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This chapter is from the book

Build Your Control Panel

Once you’ve got your financial tools in place, you need to build a control panel so that you can see what’s going on with your money right now.

I’m a huge fan of personal finance software like Microsoft Money or Intuit’s Quicken. I’ve used financial software for more than a decade, and I believe it’s the best way to stay in charge of our money.

At a glance, I can see

  • What the balances are in all our accounts as well as what bills are due and how much we’ll have left after they’re paid
  • What we’re spending and how each expense category—from auto insurance to vacations—compares to what we spent in a previous period: last month, last year, five years ago
  • How well our investments are doing and whether it’s time to rebalance our portfolios
  • Our progress toward our financial goals and how our net worth has increased over time

Built-in planners help me map out strategies for saving, investing, and paying off debt. Alerts tell me when due dates are approaching or account balances are dipping perilously low (or, in the case of credit cards, when they’re getting too high).

The software also keeps track of transactions that affect our taxes. I can easily print reports to take to our accountant or transfer the information to tax preparation software if I wanted to do our taxes myself (which I most emphatically do not).

I can pay bills, move money among accounts, and use our past spending as a template to set up new budgets as needed.

The price for all these benefits? Typically, less than $50 for the software and some time spent setting up your financial accounts so the software can access them. After that, it takes less than five minutes a few times a week to stay on top of our money.

With a couple of mouse clicks, I can tell the software to update our balances and record all the transactions that have occurred in our accounts recently. Most of the time, the software can assign categories to those transactions automatically; it knows to put the Exxon Mobile charge into the “Auto:Fuel” category and categorize the Gap purchase as “Clothing.”

For all these advantages, though, I realize personal finance software isn’t for everyone. The next sections spell out some alternatives.

Account Aggregation 1.0

Some banks, credit unions, and brokerages allow you to view all or most of your accounts on their Web sites—even if the accounts are at other financial institutions.

However, there are drawbacks to these services. You may not be able to add all your accounts. In addition, it can be difficult to project very far ahead to see how your balances might be affected by upcoming bills. Aggregation sites also typically don’t have the robust retirement, college savings, and debt payoff planners included in personal finance software. But they’re definitely a step up from having to sign on to 3 or 5 or 10 different Web sites to get a complete view of your financial situation.

Account Aggregation 2.0

If you like the idea of account aggregation but your financial institutions don’t offer it, or you don’t like their set-ups, you have other options. Here are three to check out.

  • Yodlee provides account aggregation and bill payment services for many big financial companies, but you can also sign up as an individual; it’s free.
  • Mvelopes.com is an electronic version of the old “money envelope” system, where you divide your cash into envelopes for different purposes (groceries, entertainment, gas, etc.). You know at any given moment how much you’ve spent and how much you have left in each “envelope.” The cost is about $8 a month.
  • Wesabe is a free, community-based Web site where you can not only view all your accounts and track your spending but also tap into the collective wisdom of other users. The “tags” or descriptions you assign to your transactions evoke tips, recommendations, and goals submitted by other people. There are also forums where you can ask for help, share tips, and learn about great deals.

Account Consolidation

Another solution: move all or most of your accounts to a single bank or brokerage. Then your checking, savings, investment, and credit cards will all show up on one Web site.

As I mentioned earlier, you’ll probably pay for this convenience. Your bank’s investment account fees might be higher than what you’d pay at a discount broker, and its credit cards may not offer the rich reward programs (or low rates) you could find at other issuers. Still, the ability to see your most significant accounts at a glance might be worth the trade-offs.

Excel Spreadsheets

If you’re spreadsheet savvy, you can set up Excel to help you track your transactions and account balances. You just have to do a lot of data entry that isn’t necessary with Quicken or Money. If you’re not a real numbers person, it’s easy to fall behind and then feel daunted by the workload needed to catch up. But if you’re diligent, you can set up a system that helps you monitor spending, project your cash flow, and track your net worth. You might find Peter G. Aitken’s book, Manage Your Money and Investments with Microsoft Excel, helpful in getting started.

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