The troubling statistics on the level of savings andindebtedness in America have hit home, so you're taking positive stepstoward better managing your finances. Along the way, you've heard goodthings about financial software products such as Microsoft's Moneyand Intuit's Quicken,and you'd really like to know whether either makes money managementmore, well, manageable.
Based on published reviews, both programs have the ability totransform that complicated and onerous process into a series of simplepoint-and-click operations. But these evaluations do not necessarilypaint a complete picture of the ultimate success you might havetracking day-to-day financial transactions over the long term.
What Software Can Do
"The use of this software forces you to discipline yourself withrespect to your finances and the managing of your own money," saysClark Howard, nationally syndicated consumer-advice talk-show host andauthor of Clark SmartParents, Clark Smart Kids (Hyperion, 2005).
Chris Farrell, economics editor of American Public Media's"Marketplace Money" and author of Deflation:What Happens When Prices Fall (HarperCollins, 2004), has agenerally high opinion of these programs.
"However, here's the drawback," he says. "If you are someonefor whom the discipline of keeping detailed track of financialinformation is too much, this software might not ultimately work out."
For Farrell, erratic use of personal finance software bringsto mind an old saying from the world of data processing: garbage in,garbage out. Many software users initially approach the money-managementtask with the enthusiasm normally reserved for New Year's resolutions.They may keep track of all their expenses for an extended period, hesays. "Then, six weeks later, there's a choice of doing that recordkeeping or going to the movies, and old habits start re-emerging," saysFarrell. "You stop inputting that data, then you feel guilty about it,you then go back to doing it -- but then you find that you can't findthe receipts you need, and you start guessing -- and the numbers youget back from the software are no longer working. And, finally, indisgust, you just stop using it."Even so, Farrell, like Howard, believes that those who stickwith it can benefit greatly from tracking their personal finances onsoftware: They will become fully aware of where their money is going,how it is growing, how it is being invested, and how it is beingutilized to pay off outstanding debts.Things to be aware ofFarrell says he uses Quicken and Money to keep track of hispersonal finances. Though both programs offer other comprehensiveplanning features and capabilities, he likes to use other tools forcertain functions.
"For things like your classic asset allocation, for example, Iprefer (online) programs like those offered by financial engines. Theycharge a fee for their service, but I like the way in which theirprogram looks at the world, always in terms of probability. ... and(setting up an appropriate asset allocation) is one area in whichpeople do seem to need lots of objective advice and help. FinancialEngines does a much better job of this."In addition, he finds that Quicken and Money debt calculatorsare no better than those found elsewhere on the Internet. But when you use Web-based resources for financial help, becareful to discern between recommendations that are part of a site, andthose of Web-based partners. This same caveat also applies to the linksand recommendations that appear within the Money and Quicken softwareitself. Quicken and Money are continually evolving Web-centricprograms, which means that when you open a page inside the programswhile connected to the Internet, you are presented with your financialdata as well as with features, ads and hyperlinks found at the softwaremakers' respective Web site. All of this can appear within Money andQuicken without opening up a Web browser, and it can be part-and-parcelof the banking, investing, credit or financial planning pages you openinside of the programs. So it's important to differentiate between paidadvertisements and objective financial information.
"Even at my own Web site, peoplewill assume that, because an advertiser is on that site, there is adirect or implied endorsement (of the goods or services)," says Howard."It can be neither. It's just what happens to fund the Web site." Focus on the forestAmelia Warren Tyagi, coauthor of All Your Worth: The UltimateLifetime Money Plan (The Free Press, 2005), reminds usersof personal finance software to look at the big picture. They shouldnot only monitor their financial transactions accurately over time, butalso pay close attention to what that accumulated data is telling them."It's always good to be able to keep track of your money: toknow where it's going, to know what it is and what it is not doing.But, ultimately, managing your money is not so much about keeping trackas it is about making smart choices. You can keep track of dumb choicesall you want, but ... plotting your finances as you're going off acliff won't do you much good." You need to fully recognize what's happening with your moneyas you're moving along in life so that you avoid a catastrophe in thefirst place, she says. And she emphasizes that you don't necessarilyneed a computer program to keep your financial affairs in order. Allyou really need is a plan.Bankrate.comis the Web's leading aggregator of information on financial productsincluding mortgages, credit cards, new and used automobile loans, moneymarket accounts, certificates of deposit, checking and ATM fees, homeequity loans and online banking fees. Visit Bankrate.comto get the tools and information that can help you make the bestfinancial decisions.
Source: Money & Work
