For a while I wasn’t really tracking how I spent money. I’d just pay my credit card balance off every month and get cash as I needed it. Before writing checks I’d just make sure I had enough in my account to cover it. All I knew was that I wasn’t spending my entire paycheck so I was doing okay. After getting married our expenses grew and I knew I needed a better way of tracking where our money went.
I tried out Quicken and Money, but they were just a complete pain to use and were overkill for what I needed. I looked for simpler software and online solutions but they all required you to manually download or enter transactions. I looked around the Web some more and discovered “account aggregation” services that grab data from your various financial accounts and stick it all in one place. A lot of banks like BoA and Citi have this as part of their online services now and other sites like Mint.com offer identical services. Turns out all those sites are just branded interfaces for a back end service provided by the company Yodlee.
The same MoneyCenter aggregation service that powers the sites of a lot of banks and financial service providers is available directly from Yodlee for free. In fact, their application is better than the others because you get new features first rather than waiting around for the bank to implement them. If you are nervous about entering your login information for your bank account and credit cards just remember that this is the same service banks around the world use which says a lot.
The aggregation premise is pretty simple: you enter information for various accounts, Yodlee grabs transaction and balance information, saves it, categorizes it and then lets you run reports against it. You can see some of this in action in their demo. Overall it does a pretty darn good job at categorizing stuff like gas, groceries and restaurants, but if anything gets through you can categorize it yourself or setup categorization rules for things like car payments. You can split transactions too; if we buy alcohol or gifts I split those transactions since they are usually lumped in with other things.
Eventually all this is on autopilot and I just have to periodically check categorization to make sure stuff is in the right bucket. After building up a few months of data I can do some pretty meaningful analysis of where our money goes. Some people are budget fanatics and others could care less, but I fall in between. My budget numbers are really just the average of what we normally spend in a category. I’ll save budgeting for a later discussion, but the important thing here is being able to track spending.
The primary thing MoneyCenter lets you do is keep yourself accountable. The MoneyCenter homepage is a view of all your accounts and their current balances; having your credit card balance sitting right next to the available funds in your checking account can be very sobering. On the other hand, having your savings and investments accounts listed can be very encouraging and motivate you to sock away more for the future. Even if you don’t bother categorizing everything, these summarized numbers can be a big help.
By categorizing everything a very useful pool of data will start to accumulate. Let’s say you want to start saving more which presents two options: make more money or spend less of what you make. One of those is easier said than done. Yodlee makes it easy to view your total spending by category and then make informed decisions. More than anything the data helps answer general questions like what percentage of my income am I spending on housing, transportation and insurance (I was a little surprised about the amount going just to these items).
Every time I talk about finances I’m not expecting people to take it as gospel or go implement my idea immediately. I’m just sharing my experience and the information I’ve gathered through research and practice. After a year long failure with Quicken I’ve been incredibly happy with Yodlee MoneyCenter. My time spent dealing with finances has gone down while the awareness of my financial situation has gone up. Just this week Sarah asked how much money we had and I was able to immediately tell her an accurate number. Anyone figure out a system that works well for them?
I never did like Quicken, it’s overly complicated for most and gets into too much minutia, plus you’re tied to one computer.
I’ve banked with BofA for a long time and have been using their online banking for probably close to 10 years now.
It has improved so much over the years and they constantly seem to add new features.
I do enjoy “portfolio” feature. It’s nice to be able to see an intelligent summary of your finances so quickly.
I’ve toyed with the idea of trying other aggregation services but I like the idea of having one login via my bank where I can see all my account details, do bill pay and any other banking services as well as portfolio.
The My Portfolio area at BofA is actually powered by Yodlee, but they don’t seem to advertise that fact. BofA is missing from Yodlee’s Corporate client listing.
I’m sure BofA pays heavily in order to present the appearance that it’s *their* application.
It works so well and is tightly integrated/feels seamless, I’ve haven’t felt the need to try anything else, namely Wesabe.
Early on I had an excel spreadsheet that had all our expenses in it and how much we save each month. Most of our expenses are fairly static, so I have a good idea what our “fixed” expenses are and our variable expenses are (gotta put those college accounting classes to use).
Something else I like to do is monitor how much money we have from month to month, and even year over year. As long as you know what expenses are required (mortgage, utilities, etc) and the ones that are “extra” (eating out, booze, etc) then it’s pretty easy to expand your savings. If your monthly savings is about $1000…then cut back on the other stuff to expand that.
I had looked at Wesabe too, but they just weren’t anywhere close to Yodlee. At the time you still had to upload transaction files, not sure what they’re doing now. Mint was out when I was looking too, but turns out they just use Yodlee too and were missing some key features like split transactions.
I haven’t really looked at Bill Pay stuff yet since it only takes me a couple seconds to pay the bills that don’t automatically get paid.
Thanks for this kind of info, Andrew. We’ve done some budgeting in the past, but only the archaic kind with paper and pencil. I think I will give this a try. And one of these days I’m gonna have to ask you how to get our wireless “secure”. Paul says we need to do that, and I think it would help with the problems I’m having viewing some media stuff.
mint.com is pretty cool too – pretty slick gui compared to yodlee. check it out if you’re a visual person…