Online money management tools are a dime a dozen, but Boulder, CO-based budgeting tool Budgetable is launching in private beta to try to tackle what founder Ryan Bales believes is a simple and under-served problem: budgeting. The tool, which connects to over 10,000 financial institutions across the U.S. and Canada, aims to make budgeting transparent and integrated with a user’s normal money management routine.
Budgetable is intended to be a user’s sole money management tool – it connects with and aggregates a user’s financial accounts, and provides automatic transaction categorization. While tools like Mint.com and Spenz already offer the ability to create and track budgets, Budgetable is unique in that it offers users budget tracking by “Budget Score,” which acts similar to a credit score for spending. It reflects a user’s spending behavior over the short- and long-term, and gives users a daily idea of how well they’re doing, and where they’re wasting money.
Bales started the company because of his frustrations with trying to create his own budget. He said the problem isn’t always the inability to stick to a plan, it’s the fundamental impoosibility of attempting to plan for the unknown. “That is, most of us can only give a rough estimate of how much we’ll spend during any particular month, yet when we budget, we try to set these exact budget goals,” he said in an interview. “This is doomed to fail because eventually we’re going to slip up, get discouraged, and ultimately stop budgeting.”
He found that existing budget apps haven’t solved the problem because they still base their foundation on the traditional budget, which he believes is flawed. “Budgeting has always been this unsolved problem,” he said in an interview. “People want to budget now more than ever, but it’s difficult to start, and almost impossible to maintain for any length of time. There are just too many variables in our lives and our spending.” He decided to approach the problem by trying to improve spending behavior over the long-term rather than try to conquer finances in a couple months. “Our solution works because it integrates budgeting into a person’s overall finances in a transparent way, instead of treating it as a stand-alone thing,” he said.
As for why anyone would use Budgetable over a popular existing solution like Mint.com, since the two tools have many similar features, Bales said it comes down to the budgeting tool and Budget Score. He said that unlike other tools, Budgetable looks for patterns in a user’s spending behavior and determines which transactions are potentially wasteful. By monitoring wasteful spending, users can make small changes in their daily routine, and the changes are reflected in their Budget Score. “In this way, you can see how Budgetable interacts with your world,” Bales said. “Your Budget Score measures your overall financial health as it relates to your spending habits.”
A select group of personal finance bloggers and people familiar with online money management have been beta testing the tool before it opens up to the public, and no official launch date has been set. They’re also working on iOS apps and will release them shortly after the web app. The tool is only open to users in the U.S. and Canada, and Bales doesn’t see them expanding internationally in the near future. The company is self-funded but will be looking to raise a round of seed funding soon, and in terms of monetization strategy, the web app will be free for users, but Bales plans to charge for the mobile companions.
One of the biggest problems with online money management apps is that they don’t track cash spending. While Bales said users will be able to track cash transactions via the mobile apps, it still requires users to input the information themselves, which people often forget to do. So while Budgetable has all the features users have come to expect from online money management tools, and unique add-ons like the Budget Score, it will be difficult to convince users that their technology is worth switching from Mint.com or similar services, especially when Mint’s web and mobile applications are free to use. And while the service takes a new approach to an old problem, it will be up to users to decide whether Budgetable solves different parts of the online budgeting equation.