Simplify Your Finances with Software

Using software to simplify your life sounds like an oxymoron. Given the time it takes to install, customize and update most programs, many people understandably groan at the idea of learning yet another piece of software.

But perseverance can pay off--especially with the leading financial management programs, Intuit’s Quicken and Microsoft Money. The benefits of financial control these programs offer is well worth the few hours it takes to master them.

In fact, they can make the process of tracking and planning your money easier and--can it be said?--almost fun.

The 2001 versions of both Quicken and Money eliminated most of the tedious typing that turned off some previous users. Both programs improved download features that funnel transactions from your bank, brokerage and credit card accounts directly to the programs’ registers.

In addition to tracking your spending, Quicken and Money can remind you about pending bills, help plan your retirement, monitor your investments, review your asset allocation, suggest ways you can trim your insurance premiums and alert you to news that might affect you financially--among many, many other features.

The programs are better than their predecessors at picking up problems and conflicts. Both can warn you when your checkbook balance will probably fall below the account minimum, for example, or tell you that your plans to buy a new car conflict with your retirement savings goals.

Both programs also have improved their “home pages,” the view users see each time they start up the software. At a glance, you can see how much you own and how much you owe, what payments are pending and how your investments are doing.

The programs enable you to use the Internet to monitor your financial activity while on the road or at the office. You can upload your financial information from your home computer to the Quicken.com or Microsoft Money Central sites and view it anywhere you have an Internet connection. While such access certainly isn’t for everyone, it can be helpful for travelers and those who can’t bear to go eight hours without knowing their net worth to the penny.

That’s great, you may be thinking, but I still don’t want to spend hours mastering yet another computer program. To help ease the pain, Quicken and Money are loaded with how-to videos, tutorials and help menus.

Money 2001 also has an outstanding new setup tool that assists users in getting started and in exploring the program. This feature is so good, in fact, that by itself it makes Money 2001 a better program than Quicken 2001 for people who are new to personal finance software.

Money 2001 also has an excellent new cash flow viewer that looks through your past expenses and combines that information with your future bills and projected income to show how much money you’re likely to have in the future.

Maintaining a budget is also easier on Money: A budget rebalancer allows you to trim your planned expenses in one area if you overspend in another. You can do that in Quicken, as well, but Money makes the process easier and quicker.

Those who are used to Quicken, however, have little reason to switch and several reasons to upgrade, particularly if their version is more than a year old. In addition to better downloads, Quicken 2001’s bill and transaction reminder now pops up every time you open an account register, and a “missed bill” feature may make late fees a thing of the past.

More sophisticated investors will like the program’s capital gains calculator, which lets you play with various “what if” scenarios to see the tax effect of selling various investments. The program makes it easy to link up with the 401(k) Advisor on Quicken’s Web site. This very good tool not only suggests asset allocations but recommends specific funds.

Getting your bank, brokerage and credit accounts coordinated with Money and Quicken requires some effort, although the process is becoming less cumbersome as more financial institutions get used to working with the software.

Sometimes you can set up your accounts for downloads with a few mouse clicks at the bank or credit card Web site; other times you must call and request the setup information be sent by mail or e-mail.

The downloads themselves come in two formats: direct and indirect. Indirect downloads require that you go to the financial institution’s Web site to create a file that you then import into the program. You’ll quickly find that direct downloads are the superior method, because the information downloads automatically--you just tell the program to go get it.

Using automatic downloads is so convenient that if your bank or credit card company doesn’t support this feature, you’ll probably want to switch to one that does.

Some people are queasy about having their financial data flying around on the Internet. Intuit and Microsoft use secure, encrypted connections that should ease those fears, and both promise not to use your data for marketing or to sell it to, or share it with, anyone else.

Glitches do happen, of course. In March 2000, Intuit said some of its customer data leaked from its Quicken.com loan Web site to an advertiser. Intuit said that the leak was quickly plugged and that none of the data, which came from a loan calculator, could be traced to individual users. Still, people who are particularly concerned with privacy may choose not to upload their data onto the Quicken or Money Web sites and instead use the download feature only, so the data stay on their home computers.