ProfHacking Your Personal Finance Software

Academia is characterized by a myriad of financial arrangements. You might receive your paycheck every two weeks while your household bills are due every month, and two two-week periods do not usually line up with a month. Maybe you earn some consultant income every now and then. Perhaps you’re a graduate student switching from an RA to a TA, each of which has a different pay schedule. Then there are of course bills to pay. Thankfully, there are a number of tools available to keep track of money coming in and going out of your personal accounts. This post will focus on digital tools, as opposed to pencil-and-paper methods.

I first started using personal finance software ten years ago as an undergraduate student who had a number of campus and summer jobs pooled together to help pay for my education. Back then the market was dominated by Microsoft Money, which I used and has since been discontinued. The last ten years have introduced many different options for managing your money. If you are interested in utilizing any one of these tools, note that they all assume that you’ve got downloadable financial data to work with in the first place and that you have established access to your banks’ websites. Most banks have a information page that describes the format in which you can download your data. As with any program or website that stores and manages personal information, you’ll want to make sure your passwords are secure and your data is encrypted. Below are a few options on the market.

Spreadsheets (free or you’ve already purchased it; web-based or desktop)
Spreadsheets are a quick and dirty way of managing your financial transactions. Most financial companies allow for their data to be downloaded in .csv format, which goes nicely into spreadsheets. A big plus is that most people are familiar with spreadsheets, so there’s usually not much need for getting oriented with the programs. If you don’t use a spreadsheet program already, you can use free ones, such as Open Office or Google Docs.

A downside for many, especially if you’re interested in categorizing or forecasting expenses, is that you will have manipulate your data yourself to get the information you need, not to mention go to each site individually to download your data in the first place. But if you have a fairly simple financial life and you’re comfortable with spreadsheets, downloading .csv files can be a good option.

Quicken ($36.99 via download at Amazon.com, desktop)
Quicken runs as desktop software and comes in a variety of versions depending upon what you need it to track. Quicken Deluxe is my tool of choice at this time. Setup is fairly easy; you choose your financial institutions from a list and enter into the program those sites’ user names and passwords. Quicken can download information from your financial institutions with one click, and even works with your investment accounts (including TIAA-CREF). Within the program, you can set up a sequence of regular bills and paychecks you incur and then the program will match them up to the downloaded information. This kind of process is helpful for forecasting cash flow. I also like that you can record transactions that get taken out of your gross pay. For example, while my gross paycheck every two weeks is X dollars and I end up with Y dollars in net pay after taxes, 403(b) contribution, etc., I can set up the paycheck to keep track of A+B+C+…that add up to X-Y. The program will also automatically categorize purchases you make after checking in with you once about which category you want for purchases from that company. And it’s easy to make up your own categories. Finally, the program does a good job of keeping track of categories that are pertinent to filing taxes and will import them easily into TurboTax.

One thing I don’t like about Quicken is that you must purchase the full program again if you want to upgrade. If you dig around enough you can find discount codes so that the pricing will decrease. But personally, I don’t like the fact that my choice of search keywords determines the price I pay for the product. Additionally, I find the reports and budgeting features in Quicken to be less than desirable, at least in the version I’m using (Quicken 2009). For as long as I’ve been using Microsoft Money and then Quicken, I usually upgrade every other year, and this is not my year, but I’ve read that the newer version has some more intuitive reporting structures.

Mint.com (free, web-based)
Mint.com is a free personal financial management website that began as an internet startup and has since been swallowed up by the Quicken folks. However, it retains a fairly separate identity (in fact, as a Quicken user for several years I’ve never been invited by the company to join Mint.com). It works in much the same way as Quicken; you enter your website login information for each of your financial institutions and the site pulls in the data.

I’ve been trying out Mint.com for a few weeks. I think its display of budget information is better than Quicken’s, in that you can see very clearly on the home page via bar graphs how much you’ve spent out of each budget category. Transaction data is downloaded from all of your banks each time you log in to the site. Mint.com will try to categorize transactions for you but in my experience can give you some pretty undesirable results. I’ve tried creating my own categories, but they don’t seem to really stick. It’s also really difficult to categorize those things that reduce your paychecks from gross to net; the site wants to just think about the net. Many of the workings of Mint.com seem to be focused around zero-based budgeting, which may or may not be appropriate for your household, especially if you receive bi-weekly paychecks but incur monthly bills.

A plus to Mint.com is their smartphone app, which is a good option for keeping track of expenses on the go. As with many free online programs, the program does expect you to give up a bit of demographic information and funds itself by offering you the chance to sign up for credit cards and other financial services through the site. But in my experience, the hassle from this has been minimal.

There are, of course, several other programs for managing your financial data. Let’s keep this discussion focused on tech-based methods. What works for you?

[Creative Commons licensed photo by Flickr user alancleaver.]