Choosing between software and a spreadsheet is a personal decision. It depends a lot on your needs, your comfort level with technology, and your budget. My personal preference is an app rather than a spreadsheet, however, I can easily understand why so many people prefer to use Excel or Google Spreadsheets to plan their finances. When I started to plan my finances, I was a spreadsheet guy. I found it more convenient to just open Google Sheets and start typing in my expenses and income. Next, I wanted to see how my finances would look in the future, and I created some formulas to project my cash flow. Each time I opened the spreadsheet for my monthly financial update, I found out that I ended up making new formulas and new sheets to track further financial insights. It was a never-ending process.
After two years of using a spreadsheet, I had enought and I decided to give a try to a financial planning software. I tried many of the popular ones, and I was never happy with them because of two main aspects: either poor UX or lack of data privacy. Thus, I decided to create my financial planning software. I wanted to have a tool that would be easy to use, have a great user experience, and make sure that my data is fully protected and no one else except me can ever see it. FinancialAha is the result of years of planning my finances in Excel and then moving all that knowledge and insights into an app. This is the financial planning template that I used to plan my finances in Excel before moving to FinancialAha .
Let’s take a look at the pros and cons of both financial planning software and spreadsheets.
📊 Spreadsheets for financial planning
Advantages of spreadsheets
1. Customize as much as you want
Spreadsheets are highly customizable. You can create your formulas, charts, and tables to track and plan your finances. You can also create your categories and subcategories to track your expenses and income. Everything can be customized to your own needs and you can do it right away without waiting for a software update.
2. Don’t have to pay a subscription
Creating a spreadsheet is and will always be free (after you pay the Microsoft subscription if you are not using Google Sheets). You can also find many free templates online that you can use as a starting point to plan your finances.
3. Accessible offline
Spreadsheets can be used offline. You can download your spreadsheet and use it on your computer without an internet connection while flying around the world or being on a train in the middle of nowhere. This is a great advantage if you are traveling or if you don’t have a stable internet connection.
4. Privacy
Your data is stored on your computer or in your Google Drive. You don’t have to worry about your data being stored on a server that can be hacked, and you are the only one who has access to your data. This is one of the greatest advantages if you are concerned about data privacy.
Cons of spreadsheets
1. Extremly time-consuming
Creating a spreadsheet from scratch can be time-consuming. You have to create your formulas, charts, and tables and you also have to input your data manually. This takes a lot of time, especially if you want to create a detailed budget with many categories and subcategories.
2. Prone to errors
Spreadsheets are prone to errors. If you make a mistake in a formula, it can mess up your entire budget, and might be very difficult to identify the source of the problem. You have to be very careful when creating your spreadsheet and double-check everything to make sure there are no errors.
3. Lack of automation
Spreadsheets don’t have automation features. You have to input your data manually and create your formulas to calculate your budget and make financial projections. This can be time-consuming and prone to errors as previously mentioned.
💻 Financial Planning Software
Pros of financial planning software
1. Automation
Financial planning software can automate many tasks that you would have to do manually in a spreadsheet. For example, you can connect your bank accounts and credit cards to the software and it will automatically import your transactions. You can also set up recurring transactions and the software will automatically add them to your budget or notify you when they are due.
2. User experience
Financial planning software is designed for specific needs and not as a broad solution when compared to spreadsheets. You don’t have to create your formulas or charts, everything is already there for you. You just have to input your data and the software will do the rest in no time.
3. Collaboration
Most financial planning software allows you to collaborate with your partner or family members. You can share your budget with them and they can add their transactions, which makes it great if you want to plan your finances together.
4. Security
Financial planning software is usually more secure than a spreadsheet. Your data is stored on a server that is protected by advanced encryption algorithms and other security measures. You don’t have to worry about losing your data if your computer crashes.
Cons of financial planning software
1. Cost
Financial planning software can be expensive. Most software is subscription-based, so you have to pay a monthly or yearly fee to use it. This can add up over time and be a significant expense. However, there are free options available and at FinancialAha we offer a free plan that you can use to plan your finances up to a very considerable level.
2. Lack of customization
Financial planning software is not as customizable as a spreadsheet. You can’t create your formulas or charts, you have to use the ones that are already there. This can be limiting if you have specific needs that the software doesn’t meet. That is why, we are always open to feedback and we are constantly improving FinancialAha to meet your needs. If you need a specific feature, just let us know and we will do our best to implement it as soon as possible.
3. Data privacy
Your data is stored on a server that can be hacked if it is not managed properly. For us, data privacy is a top priority and the entire FinancialAha platform is built with security in mind. You can read more about our security and data privacy here .
4. Internet connection
Financial planning software requires an internet connection to work. If you don’t have a stable internet connection, you won’t be able to access your budget. This can be a problem if you are traveling or if you live in an area with poor internet coverage. However, FinacialAha can store data locally on your device and once you load the app, you can use it offline as well.
All in all, I believe that both financial planning software and spreadsheets have their place in personal finance. If you are comfortable with technology and want a more automated solution, financial planning software could be the best choice for you. If you prefer to have full control over your budget and don’t mind spending some time creating your formulas and charts, a spreadsheet is probably the way to go. In the end, it’s all about what works best for you and what you feel most comfortable using.
