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.
Great post, thanks for the info.
You mentioned a few capabilities that are important to several user types, which typically boil down to “customization”. I’ve enjoyed Mint (despite some technical difficulties well documented in their user forum -> duplicate transactions), but one issue is I’m shoe-horned into their predefined expense categories. Several of which are really silly. Auto-categorization with the ability to modify it is a no-brainer. A tool that would “learn” is ideal. Mint does this well, you click a button for an expense to always get categorized a specific way. Quicken I found (4 years ago) to be decent but not great at this.
BOA has a budget tool, and it’s actually decent, but the auto-categorization aspect stinks.
The key to keep in mind is balancing the novice vs. power user. A tool should be logical and simple enough that my 68 year old Aunt could use it and get rolling in an hour, but have enough latent features that my super detailed wife wouldn’t think the tool was built by a 6 year old. One option would be to adjust the level of features based on one’s profile.
Look forward to other readers’ comments.
David Carter says
Right now my personal finances are pretty simple so I don’t use any software. I don’t balance a checkbook, no budget no nothing. I would like to start however, so if you ever find some software you really like be sure to post about it and I will probably try it out. Free is probably a requirement for me, b/c otherwise I wouldn’t buy it.
I think customizability is what will make the application truly useful to everyone. By allowing me to manage my finances how I need to today while still giving me the flexibility to change this down the road would be essential. But I think by far the biggest and most important aspect would be to ensure all of this is online and platform/computer independent.
Ben @ Trees Full of Money says
In my opinion, it would make sense to have one finance program that offered different levels of control instead of trying to be one size fits all.
For instance when I was first starting down the road of financial progress I wanted to know exactly were every last dime was being spent.
As time went my budgeting requirements evolved to were I had a really good idea how much cash I would need for my monthly living expenses without having to write out each individual expense.
Developing software that is one size fits all is about as likely as finding a blogger who’s advice is 100% appropriate for every person regardless of his or her circumstances.
I’ve used Quicken for about 6 years. And although it was nice to know what I spent, I really wanted to get ahead of the game and see what I was spending as I spent it. Sure, I’ve tried to keep track of my daily expenses by writing them down and I also tried sticking to a budget. But none of that really seemed to work as well as I wanted it to work.
So, last week I signed-up for the free 30-day trial of David Bach’s “Automatic Money Manager”.
So far, it’s easy to use and it seems to really be helping me to keep on top of my spending. After a month of so, I’ll let you know how it’s working for me.
By the way, I totally dig your blog. It’s great.
I think Wasabe & Mint should merge and we would have a pretty robus site meeting everyones requirement! I use both for diffrent reasons as I get diffrentbenifits from them and they both have features that I would like to be able to use together.
Lazy Man says
KS: I think that’s not a crazy notion. I had mentioned that Wesabe in the past. I think there will be some consolidation in the field and either there will be a merger or they’ll each build out their product lines to have both aspects.
I’ve been checking out a lot of these sites/programs lately, trying to find one that has exactly what I want.
I like Quicken, for the ability to schedule bills and have them show up in my register ahead of time. I always know at least 2 paychecks ahead whether I’m going to have enough to cover everything.
I like Geezeo’s budgeting system, much like the envelope system (unfortunately, I can’t seem to get one of my Canadian credit cards to work properly on the site). PearBudget’s (the downloaded excel chart) is a little less fancy, but works just as well.
Wesabe didn’t really do anything for me that Quicken doesn’t already do, though I really liked how they recorded your updating process locally on your own computer. I was hoping to get more useful tips out of it, but they were all pretty useless to me, and I don’t really care about joining groups.
For right now I think I’m going to stick with my old version of Quicken (which isn’t connected to my bank accounts at all, and I enter everything manually) along with PearBudget, while I try to keep my budget in check and pay off my debts. Once my financial goals shift, I’ll probably take another look at some of the other options available.
Some of the commercial providers should look to open source pf tools coming out in the market place. They are free and have tons of options (largely due to the fact that they are open source). I recently had a post on this topics and am using the tool reviewed.
I currently use mint, and i like it quite a bit. however some of my accounts do not show up, such as my loan and my line of credit.
further more i can not track spending i am doing with cash in that program which i would like to be able to do.
furthermore in the budgetting section there is nothing for income so while i can somewhat figure out what i am spending it has no comparison to what i am making. this is extremely important to me since i am in a job where in addition to a steady paycheck i make tips. so income is a lot harder for me to track and fluctuates a lot from month to month
I agree that the major failing of budget/expense tools is their lack of customization. You do it their way and that’s that. I’m slowly working on my own program as I haven’t found anything that suits the way I manage my finances. I currently use two excel spreadsheets with about a dozen pages between them and a program that isn’t nearly what I thought it might be.
RE: web based apps
I know everyone is crazy about online apps for everything right now, but I don’t feel comfortable giving over all of my financial information to be stored in someone else’s database. So online apps aren’t the be all, end all for everyone either.