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Budgeting software takes drudgery out of managing money Add to ...

Way back – in the late 90s – my older brother gave me Quicken for Christmas. Though I was delighted when I first unwrapped it, I never actually got around to using it. I had just entered the work force, I felt rich beyond belief and didn’t have much motivation to track my modest expenditures (like rent, takeout meals, beer, etc).

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Now that I’ve got a husband, a house, a car and a couple of kids, I’m feeling a more urgent need to track our spending and set a budget. But my old copy of Quicken is long gone and I’ve been wondering which software I should be investing in.

Tom Drake of Canadian Finance Blog says when it comes to tracking spending, Intuit is the clear leader both in desktop software and online options. For the desktop, they offer Quicken (the pioneer, but still industry standard) and for an online option, they offer Mint.com, which became available to Canadians in 2010.



Mr. Drake says that Quicken Cash Manager is a “user-friendly way to compile your income and expenses and then use that information to understand your spending.” Essentially, you input what you make, what you owe and what you spend, and Quicken organizes it for you.



“It’s always had a bit of an accounting feel, measuring your cash flow through pie charts and ledgers full of income and expenses,” Mr. Drake says. “I think nowadays, the problem with Quicken (or most software for that matter) is that it’s stuck on your desktop. People are using the Internet more, including on their cellphones. Plus, the model of trying to convince people to upgrade physical software every year is running out of time, especially with a program that doesn’t have much room for annual improvement.”



Mint.com takes expense-tracking one step further. It gleans info directly from your bank accounts, so you don’t even have to input your transactions. Mr. Drake says he’s been a fan of Mint for a long time, even before it officially supported Canadian banks.



“I like the convenience of not having to manually download data files from my bank accounts,” he said. “I also love the connectivity of it working from any computer or even from my phone.”



However, some consumers are hesitant to embrace Mint, because of security anxieties. In order for Mint to track your transactions, you need to give your access code for online banking, giving Mint “read-only” access to your accounts.



Mr. Drake says that the biggest issue with Mint’s access to your bank accounts isn’t their security, which is just as good as what the banks have in place. It’s the fact that you’re giving a third party access to your accounts.



“The problem is that doing so can break your cardholder agreement with the bank, possibly leaving you liable if something happened to your account,” he said. “

Robb Engen, one of the minds behind personal finance blog Boomer and Echo, says that programs like Quicken and Mint can be useful, but they do have drawbacks. For example, when he tried Mint, he found it not very intuitive when categorizing expenses.



“If I get gas at the Costco or Safeway gas bar, it’s going to code that into groceries,” he said. “What happens is you have to go back into the program and recode it, so it kind of takes away from that automation that people are looking for.”



As well, Mr. Engen says these types of programs aren’t actually helping you set, or stick to, a budget.



“All they’re doing is putting that automation into tracking your expenses, but it’s not actually making a plan for you,” he said. “You can go into Mint and you can say, my grocery budget is $500, and then if you get close it’ll send you an e-mail notification saying, ‘You’re within 20 bucks of your grocery budget,’ but to me that doesn’t really help.”



“I see tracking expenses as looking backward, and using your budget properly is more forward-looking.”



Mr. Engen says he prefers to use an Excel spreadsheet that he customized to his own family situation. He found a free, downloadable template at Vertex42.com.



“They’ve got all kind of templates from family budgets to wedding budgets to business budgets and you kind of find one and make it your own,” he said.





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