What's the best software for keeping track of your personal finances?

How to be the best consumer you can be.
Oct. 7 2008 6:47 AM

Show Me My Money

What's the best software for keeping track of your personal finances?

While the magnitude of the current financial crisis remains uncertain, one thing seems clear: The party is over. The era of easy credit and blithe overspending is drawing to a grisly close. And not just for Wall Street BSDs. After years of being goaded toward ever greater heights of consumerism, average Americans are finally feeling pressure to buckle down, spend less, save more, and prepare for lean times ahead.

This is particularly bad news for me because I am a comically inept manager of my personal finances. It's not that I don't try. Over the years I have instituted several budgeting systems, ranging from a simple list of expenses tacked above my desk to an ambitious attempt to track every penny I spent for months. Still, my money disappeared in ways I could neither understand nor predict.

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But then I discovered Mint, a two-year-old Web startup that lets you keep track of all your financial accounts in one place for free. It seemed like the perfect way to see where my money was going (and with colorful pie charts, no less) minus the hassle of tracking everything manually and without actually spending money on software. But Mint's not perfect, and the more I used it, the more I wondered: Would it be worth the upfront cost to purchase more powerful desktop software like Quicken or Microsoft Money? Or would a different free or low-cost Web service be even better? I decided to pull my finances together and find out.

Methodology
I spent a month tinkering with a host of computer money-management tools, including an array of Web sites with funny names: Wesabe, Buxfer, Geezeo, Expensr, and Green Sherpa, among others. After winnowing the list to a manageable five finalists, I put them through the usual ups and downs of my monthly finances: the dizzying highs of payday; the demoralizing lows of rent payments, credit card bills, and impulse Internet sneaker purchases. The ideal software would help a financial dunce like me easily monitor multiple accounts (checking, savings, credit cards, 401[k]), identify spending trends, and maybe even save a buck or two. I evaluated the software using four criteria:

Security (10 points)
When I told friends about sites like Mint, which require you to divulge the passwords used to access your financial accounts online, they all had the same question: Is it safe? The answer: probably. All of the companies I evaluated tout their use of secure sockets layers technology and 128-bit encryption to securely transmit data on the Internet. To find out what that means—and if it's enough protection—I called up Alfred Huger, vice president of engineering at Symantec. He said that 128-bit SSL encryption provides a basic level of protection, but he would look very closely at companies' security statements, and he would be more inclined to trust a national bank than an unproven startup.

Bottom line: Yes, there are risks, and it's tough to say definitively that one site is more secure than another. If you're the type of person who is fundamentally uncomfortable sharing financial data on the Internet, I won't try to change your mind. (In that case, you might try a no-frills program like Buddi or Pear Budget, or download a budgeting template for Excel.)

Features (10 points)
Does the software support numerous financial institutions? How many ways are there to slice and dice your data? Can you categorize your spending, and does it let you invent your own categories? Can you set up budgets? Bill reminders? E-mail and text-message alerts?

One important issue: All of the tools I tested—except one—failed to incorporate pending transactions on my checking account. As a result, they displayed a balance that was usually a day or two out of date, forcing me to consult my bank's Web site for the real number. This may not be a deal-breaker for some people, but when you play the high-stakes game of paycheck-to-paycheck brinkmanship that I do, knowing the most up-to-date balance is crucial. This played a deciding factor in choosing a winner.

Ease of Use (10 points)
Is the software easy to set up? Does it have an intuitive interface? Can you update your accounts with one click? Is there an overwhelming number of features? What if you need help?

Value (10 points)
How much does the software cost? Are there associated bank fees? Are the features on the pay software worth the money, or would you do just as well with a free Web-based platform?

Here are the results, from confounding to ka-ching!

Quicken Deluxe 2009

Quicken Deluxe 2009, $39.99 Quicken seems to hold a slight edge over its rival Microsoft Money in head-to-head comparisons, and it has certainly attracted a devoted fan base of expense-tracking obsessives. So, I was expecting fireworks. Instead, I found a crowded user interface with a bewildering array of options. Setting up all my accounts was time-consuming and frustrating, and I was disappointed that the software lacks a simple central overview of my financial health (or illness, as the case may be). Plus, the fact that all transactions are recorded on a checkbook-style ledger drove me crazy. I've never balanced a checkbook in my life! In short, the software made me feel stupid—which, naturally, made me want to cheer myself up with some reckless impulse spending. Not a good start.

Securitywise, Quicken is a safe bet—it stores passwords only on your home computer, not on its own servers. And it certainly offers a lot of powerful tools. (I particularly like the fact that you can write checks in the software.) But if, like me, you're looking for a simple snapshot of your finances, I would suggest something more basic—and less costly.

Security: 10
Features: 8
Ease of Use: 2
Value: 2
Total: 22 (out of 40)

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