In the beginning there was Quicken and Microsoft Money, and financial life was good. Hours were spent in front of a cathode-ray-tube screen pondering whether a happy-hour splurge should be classified as an “entertainment” or “food” expense. Then, three years ago, free budgeting Web sites, such as Mint and Wesabe, appeared. They could download transactions from users’ accounts, categorize them automatically, and produce spending and income reports using colorful graphs. That enabled even people who were less fanatical about their money to keep tabs on it. And financial life was better.
See our slide show: Which Budgeting Site Is Best for You?
Now the online life of money is changing once more. Banks and other financial institutions are incorporating budgeting tools into their own Web sites. Intuit, which owns Quicken, bought Mint and has switched all its Quicken Online customers to Mint. Microsoft discontinued its Money software in June 2009. Wesabe shut down everything but its discussion forums last July, and Buxfer appears to be on the inactive list. Meanwhile, another crop of personal-finance start-ups aim to make it even simpler to track your spending and plan for the future—not just on your computer but also on mobile devices, such as smart phones and iPads.
Reach Your Targets
The makers of online tools are no longer content to show you how you are spending your money now. Many aspire to tell you what your spending will look like in the future and what you need to do to reach your financial targets.
Mint has added a feature that lets users monitor their progress toward specific financial goals, such as getting out of debt, saving for college or buying a car. A thermometer graphic on Mint’s dashboard gives you a clear sense of how much you have to save and how long it will take you to get there. The thermometer turns red if you fall behind.
HelloWallet, a Washington, D.C., start-up, takes goal-setting a step further. The service will tell you how much you need to put toward your goal with each paycheck and will automatically adjust that figure depending on what you actually do with your money.
HelloWallet (as well as MoneyRight and MoneyStrands) also allows you to forecast your income and expenses for the months ahead. Theoretically, if the projections are close to the mark, this feature helps identify money problems before they occur. But such bells and whistles may be too much. “Forecasts are rarely accurate,” says Aaron Patzer, founder of Mint, explaining why his site doesn’t offer a forecasting tool. He says that the time it takes users to categorize every expense for clear forecasts will “frustrate the hell out of them.”
Most of the free sites make money by collecting referral fees from companies for recommending products to users based on their spending patterns. For instance, Mint recommends savings accounts, certificates of deposit, credit cards, IRAs and auto insurance. Trackers from financial institutions usually promote their own products. Unlike the other major budgeting sites, HelloWallet charges $5 per month (or $4 per month if you sign up for a year) because it does not accept referral fees. Its database of 130,000 bank products to search among is far larger than those of its rivals. And because it has such a large product database, the company claims that, using its recommendations, the average user will save $600 in the first month.