User Information Safe?
• How a Budget Leads to Financial Freedom
• Avoiding a Common, Costly Budget Mistake

Who else would benefit from this post?  Why not forward a link to my site? And if you haven’t done so already, you can subscribe to this blog by clicking here.  Two or three times a week, you’ll receive ideas and encouragement for using money well.

People who’ve never used a budget usually hate the idea.   They think of a budget as the wicked witch of personal finance whose sole purpose is to drive any semblance of fun right out of their financial life.

In truth, it’s just the opposite.  A budget, or as I prefer, a Cash Flow Plan, is the single most powerful tool we can use for wise, effective, even joyful money management.

There are several different budget tools available.  The one we’ve chosen in our household is Mint.com, which automates a lot of the tasks related to using a budget.  If you’d like to try it, this video will show you how to get set up.

Mint is free.  The service makes its money through advertising.  Since it sees which bank or credit card you use, it might recommend one of its sponsors that offers better rates.  But I don’t find those recommendations intrusive at all.  To me, it’s a small price to pay for a great service.

If you have any concerns about security, watch this interview I conducted with Mint’s security architect.

Who else would benefit from this post?  Why not forward a link to my site? And if you haven’t done so already, you can subscribe to this blog by clicking here.  Two or three times a week, you’ll receive ideas and encouragement for using money well.

Here are two steps every couple can take to work as a team in building a financial life that works really well.

Play to Your Strengths

When you can’t get your spouse to stop spending so much money (or start spending money, or buy better quality stuff, or stop spending so much to buy quality stuff, or…), usually the issue isn’t really about the words coming out of your mouth while you’re arguing about it.

It isn’t really about the spending or the saving or whatever else the issue seems to be about.  There’s an issue behind the issue.

It’s that he or she comes from a family where they always did it that way, or it’s because of a desire for more security or more freedom or…

I devoted three chapters of Money and Marriage to helping couples understand all that stuff.  Only by understanding what’s behind the issue can you have any hope of really resolving the issue.

And one of the biggest factors behind any issue that comes up in marriage is each others’ temperaments.  Chances are good that you and your spouse are wired up differently than each other.  That’s what drew you to each other, and it’s what can drive you apart.

There are various temperament classification systems, but they all trace back to this simple four-temperament system: choleric, sanguine, melancholy, and phlegmatic.

Knowing your primary temperament and your secondary temperament, as well as those of your spouse, will help you put each other’s unique strengths (each person has some) to work in your marriage while minimizing each other’s weaknesses (each person has some of these as well).

Become a student – a lifelong student – of how you are wired up and how your spouse is wired up.  You’ll be amazed at how helpful it is in your marriage, and not just financially.

Plan to Succeed

There may be no less romantic topic on earth than the idea of using a household budget.  However, research has shown that couples that use a budget tend to fight about money less often than those that don’t.  And the more detailed the budget, the fewer the fights.

A budget gives you objective information about your finances.  If you’re truly using a budget – you have a plan, you’re tracking your use of money, and you’re managing to the numbers in the plan – you don’t have to debate whether too much was spent on clothing or concerts last month.  You can just look at the budget and see how much was actually spent.

Use my recently updated Budget Quick Start Guide and Recommended Spending Guidelines (found at the same link) to put together a plan.  And keep these tips in mind:

Give Each Other Some Freedom.  Each spouse should have some money they can spend how they want to.  Jude and I have separate clothing budgets.  As long as we stick to the agreed upon amounts, we have some freedom in how we spend that money.  Other couples call these separate budgeted amounts “fun money.”  It’s for lunches with friends or hobbies.

Divide the Tasks.  Both of you should be involved in choosing what goals to pursue and both are responsible for doing their part to keep spending within the boundaries set by the budget.  However, one will typically take more naturally to the “work” of budgeting – data entry and such.  If one of you has a melancholy primary or secondary temperament, that’s the person who’s probably best suited for the job.

Review Regularly.  At the end of each month, go over the budget to see how your actual spending compared with your goals.  Then decide what changes may be needed in the month ahead.

There’s only one way you can do life exactly how you want to.  Stay single.  Choosing to get married is choosing to make room for another person – that wonderful, amazing, very different person that you call your spouse.

Learning to put each other’s strengths to work and developing a plan for your use of money will help you stay on the same financial page.

What else have you found helpful in making the whole money thing work in your relationship?

Who else would benefit from this article?  Why not forward a link to my site? And if you haven’t done so already, you can subscribe to this blog by clicking here.  Two or three times a week, you’ll receive ideas and encouragement for using money well.

Many Prescription Drugs Are Getting Cheaper Soon (via Main Street).  Good advice on getting the best prices for your meds – especially helpful for those who have lost their health insurance through the recession.

Are Credit Scores Worthless? (via NY Times).  I always get lots of questions about credit scores in during workshops.  This debate between a blogger who takes issue with the way credit scores work (or his perception of how they work) and a credit industry expert sheds some helpful light on the topic.

5 Things You Can Do To Land The Interview (via US News).  Good practical advice for job seekers, including one idea that should improve your odds of getting hired from 1 in 33 to 1 in 4.  And while you’re at it, don’t forget these two essential steps for finding a new job.

Stay Tough, Stay Employed (via CNNMoney).  Helpful research about who’s most likely to stay employed, including some interesting parenting advice (hint, make sure your teens get a job!).

Budgeting While You’re In College (via MSNBC).  Are you heading off to college this fall or do you know a college student?  This is a good guide to building one of the most helpful financial habits.  Discovering that a budget leads to financial freedom is a great lesson to learn early in life.

And from the personal finance blogosphere…

How to Use Bill Reminders (via Mint).  Regular readers know that we use Mint in our household.  This article describes how to use Mint’s newest feature.  If you’re thinking about using Mint but are still concerned about security, learning about the steps Mint takes to keep user info safe may ease your mind.

Preparing for Your Next Act (via The Simple Dollar).  Good thoughts on getting set, financially and otherwise, for what might be next in your life.

New Ways to Listen to Music for Free or Cheap (via Wise Bread).  Sometimes it’s easier to sing along if you didn’t pay for the song.

5 Strategies to Save Money and Sanity Big When Flying With Baby (via Money Ning).  Why early boarding may not be a good idea, and other helpful ideas.

How to Protect Your Smartphone From Identity Thieves (via Money Talks News).  All those apps you love so much might be loved even more by ID thieves.  Here’s why and what to do.

Got some feedback on any of the above?  Be sure to leave a comment.

Know someone else who would benefit from this article?  Please forward a link to my site.  And if you haven’t done so already, you can subscribe to this blog by clicking here.  Two or three times a week, you’ll receive ideas and encouragement for using money well.

But a cash flow plan is actually about more.  It provides more knowledge about where our money is going, so we can be more proactive about where it should go, so we have more for what really matters.

For some people, a cash flow plan even gives them more freedom to spend.  That was the case with Sheila.

We Can’t Afford It, Or Can We?

When she married Mike, Sheila was really good at living beneath her means. Even with a relatively low salary, she never worried about not having enough. She always had money in the bank.

Because she grew up as one of five kids with a stay-at-home mom and schoolteacher dad, she knew all about frugality. However, the money she had in the bank gave her no happiness, no warm feelings of financial freedom. She only allowed herself to buy whatever would get the job done at the absolute lowest possible cost.

When she and Mike got married, he had been in the habit using a simple spreadsheet to guide his spending. As they used it to guide their joint finances, Sheila began to see that her automatic response to any spending opportunity—“we can’t afford it”—was based on an unwarranted fear of spending.

Seeing on paper that, yes, in fact, they could afford it—whether it was a restaurant meal or a better brand of clothing—gave her a sense of freedom around money she had never experienced before.

Getting Started With a Budget

If you’ve never used a budget before, give it a try.  My Budget Quick Start Guide will get you going.  I’m confident you’ll find that a budget is not constraining or restrictive; it’s actually incredibly freeing.

In fact, I believe it’s the single most powerful, practical tool for successful, joyful money management.

If you use a budget, do you agree that it has given you a greater sense of financial freedom?  If you don’t use one, what holds you back?

Know someone else who would benefit from this article?  Please forward a link.  And if you haven’t done so already, you can subscribe to this blog by clicking here.  Two or three times a week, you’ll receive ideas and encouragement for using money well.

I’ll explain how it works, along with its pros and cons, in a minute. But first, a little background.

Making Budgets Cool

When Mint and several competitors launched a few years ago, they did what I never thought possible; they made it appealing to use a budget.  This has long been a tough sell, but by bringing budgeting online, the idea caught on quickly.  Today, Mint has almost five million users.

The main barrier for people is that you have to enter all of your bank account and credit card passwords (see my previous post, Is Mint.com Safe?).  If you’re comfortable doing that and are then willing to spend a little time setting up a budget, Mint will quickly and easily show you how your actual spending in each spending category compares with your planned spending.

We use Mint in our household and have been mostly happy with it.  Most mornings, I log in for a few minutes to see how we’re doing, make sure our most recent transactions were categorized correctly, and then manually enter any cash transactions.

Steady Improvements

Mint rolls out new features on a regular basis, and last summer launched a Goals tab, where you could choose among nine goals, such as buy a home or get out of debt. It then suggests a series of next steps and tracks your progress.

Since the Get Out of Debt goal was, by far, the most popular, and because revolving debt like a credit card balance is a different animal than installment debt like a student loan, the company decided to split the Get Out of Debt goal into Pay off Credit Card Debt and Pay off Loans.

If you choose the Pay Off Credit Card Debt goal, Mint will show you each of your credit cards along with their current balances, ask you which ones you want to pay off, and then instruct you to fill in the interest rate and minimum due.  When you’re done, it will show you how long it will take you to get out of debt if you make just those minimum payments.

By moving the slider, you can easily run other what/if scenarios, showing how much more quickly you’ll be out of debt if you pay more than the minimums.

Which Debt to Pay Off First

There’s a perennial debate among personal finance teachers as to whether it’s best to pay off your highest interest rate debt first or the one with the lowest balance.

Some people, myself included, recommend going after the lowest balance debt first, pointing out that it feels good to knock out one of your debts as soon as possible.  It’s an emotion-based argument.  The assumption is that making fast progress will give you the motivation to keep going.

Others recommend going after the highest interest rate debt first, reasoning that doing so will get you completely out of debt the fastest and cost you’re the least amount in interest.  When I’ve run different scenarios, I’ve found that this is, indeed, the approach that will get you completely out of debt the fastest and with the smallest interest cost.  However, the savings of time and money are relatively small compared with going after the lowest balance debts first.

Mint’s system creates a payment plan focusing on paying off the highest interest rate card first.

Aaron Forth, Vice President of Product in the Personal Finance Group at Intuit, which owns Mint, told me, “It was a debate that was had passionately.”  He explained that the folks at Mint tend to be “a quantitative bunch,” so it’s natural that they would set up the system to go after the highest rate debt first.

But they’re not all numbers and no heart.  After someone pays off a debt, Mint is set up to send a congratulatory e-mail.  Figuratively speaking, Forth said Mint “used to yell at people for going over budget… Now, we’re giving them a pat on the back for paying off their debts.”

Still a Bug or Two

I was able to test Mint’s new Pay Off Credit Card Debt goal since we have three credit cards (of course, we pay our balances in full each month), and I found a few issues.

Most importantly, after entering all of our information, it came up with this ill-advised suggestion: “Keep yourself in check: Consider using your E HEALTH SAVINGS NOW debit card for purchases.”  That’s our health savings account, which is only to be used for medical expenses.  We have a debit card attached to our regular checking account, which is the one it should have recommended.

In the past, when Mint has added new features, they have had a few bugs.  I trust they’ll get things smoothed out soon enough.

“Minimum Payments” Needs Clarification

One last point has to do with Mint’s advice about making your “minimum payments.”  Let’s say you have multiple credit card debts and you wisely decide to pay more than the minimum.  While applying that extra amount to one of your cards, Mint reminds you to keep making your minimum payments on all of your other cards.

But here’s the somewhat confusing issue: there are two types of minimum payments: a “fixed” minimum and a declining minimum.

If you stop using a card and pay the minimum amount required each month, then each month the card company will require a little less of a payment.  That’s because your balance is declining a little bit each month and your minimum payment is based on a percentage of that balance.  Paying this declining minimum is what keeps people in debt forever.

On the other hand, if you fix your payment on this month’s required minimum – if $29 is required this month, you keep paying that amount every month even when the card company asks you for less – you’ll get out of debt much faster.

Fortunately, when you look at the details of the payoff plan Mint creates for you, it’s clear that Mint’s plans are based on an assumption that you will fix your minimum payment at the amount due this month.  This is a wise step and one that I have long recommended.  Mint should simply do a better job of calling this out.  Otherwise, some people may interpret its advice as “pay the declining minimum.”

Final Thoughts

Overall, I like the simplicity of Mint’s new tool, and believe it will help motivate people to pay more than their minimums by easily showing them the benefits of doing so.  If you don’t use Mint, or if you prefer to set up an accelerated debt repayment plan that focuses on going after your lowest balance debts first, you could use the free calculator on my site.

Do you use Mint?  What’s been your experience?

If someone forwarded this article to you, please sign up for your own subscription to this blog.  Two or three times a week, you’ll receive ideas and encouragement for using money well.

There are three steps involved in using a Cash Flow Plan.

First, plan the use of your income.  How much will you give, save, invest, and devote to monthly expenses like food, fun, and everything else?  Not sure how much a household of your size and income should spend on this or that?  Take a look at the budgeting percentages in my Recommended Spending Guidelines.

Second, track where your income actually went.

And third, review how you did compared with your plan.  This is the step that a lot of people miss.  They plan, they track, but they miss out on the full benefits of a budget by failing to review their results and make any necessary revisions.

If you’ve set up a plan and have kept up with the tracking, a monthly review shouldn’t take much time at all.

Our Monthly Budget Review

We use Mint.com to plan, track, and review our cash flow.  It takes a little while to get Mint set up, but once you do, a simple click on the Budgets tab will show you how you did compared with your plan.  Here’s a snippet of our January results, showing three categories.

Notice a few things:

Just because we didn’t spend any money in a category doesn’t mean that money is available for something else.  For a lot of our periodic expenses or bills – those that occur sometime each year, but not every month, like our semi-annual auto insurance premium – we transfer one-twelfth of the annual amount into a savings account each month.  So, seeing a zero in that category doesn’t mean we can go spend an extra $55 on clothing.  That $55 was transferred from checking into savings so we’ll have the full amount when the premium comes due.

Second, it may be okay to overspend in some categories.  You’ll see that we overspent our parking & fees budget.  That’s because our vehicle’s electronic toll device hit up our checking account for $40 in January.  Since we don’t drive on the tollways all that often, this category will soon even out.

The same thing typically happens with some of our utility bills like natural gas and electricity.  Our gas expenses are usually over budget in the winter but under budget in the summer.  We could customize our budget, altering the amount we plan to spend each month, but we prefer to keep each month’s plan the same.  If you don’t have enough money in reserve to ride out the ups and downs of such categories, you may be able to request even billing from your utilities.

Third, keep a special eye on discretionary categories like groceries, clothing, and entertainment.  These are the categories that may not even out over time on their own.  We overspent our grocery budget in January.  As Jude and I talked about it, we decided that the amount we had allocated for groceries was unrealistic, so we upped our budget.  Of course, that meant we had to reduce our planned spending in some other categories.  The other alternative would have been to try to spend less next month.

Make sure you don’t skip this third step to using a Cash Flow Plan.  A monthly review will go a long way toward keeping your plan on track.

How often do you review your spending?

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But it isn’t always easy for couples to talk about money.  Nor is it easy to understand the truth about the other person’s finances just through observation.  You can see if they’re a generous tipper, but just because they drive a nice car doesn’t mean they’re doing okay financially.  The car may have come hitched to a boatload of debt.

That’s why, if you’re seriously considering getting married, it’s important to talk about each other’s finances.  When asking the following questions, focus on listening and understanding, not judging or fixing.

Five Key Financial Questions

Here are my picks for the five most important pre-marriage money questions.

1) How much debt do you have? Research shows that having debt increases the likelihood that couples will fight about money, and couples that argue about money are more likely to divorce than any other topic of dispute.  If one person has a lot of debt, find out what happened.  Did it come about through some unusual circumstance or plain old overspending?  The key here is to see if the cause of the debt has been addressed.  If not, hold off on the wedding until it is addressed.

2) What’s your credit score? Scores range from 300 to 850.  The higher the score, the better.  If a person’s score is below 700, you’ll want to dig deeper.  Do they tend to pay their bills late?  Whether or not bills are paid on time is the most influential factor in determining your score, counting for 35 percent.  A really low score may also indicate a prior bankruptcy or foreclosure.

It may sound boring or intrusive, but it’s an act of love to share your credit reports with each other.  Just as with the first question, if there’s a problem, the key is to see if steps have been taken to fix the problem.  If the person has a history of late payments, is that still going on or was that in the past?

Get your free credit reports from each of the three national credit bureaus at AnnualCreditReport.com and then buy one of your credit scores for $19.95 from MyFICO.com.  You’ll have the option of buying scores from two of the bureaus, but you just need one for now.  It doesn’t matter which one you choose.

Watch as several married people give money-related advice to those who are planning to get married.

3) Do you want to have children? This one isn’t directly a financial question, but the natural follow-up question has huge financial implications: will one of us stay home full-time if and when we do have kids?  I encourage all couples to live primarily on one income, but this is especially important for couples that want to have children and want to have one parent step out of the paid workforce.  The single most helpful financial move you can make to prepare is to live your pre-children days primarily on one income.  Are you both on the same page on this?

4) Do you use a budget? National research I’ve conducted has found that couples that use a budget experience fewer financial disagreements than those that don’t.  Do you both agree that you will operate your household with the use of a budget?  Even better, put together a budget for your first year as husband and wife before you get married.

5) How much do you give away each year? If generosity is a priority for you, you’ll want to make sure your spouse is like-minded.

There are plenty of other questions to ask as well.  In fact, early in my new book, “Money & Marriage: A Complete Guide for Engaged and Newly Married Couples,” I devote two chapters to questions and other exercises designed to help you get to know each other financially.  But I believe these are five of the most important questions to discuss before getting married.

What about you?  Are there other questions you think should have made the top five?  Leave a comment below.

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