Nearly two months ago, I mentioned that Expensr and NetworthIQ (now Money Strands) had invited some personal finance bloggers to talk about personal finance software. I learned quite a few things, but one thing stood out to me. When you have 20 people in a room, you are going to get 20 different ideas on how the ideal software should work. Here are some examples (my memory may have faded slightly since then, so I apologize if I misquote a few people):

• J.D. from Get Rich Slowly wanted more control of categorizing his expenses – the ability to enter them in each time. I wanted the opposite – the software to predict the categories. I think we found a happy ground where the software should try to pick, but you can override it’s guess if you wish.
• Others like Dual Income No Kids felt that budgeting should be a significant part of the software. The Digerati Life has reached the point in her life where she doesn’t have to keep an eye over each outgoing penny.
• Some people like all the bells and features that Quicken has, while others, think Quicken is too complex and resort to an Excel spreadsheet.

I did a lot of listening and not very much talking. I wanted to take in everyone’s thoughts and opinions and process them to come up with the perfect solution. It became clear that the solution should incorporate the following concepts:

Software As a Platform

Somewhere along the line, J.D. hit the nail on the head – customization. There’s simply no way a piece of software is going to be everything to everyone without it. I think he came up with idea that it should have different modules. I chimed in that Firefox has a good model – it handles the basics of web browsing for less tech savvy people like my mother, but provides plugins for those who are more advanced. Flexo from Consumerism Commentary said that Facebook’s application platform is another example.

If I were creating the software, I’d create a new proprietary mark-up language that can be manipulated by developers at a very basic level. For example, Google’s chart generator serves as a model for creating charts. I can imagine a subtraction module for budgeting, a basic text input module, etc. These would form the smallest building blocks. I would publish these openly and encourage software developers to combine these building blocks to create investment trackers, retirement planners, etc. I would have contests and prize money for the best modules and ideas for new modules.

I’d concurrently be doing market research to find what most people want from the software and make a default program based on that knowledge. I’d share the code to make this default software so software developers could tweak it and learn the system.

Privacy of Data

Many people were concerned about the privacy of their financial data. This is no surprise with the media discussing identity theft every few minutes. I have two schools of thoughts on securing data:

• Data stored centrally – I’m a trusting soul with my data – I don’t know why, I just am. That said, I trust companies like Mint and Prosper to guard my data. These companies are well-funded and I believe that they have great incentive to guard this data with their business lives.
• Data stored locally – Knowing that Mint’s servers have all that juicy on them is tempting for hackers. If I were to focus my efforts as a hacker, I’d go where there’s lots of useful data. However, if I had the option to store my data locally and encrypt it so that it doesn’t look like the data for this program, that would be a great way to hide from hackers. I think more companies should give users this option.

I originally thought that there should be a way to customize the website to look how you want. In the software world they often call this skinning. When I thought more about the prospects of being able to make the website look how you want, I decided that it is fairly unimportant as long as the default look is decent. It goes back to Firefox… you can skin it if you want, but it seems like 98% of the people I know have never cared to take the time. Either they are Lazy like me, or feel that it’s good enough as it is.

What would you put in your ideal personal finance tool? Let me know below… this is a good chance to make your voice heard to Mint, Expensr/MoneyStrands, and Geezeo. I have a good relationship with representatives of all those companies and will share the best ideas with them.