Yesteryday, I wrote a post about zero based budgeting, a type of budget that forces you to assign each dollar of income to an expense category. I think it’s a very good way of budgeting but one that can be difficult for nonbudgeters (I think envelope budgeting is the best way, of the five budgeting systems I’ve discussed, for nonbudgeters to get their feet wet).

However, in writing about all these budgeting systems, many of which are very similar, the conclusion is that there is no right way to budget. There is only a way that gets you to financial independence, the way that works best for you and your situation. In reviewing all of these free budgeting tools, it all went back to the simple idea of spending less than you earn.

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A zero based budget is a budget where every dollar you earn is assigned to a category in your budget. Your income minus your expenses equals zero – zero based budget. The idea sounds very simple, and it is, but the real value in creating and following a zero-based budget is that it requires you to plan very deliberately ahead of time and track it very closely as you go through your month.

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With the unceremonious shuttering of Microsoft Money a few months ago, a lot of former Microsoft Money customers are looking for alternatives. If you were using Microsoft Money Essentials, Plus Deluxe, Plus Premium, or Plus Home & Business, your software will still work but support will be gone.

Fortunately, there are a lot of alternatives in the online budgeting tool chest. After a recent Personal Finance Hour show all about budgeting, I took a look at several software tools. This post will cover all of them briefly to help you decide which might be right for you (and they are not ranked in any predefined order).

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Last night, on the 25th episode of the Personal Finance Hour, we discussed mostly about budgeting and touched on some popular budgeting tools. PearBudget is an online budget management tool, mentioned by both JD and members of the chatroom, that I had never heard of.

PearBudget’s tagline is “really simple budgeting” and it delivers on that promise. Within ten minutes, I was able to setup a budget and begin tracking expenses without even entering an email address. You can play with the full tool right from the start, without even registering. That’s uncommon in any tool, let along a budgeting one.

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This morning I published a You Need A Budget (YNAB) review explaining the YNAB methodology as well as a look inside the tool. If you’re thinking about buying it, I recommend that you download it and do the 7-day trial first. Don’t buy it sight unseen when there’s a 7-day trial available giving you full access to the tool, so click here to download it before paying.

Then, when you’re ready to upgrade YNAB, we have a special 10% off coupon code:

Also, YNAB 3.0, which is slated for a November release, will cost $59.95. If you buy YNAB 2.0 for $49.95, actually $44.96 after the 10% off promotional coupon code, then you will be upgraded to YNAB 3.0 absolutely free. YNAB 3.0 not only looks more visually appealing but will sport additional features like expanded report functionality over 2.0.

For years, my budget consisted of an Excel spreadsheet that documented every purchase I made every single day of the year. As a numbers guy, this wealth of data was amazing and helped me tweak my spending, find my financial leaks, and reach financial goals much sooner than I would have without budgeting. Since then, I’ve been tentatively using online personal finance tools because of the security issue and instead I rely on Quicken’s desktop application, which is one of the most comprehensive tools available.

What if you just want to maintain a budget? Enter You Need A Budget. You Need A Budget, often called YNAB, is a desktop budgeting software package that will help you set, maintain, and stick to a budget. It’s a much better version of what I used to hack together in an Excel spreadsheet.

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Here’s a little video discussing the ins and outs of envelope budgeting, how it’s done (at a basic level), why you might want to consider it, and my thoughts on its effectiveness. I’m by no means an expert on envelope budgeting, but I do understand the basics, so I invite those of you who do use this on a regular basis to chime in with your thoughts!

One of the interesting discussions that came out of the Personal Finance Blogger’s Conference in San Francisco was a discussion of how people budget and some of the budgeting styles. While we didn’t explicitly go over some of the more common budgeting systems, I felt it would be useful if I hit on a few to see where their benefits and drawbacks are.

Personally, I did the Track to the Penny system for a few months until I got a good handle on my monthly expenditures, then I essentially did the Reverse Budgeting/Nothing strategy. In between the two systems, I reviewed my expenditures to see where my spending was going and whether I could make some improvements. I saw that I was eating out far too often, a detriment to both my wallet and my health, so I took steps to start buying more groceries and preparing lunch more often.

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