A Flexible Budgeting App for Couples: Monarch Money
Happy New Year! The beginning of the year is a great time to reflect & reset our money priorities, especially when it comes to saving & spending. Plus, let’s be honest, we are all broke from holiday parties & gifts, so time to reign it in!
Monarch Money is a new software that I have been piloting with several clients. It is largely a budgeting app to help you keep track of your spending over the month and year to make sure that you are staying aligned with your goals. Many people were sad to see MINT go away last year-- and Monarch Money has been a popular choice for many former Mint users.
Monarch is great for couples
Monarch Money allows for multiple family members to use the app together, so you can connect individual and joint accounts. It allows both partners to collaborate on the budget and review transactions. You can even tag transactions for future review by your partner.
I've been using the app personally with my husband, trying to learn best practices so that I can help clients who are also using the app. I've recently found some resources that I think are super helpful and want to share, along with a quick tutorial for getting started with the program.
Picture caption: Me & Husband Ted during one of our rare angelic moments. Usually we are looking at our phones next to each other like regular couples.
How I Use Monarch Money with my Clients
One of the key aspects of creating a financial plan is knowing how much you need to earn and save today in order to support the lifestyle you want now and later in retirement.
In order to build an accurate financial plan, I need to know the dollar figure that represents ALL of your monthly spending. This figure includes all of your fixed expenses like bills, loan payments, insurance, etc. and all of your “lifestyle” expenditures, like how much you spend on travel, clothes, gifts, eating out, etc.
If everyone at most spent only their paycheck each month, this calculation would be a simple exercise. But there are other sources of money to spend: we can spend down from our savings accounts or we can spend on credit cards with borrowed money.
For clients who don't already have a clear understanding of where their money goes each month, just doing steps 1-3 below with Monarch Money allows us to look back at their historical spending & saving patterns. It gives insights into the true amount of total spending each month and helps uncover habits that weren’t so obvious.
Below is a report I pulled in Monarch from my personal account. I’ve removed the dollar amounts for privacy, but it still gives a breakout of how my household spent money in November.
Want to give Monarch a try? The rest of this blog outlines the four main steps to become a power user of the app. Already feeling intimidated? Just start with Step 1.
Getting Started With Monarch
Step 1: Connect your accounts
While this app can track your entire net worth, I find that it is most helpful as a budgeting/spending tracking app. Plus, it can be unhelpful to see the daily and monthly changes in investment accounts since, for the most part, you should stay focused on long-term investing and ignore the day-to-day. I would focus on connecting the primary accounts you use for paying bills, saving towards goals and everyday spending.
These accounts include:
1) Bank Savings & Checking Accounts
2) High Yield Savings Accounts
3) Credit Card accounts used for spending
Taylor with Evolving Money has some great videos on YouTube to help you get started with Monarch. The first in her series is mostly about connecting accounts:
Step 2: Set up your Custom Expense Categories
It's very important to set up your Categories immediately after you connect your accounts. This is going to make the next step, organizing transactions, much, much easier.
Many monthly expenses are the same every month and fairly simple to categorize-- utilities, housing, transportation, etc. But every household has different places where they choose to spend money every day or month. For people who have kids, maybe there is daycare and children's activity fees. For people with pets, there should be a Pets and Veterinarian category. If there is a regular place where you spend money, or if you have a spending habit that you want to monitor, then you should have it defined as a category in Monarch.
Here is a helpful video from Evolving Money about setting up categories in your Monarch account:
Monarch recently released a NEW way of monitoring expenses that I'm pretty excited about: Flex Budgeting.
Basically, you create super groups for fixed monthly expenses and your discretionary monthly spending. It's a great way to help you focus on one monthly spending number for discretionary spending.
Step 3: Organizing Transactions & Setting up Rules
This is the step that will help you quickly translate all your account transactions into the right categories.
Step 4: Set Up Your Budget
If you want to just look backward on where you're spending money, then you don't need to use the Budget feature.
If you want a guide and guardrails to help you keep your spending within a target as you go through the month, then it's important to set up a realistic budget for all your categories.
Disclaimer: Please know that I am not endorsing Monarch Money or Evolving Money and that I don’t get paid for using them with clients or recommending them to others. There are many other apps out there that are likely just as functional— I chose this platform based on some good reviews I heard from other financial advisors, and I personally found these videos by Evolving Money very helpful.
Full Disclosure: Nothing on this website should ever be considered to be advice, research or an invitation to buy or sell any securities. Please see the Disclaimer page for a full disclaimer.
Stacy Dervin, CFA, CFP® provides fee-only financial planning and investment management services in Eugene, Oregon. Tailored Financial Planning (TFP) serves clients as a fiduciary and never earns a commission of any kind. As a financial advisor, Stacy is on a mission to help Gen X and Gen Y be truly proactive about their financial futures.
