Considering Personal Finance Software?

Using a computer to track your money and investments used to mean just choosing software and getting started. It's not that simple anymore.


For the first time in years, you might wonder if you can bypass using personal software altogether and instead use a third-party financial tracking website or just use your bank's or brokerage's site. Here's the irony: Financial tools such as Quicken are supposedly easier to use, and trying to choose which product is best for you is increasingly complex. "There are more choices, that are growing increasingly more powerful each year plus more options from banks and brokerages and a number of other Web applications but none of them offer you the coaching and expertise you need to make the more difficult decisions.

Here is an analysis of the four major ways you can use your computer to monitor spending and investments. You'll discover the advantages and disadvantages of each method so you can spend less time choosing technology and more time getting your finances on track.

Solution No. 1: Quicken

They say Quicken is the gold Standard. And for those with the patience to get through it and set it up, it is. But for the rest of us, I think it complicates the process.

The upside: Quicken is an annually upgraded product backed by Intuit, it lets you create detailed budgets, as well as download all your bank and brokerage data and even see the ups and downs of your cash flow and portfolio.

For investors, Quicken is tough to beat, because it can track how much you've paid for stocks even if you've invested in the same security several times.

All your data are stored on your personal hard drive, so you can make copies yourself. And if you switch brokerage firms, you don't have to worry about losing your historical data.

The downside: Quicken is an app, and you must pay for it.

The Deluxe version costs $60. Quicken 2011 runs on computers running Windows, but the version for Apple’s Mac isn't nearly as powerful.

The online capabilities of the software, including stock quotes, expire every three years, so that forces you to update every three years.

Also, Quicken 2011 doesn't connect with any smartphones.

Solution No. 2: Other personal finance software

Microsoft dropped out of the personal financial software game, but that doesn't mean the competition is gone. Several viable rivals to Quicken exist.

The upside: Quicken's rivals focus on areas that irk some Quicken users. Moneydance, for instance, is designed to work equally well on computers running Windows as well as Macs and Linux. The software is also a bit less expensive at $50, and the part of the software that pulls online data doesn't expire. And like with Quicken, your data are stored on your hard drive so you can make copies and have access any time.

The downside: Many of the alternatives are much less polished have fewer features. Moneydance's asset allocation tool, which helps investors measure how their investments are diversified, is much less powerful than Quicken's. Another rival's software, iBank, works only on Macs and not on computers running the more popular Windows operating system. These software programs aren't free either: Moneydance costs $50, and iBank, $60.

Solution No. 3: Third-party websites

E-mail, photos and diaries are going online, so too is personal finance tracking. Personal finance websites, such as Mint.com and Yodlee MoneyCenter, are changing how many track their money. Rather than downloading your financial information to your computer, these sites pull data and store them on their own computers and make them available online. Some sites, including Wikinvest, provide websites that help you track just your investment portfolio.

The upside: All you need to check on your finances is a device with a Web browser. These sites are designed to be as simple as typing in your user names and passwords from your bank and brokerage accounts. In most cases, you can be up and running, tracking all your accounts, in just a few minutes. You can also tap your financial information from anywhere, either on a friend's computer or from your smartphone. Best of all, these sites are free.

The downside: The first HUGE hurdle is security. You'll need to enter your user names and passwords from all your financial accounts to get the most value. The providers all say they have security safeguards in place. But so have the Madoffs of the world.

In addition, because information sits on the providers' site, if that website goes down or your Internet connection is severed, you can't access it. These sites also lack a way for longtime users of financial software to import past transactions from software such as Quicken.

There's also no guarantee you can always get your information. There have been cases of smaller rivals that have discontinued their websites, leaving users stranded. And they still lack one main element, ASSISTANCE or COACHING.

Solution No. 4: Bank and brokerage websites

Seeing the advances in personal financial software and websites, banks and brokerages are beefing up their own sites so people won't switch.

The upside: If you want the least amount of work, bank and brokerage sites are tough to beat. All your information is already culled and imported. Some brokerages, such as Vanguard, will even let you track your portfolios at other financial institutions. Also, thanks to new IRS rules that kick in in 2011, these sites are required to track your cost basis on new investments, which is one of the biggest reasons why people use personal financial software and sites in the first place. These sites are free.

The downside: Unless you have all your money with one firm, the utility of these sites can be limited. The brokerage sites, for instance, can't help you create a budget with your checking account.

But the biggest drawback is that your institution controls your data, not you. If you switch banks or move to a brokerage with lower commissions, you could lose data on many historical transactions.

What's the bottom line? If you're worried about security and want tight control over your historical financial data, Quicken and other personal financial software apps are good choices. Quicken is the best-known app , but doesn’t mean it’s the best solution for you.

If you're looking to just keep a quick tab on all your financial accounts, including while traveling with your smartphone, online sites might be best.

And if you want little hassle, and want only the very basics, then your bank or brokerage websites may be just fine.

In the end all of these solutions will help you keep track of your money…but NONE of them will help you with the most important element, Self-control and understanding why your budget should consist of X, Y, and Z. Paycheck Distribution Coaching doesn’t want any of your passwords or account numbers and we don’t leave you alone to “figure” out what budget is best for you and your situation. We are there to hold your hand through the process and help you make the best decisions for your financial situation and to help you meet your goals.

Please follow us at www.facebook.com/paycheckdistributioncoach  and http://www.irenemcruz.com/