Do you know where your money is going?
“Yogi” Berra once said “” and that's true of anything in life, be it saving for your first car, buying your first house or planning your retirement. If you don't know where you're going, you might not get there
Lao Tzu said 千里之行， 始于足下 though thankfully later it was translated to “” and when you’re setting out to actually get a handle on your finances that is equally important as knowing where you are going and how far you have got to travel to get there. A journey of a thousand miles begins at your feet
Luckily there are some services that are available to give you a good overview of your current financial situation – how much you owe, what money you have, and, sometimes most importantly, where it’s going. They link to your existing accounts and analyze your transactions to plot your spending and track your income.
The three biggest players this area are Mint, Yodlee and Buxfer and they all have unique features which may be right for you – though there’s no reason not to use all three I’ve chosen to focus on one for the time being though time will tell if they continue to evolve to close the gap. Many banks also offer similar services (free, or for a fee) but as I value independence as part of this process I’ve not done much beyond have a quick look at what my banks offered (and it’s actually very similar … and I suspect the reason for that will become clear as you read on)
Yodlee is the grand-daddy of the bunch and actually provide the secure communications with banks and financial institutions behind the scenes for the other services and banks described here. As well as giving you a birds eye view of your accounts Yodlee (with your permission of course) can be used to initiate transactions on your behalf (eg make regular loan payments or schedule and pay utility bills). Their analysis and reporting is no frills and, as it’s not their core business, may appear a little less flashy than their counterparts though is is very capable.
Mint, now owned by Intuit (best known for their accounting product Quicken) has the most comprehensive reporting and analysis tools of all three and once you’ve started to categorize your income and spending it helps you pinpoint areas to improve very quickly.
Since their acquisition and a period of considerable growth there have been some grumbles in the user forums that their support is not as responsive as it used to be and that the roll out of new features has slowed down – the counter to this is that they are working on an integration with their Quicken Online product to bring the best of both to all their users… hopefully an integration that will bear fruit soon.
The one feature I would like to see with Mint is an intelligent prediction of cashflow – income and bills – to give me plenty of warning if I’ll need to move money around to pay at least my regular bills.
Buxfer is the newest of the three and still the smallest, but growing steadily has a very personal feel to it. A lot of that comes from their unique feature which is tracking IOUs between friends but also their very open login scheme – rather than create an account with them and use that to login you can associate them with many existing logins so there’s one less password to remember. Buxfer also have the widest selection of mobile interfaces at the moment which is good to consider if you need up-to-date info on the go (for instance if you don’t have regular access to a computer). They also support optional offline storage of data (using HTML5 features in Safari and Firefox, or Google Gears) which may be a bonus or a security risk depending on how safe your machine is.
I also have to give a shout out to eWise – this awesome Australian company have built an amazing platform that provides a similar service but not limited to any one country… I use them to track accounts in 4 countries and while they don’t offer the same level of planning and analysis that the others here do they to act as a one-stop login portal (with your passwords securely encrypted on a flash drive or memory stick). For end users the application is free, and they provide commercial services if you are a bank, credit union or ISP and what to extend your customer offering.
If you’ve not already signed up for one of these services – Buxfer, Mint or Yodlee, or via your current bank – you should. Getting a clear picture where my money was going each month – and enforcing the rigor of actually classifying each transaction – is a really good starting point.
Simply by doing this I was able to identify some simple ways to cut back on our monthly expenditure immediately and start to get an idea where we needed to look to have the most impact going forward