Putting your finances on auto-pilot: a great idea or not so much? Over my past twenty financial years I’ve attempted a lot of different automation strategies – from pay yourself first and not worrying about the rest, budgeting and tracking every cent, using apps and writing it down. Lets take an in-depth look into some of the options available, the pros and cons of financial automation, and what I use for my tracking. Spoiler alert – this is going to be one of those cases where personal finance is personal. You need to do what works for you, and not what someone else tells you to do. Particularly if said person has an affiliate relationship with a financial automation company.
So lets take a look at the various automation approaches first.
The Main Automation Approaches
First and foremost, I’m going to say that I have no affiliate relationships with any of these providers, and all opinions are my own.
I’ve been in the personal finance scene long enough to be familiar with the various approaches to financial automation. There are two main types – automating tracking your spending and automating tracking your net worth. Sometimes you’ll find tools that do both at the same time.
Here’s a run-down of the main various automated products out there, their costs, and their capabilities – and some of my personal comments from having used these tools. For those that already know about the tools, I’ve tried to include some interesting facts for you. Since I don’t have financial relationships here, I’m going to talk about all of them instead of focusing on ones that pay me money.
Mint – One of the best known trackers, Mint has been around for quite a while. It’s owned by Intuit, the same company that owns Turbo-Tax. Mint’s been around since 2007 and was bought by Intuit in 2009. It tracks your bills, spending, and accounts (net worth) for you automatically. The app is pretty easy to use, and their sales pitches aren’t too bad. Their budgeting and spending trackers are pretty straightforward – you create a budget, they track what you spend in each category, and tell you where you’re over/under. Cost: Free to use.
YNAB, or You Need A Budget – YNAB is, at its core, a budgeting tool. They have some unique thoughts about budgeting that can work well for some people – or drive some people crazy. It goes way beyond making a simple list of income and expenses. Their perspective is to assign every dollar a job, and age your money. You can read more about their “rules” here. Cost: Free the first month, then $6.99 per month as of this writing (you can check here to see if pricing has changed)
Quicken – Ah Quicken, the grandfather of financial tracking. Quicken was the first ever software product I used to track spending and accounts. They have a more complex suite of product offerings, which you can check out more about here. They seem to be using the Turbo-Tax style model of making you buy up to high levels (read: more expensive) of software to access more capabilities. Which, frankly, only makes sense as a business model. I used to use Quicken in the early 2000’s but stopped in favor of another tool I’ll talk about later. Cost: Ranges from $34.99 per year to $89.99 per year as of this writing (you can check here to see if pricing has changed)
Every Dollar – A budgeting app created by Dave Ramsey (of Total Money Makeover fame), Every Dollar is a pretty straightforward income and expense tracking application. The user interface looks pretty easy to use, and it’s aligned with Dave’s philosophy to give “every dollar a job”. Cost – It’s free to use if you want to input your information manually (which can actually be helpful – will explain in a minute) or costs $99 per year if you want to automatically have your transactions pulled.
Personal Capital – So this is likely the program you’ve seen most in the financial community recommending. It has a pretty good user interface, and I gave it a try. But it gets a big thumbs down for me because of the annoyance factor. Cost – A sales call to pitch you on their investment management if you have above a certain amount of assets connected. And relentless pushes to connect more accounts if you try to just connect your checking/credit cards (ask me how I know).
Also if you’re with a company like Vanguard or Fidelity, they often have an option to pull in outside accounts for you. So rather than using a separate tool, you can add outside accounts to their sites.
Downsides of Automated Trackers
There are a few downsides to pretty much any option out there. Here’s the top four things that have annoyed me in my personal experience with trying to use some of the automated tools.
- Too much automation – If you rely on your automated tools to pull in everything for you, you might not pay attention to where your money is going. When you have a more manual approach, you pay attention to every dollar going in/out. This might not be an issue for you if (1) you have a high income, no debt, and don’t need to watch every dollar or (2) you check the app every day.
- Clunky way of dividing transactions– This is where you want to create a budget category for, say – food, household supplies, pets, and home decor. Guess what a trip to Target means? All four at once (plus probably 1-2 more, at least if you shop at Target the way I do). Personally I find it annoying to re-categorize transactions like that. And I do a lot of weekly shopping at BJ’s, which results in the same thing. Now I understand why these tools can’t do that for me – they don’t know how much of Target was pet food vs. hamburger – but most tools just have a clunky way of dividing transactions.
- Not pulling in all accounts – This is the case if you have, say, paper savings bonds. Or perhaps accounts with a very small bank/credit union that doesn’t have the ability to connect. I believe Treasury Direct accounts are also not really able to connect to anything. Perhaps you have real estate, or something else out of the ordinary. The automated tools usually let you track it manually, but some make it easier than others.
What I Use
Yes, despite working in IT, and despite having all these awesome automation products available, I still go back to my trusty Excel. I love Excel. Not only does it let me track manually, but it’s been my go-to tool of choice for years. I can look back a decade plus and see how my accounts have changed as the years have gone on. For budgeting, I like the awareness that manually inputting my transactions gives me. It only takes about 5 minutes a day, because I only have one checking account and one credit card (that I don’t use for much). I log in, put in my transactions, and done!
For my net worth calculations, I only do them quarterly. Updating all my accounts doesn’t take much time at all – maybe half an hour to an hour. Yes, it would be easier if I had an automated tool and only put in a few accounts manually. But I still like my spreadsheets.
What do I do with the information? Create pivot tables of all my spending by personalized category. Create pie charts and graphs of the change in accounts over time. What can I say? I’m a money nerd.
Let Me Know
What are your favorite financial tracking tools? Any great ones that I missed, and should give a try? Let me know in the comments!
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