Personal financial software

We look at some of the way you can use personal financial software to manage your home budget.
 
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01 .Introduction

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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 compromised.

 
 

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money - androidOnce you’ve gathered the data and checked to see where the money is going, you may have already identified areas you need to get under better control. This is where a budget comes in – it’s a plan of where and when you want to spend your money.

Back in the day when cash was king, you could set a budget with a row of jam jars labelled “rent”, “food”, “clothing” and so on. As you got paid, the money went into the jars. When each one ran out, that was the end of that kind of expenditure for the week or the month. Any left over could go towards a holiday or evening out.

This is the principle behind the method known as envelope budgeting, with the jam jars becoming virtual envelopes in PFS packages. You can make this just as simple or complex as you like, but bear in mind that managing expenses this way requires up-to-the-minute records. Whenever you buy something, you need to take the equivalent in virtual money out of your virtual envelope. Some packages support this methodology with smartphone apps  (EEBA - Easy Envelope Budgeting Aid - is shown to the left), so you can keep track of expenses on the go, but this level of input isn’t realistic for everyone.

What you get

All the packages here provide summary reports of your data, both line-by-line and in various graphic formats. Typically, you can choose reports such as:

  • Cash flow analysis
  • Expense analysis
  • Budget vs actual spend
  • Credit card use
  • Personalised reports
  • Set budget goals

Here are examples of reports from ANZ Money Manager. Other applications provide corresponding reports.

money - detail money - chart

There are dozens of PFS packages available, ranging from free to very expensive depending partly on what level of support you expect. Some of the more sophisticated ones advertise a range of powerful features to pay bills, manage stocks and shares and prepare tax returns, but most of these advanced features tend to be unavailable or unsupported in Australia. On the other hand, we’re used to sophisticated online facilities from our banks, such as BPAY and direct debit, so perhaps they’re less necessary.

If you’re to derive real value from using one of these packages, you’ll need to keep your data up to date. We strongly advise starting with a simple, free package so you can find out just how useful it really is and how much effort is required. We’ve focused on just a few to highlight the differences.

ANZ Money Manager 

One that’s really easy to use is ANZ Money Manager.

  • It’s an online service based on a US system called Yodlee.
  • It recognises most Australian banks and credit card accounts.
  • It’s not restricted to ANZ customers, and it’s free.
You provide your sign-in details for each of your accounts – bank, mortgage, loans, credit cards – including your password, and it pulls the data directly together – see above for an example of one account. It’s smart enough to categorise your expenses into groups without your help, so you can get summaries immediately or amend the classifications to taste. Of course, you have to trust the application with your sign-on details, which is a step too far for many people.

Microsoft Money Plus Sunset Deluxe

Money Manager’s other limitation is that, if it can’t source data directly from your financial institution – some credit unions, for example, aren’t linked – the only way to enter the data is manually, one transaction at a time. If that’s a problem for you, or you simply prefer to have the data in your own hands, it’s hard to go past Microsoft Money for a fully featured application that costs nothing.

  • Microsoft stopped selling Money in June 2009, but to avoid leaving its users high and dry, it provided a stand-alone replacement called Microsoft Money Plus Sunset Deluxe.
  • There’s also a Sunset Home and Business version with the features of the old Home and Business edition, both free.
  • You can download either from Microsoft without registration. We’ve used Microsoft Plus Sunset Deluxe in our Master Your Money tutorial in the September/October edition of CHOICE Computer.

Easy Envelope Budgeting Aid

If envelope budgeting's caught your imagination, you can try out the concept for nothing – provided you have an Android phone – with EEBA, the Easy Envelope Budgeting Aid.

  • EEBA lets multiple users access the same information so you and your partner can see and update your shared envelopes from your individual phones.
  •  When you enter information, it even uses its built-in GPS to take account of where you are when offering likely alternatives for what you’re spending right now.
  • If you need more than five envelopes or more than two users, however, or want the features of other PFS packages such as importing bank statements, balancing the books and handling recurring expenses, you’ll need the Plus or Premium variants at $5/month and $8/month respectively.

For more assistance in envelope budgeting, there’s a program called YNAB – You Need a Budget. It costs $US59.95 but has lots of basic budgeting advice and guidance as well as the basic support.

And the rest

Of course, Microsoft Money only runs on Windows. For Apple or Linux fans, GnuCash and HomeBank are free, open-source applications that run across the three environments.

  • EEBA is limited to Android phones, but there are other apps for the iPhone and iPad, such as Home Budget – free for the lite version, $5 for the full one – or PocketMoney for $6.

Generally, we favour free software over paid, especially in the investigation phase when you’re finding out what it can do and whether you can afford the effort to use it properly. But no survey of PFS would be complete without a look at Quicken, the commonly accepted benchmark. Quicken is a powerful program but also costly – even the most basic version, Quicken Personal 2011, costs $89. You can download a free trial version that gives you 90 days to decide whether you can or can’t live without it – much more generous than the seven-day trials offered by others. It has some Australian-specific features, such as categorising items in line with the questions in the ATO’s Tax Pack, but only if you step up to the Personal Plus edition at $209. A former free online version of Quicken, Quicken Online, was discontinued late last year and absorbed into Mint, a name that comes up frequently in searches for online financial software. Unfortunately, Mint only supports US institutions.

The following table summarises some of the alternatives you might like to take a closer look at.

money - table

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