Financial Management Software Keeps You in the Driver’s Seat
Technology has come a long way, but cars still don’t drive themselves, and financial management still requires time and attention. Like advancement in automobile technology that alerts you before you run into an object or automatically turn your lights off, money management software programs and online services are making it easier to keep a budget and meet financial goals, but you have to stay in the driver’s seat.
The Players
Two names have dominated the financial management software market for several years: Microsoft Money and Quicken. In fact, in an informal Noobie poll, more than 35 percent of respondents said either Money or Quicken is their software of choice. Another 18 percent use a free, Internet-based service called Mint.com.
For those noobies already familiar with Microsoft Money, note that it is no longer available for purchase, and all existing software must be activated before Jan. 31, 2011.
How They Work
The original leaders in financial management software rose to the top by selling boxed software through computer stores, big box retailers and online businesses. Most of them also have online components, but you’ll need to load their software onto your hard drive for everything to work together. On the positive side, these packages usually offer more extensive versions for managing small businesses or rental properties in addition to household finances.
A new breed of Internet-based software is giving the incumbents a run for their money (no pun intended). Mint.com has proven popular, or checkout others like JustThrive.com, MoneyStrands.com, Mvelopes.com and more. These sites are primary targeted to household consumers. You usually start by creating an account, but there shouldn’t be anything to buy or download to your hard drive. Plus, since everything is Internet-based, you’ll likely have access to all your information from any Internet connection any time.
Managing Your Money
Whatever site or software you choose, you’ll find lots of tools to help you categorize your spending and saving, which is helpful for sticking to a budget or setting financial goals. You’ll also be able to give the software secure access to your accounts at most U.S. banks, brokerages, lenders, credit card companies and more, so it can download your current balances and transaction details. With all your account information in one place, you’ll get a better look at the big picture.
Most sites will educate you on new or better ways to manage your money and provide access to products that will help you succeed. For example, you may get a recommendation or a savings account or other savings product that offers a higher interest rate or a credit card with a lower interest rate than what you currently pay.
Another great tool is the ability to categorize your expenses so you can see where your money goes and adjust your budget accordingly.
Staying in the Driver’s Seat
Many programs may give the impression that they offer completely hands-off money management, however, chances are good that you’ll need to invest time regularly to maintain records that provide the most value. If you slack off for a week or month, it will be hard to catch up and your dedication may wane.
The ability to categorize expenses is a good example. Most programs automatically assign categories based on the name of the vendor or retailer. That usually works and can eliminate a lot of manual work, but what about the restaurant charge that was actually a Christmas gift card?
Another helpful feature to look for is the ability to break out a single charge into multiple categories. For example, if you usually buy a soda and candy bar when you pump gas, you’ll actually want gas in one category and food in another. Just think of all the different spending categories you may touch during a trip to Super Target or WalMart!
While most sites will download transaction information from financial and lending institutions, you may want to consider recording your own transactions, much like a check register. The download then provides a helpful way to compare and cross check for accuracy. Mistakes happen.
As with most things in life, the more you put into your money management software, the more you’ll get out of it. Automatically generated charts, graphs and reminders can help keep your financial house in order as long as they are based on accurate, detailed records. And, when it comes to your wallet, remember you are still in the driver’s seat!