In educational technology, we spend a great deal of time talking about the divide between digital natives and digital immigrants. Have you ever been in awe by a high school student who can build websites, or a middle school student who knows absolutely everything about Facebook? Let’s face it, children’s brains are being wired to process new technological concepts and constantly adapt to their surroundings. They are digital natives, while older generations tend to be digital immigrants; fully capable of learning new things, but technology doesn’t come “naturally.”
I really appreciate the insights of Dave Ramsey; his Total Money Makeover plan is a great way for getting out of debt. As a self-proclaimed “digital native,” I find it hard to embrace his envelope budgeting system. Mr. Ramsey’s plan calls for putting cash in envelopes marked for each particular expense category- groceries, clothing, car repairs, etc. He contends that when you spend money with a card (versus cash) we are likely to spend 15% more. By putting a designated amount of cash in each envelope, we don’t allow ourselves to overspend in any particular area.
I prefer to use the budgeting tools on Mint.com. I can set up budget categories (just as I would envelopes), and Mint will track each purchase that I make to any of my bank accounts. Towards the end of the month, as I start to approach the maximum for a particular category, the budget bar will turn yellow, indicating I am near the maximum. If I overspend, it turns red. Of course, it’s not a perfect system. I still have to adjust the appropriate categories (some times an unknown restaurant appears as “Shopping”). I am able to keep track of my budgeting on my computer and cell phone daily, and rarely overspend on any category. As someone who naturally gravitates towards technology, I would much rather regularly check my budget on Mint, then pull out a wad of paper envelopes, and risk losing money, or having it stolen. Of course, according to Dave, I risk spending 15% more than I needed to, but I believe that is a general statistic, and doesn’t reflect the spending habits of someone who makes conscientious budget decisions.