Everyone has money concerns of one kind or another, whether it’s trying to make ends meet or preparing for the next tax return. We all need to know where our money’s going and what expenses we’re facing in the future. Personal financial software (PFS) packages claim to make this simpler to manage, but can they really help? In this report, we take a look at what’s available and what they can do for you.
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Software to suit your needs
Before you delve into comparing packages, it’s a smart idea to decide exactly what issue you want to solve. Software doesn’t solve problems by itself, it only makes a solution easier to manage. What’s best for you depends on the scale of your problem and how much effort you’re prepared to put into managing it.
Maybe your problem is finding out where the money has gone – if you know how much goes on each type of expense, you can decide where to cut back. Perhaps you need a better idea of what expenses are coming up so you can hold back on that impulse purchase. Or, you might need to try some scenarios to see how you can reduce the cost of your loans or credit debt.
The first step is to work out what might help – or what you may already be using – and then take a look at some of the popular software packages to see which can make your life easier by helping automate some of the steps.
Gather your data
It’s hard to survive in the modern world without a bank account. Most
people also have credit cards, loans and investments, and not all with
the same institutions. It’s useful to be able to see all this
information in one place, in a single balance sheet for all your credits
and debits. Most banks and financial institutions let you download your
transaction data in a standard format, although they usually maintain
the data in this form for a limited time, typically 90 days. To go back
any further, you’ll need to extract the data yourself from printed
statements. The most common data formats available are:
CSV (comma-separated values): each line represents a
single transaction with values for, typically, the date, a description,
the credit or debit amount and a running total, all separated by commas.
The exact layout may vary, but the essential content is the same.
Microsoft Excel format: Excel will quite happily accept
CSV files, but some institutions offer Excel files as a separate option.
Note that the file type may be .asp rather than .xls or .xlsx, which
can be read by other programs such as browsers, as well as Excel. To
open the file, you’ll need to choose the program from a list and you may
get a warning message before it opens.
QIF (Quicken Interchange Format): a data format recognised by most financial packages, not just Quicken.
OFX (Open Financial Exchange): the standard supported by many PFS packages. It’s used for both download and transfer to other institutions.
You may find your bank offers other formats associated with
specific applications, such as MYOB (Mind Your Own Business) and
Quickbooks, that are designed for small or medium businesses and may be
too complicated for your personal finances.
The most basic solution for home accounting is, of course, a
spreadsheet, using Microsoft Excel or one of its free open-source
equivalents, OpenOffice Calc or LibreOffice Calc. You can open your CSV
or Excel file with either and, if you’re comfortable with spreadsheets,
categorise your own transactions and produce pivot tables and graphs
that are just as good as most of the specialised PFS packages.
If you want more of the work done for you, you’ll need a software
package. Most require data to be uploaded in QIF or OFX format, so if
all you have is a CSV, you’ll need a conversion program. You can buy
one, such as CSV2QIF, for $19.95, but the simplest to use is XL2QIF, a free add-in for Excel, or CALC2QIF,
its OpenOffice counterpart. We show you how to install these add-ins
and perform conversions in our Managing Your Money tutorial in the
September/October edition of CHOICE Computer.
But the ultimate effort-saving software is an online package that
can obtain data directly from your financial institutions. When you
sign up for the service, you provide your online sign-on and password,
and the application keeps itself up to date with your transactions. This
can save you a lot of effort if you’re prepared to trust the package
with your detailed information, but not all financial institutions in
Australia support the OFX transfer format used by these packages, and
not many of them recognise Australian banks at all. And a word of
caution – sharing your sign-on details in this way with another
institution may expose you to the risk of fraud if those details are