Updated Review
After a lot of thought, I decided to write this review of budgeting software. I can't stand the idea of spending hours maintaining a budget every week...that's what is supposed to be so great about computers. They're supposed to simplify your life. And, that is (allegedly) what is supposed to be great about budget software.
That's why I like budget software (at least in theory). The whole idea of which is to simplify your financial life. But, the theory is full of holes.
A major problem with budget software is that it is built on a financial theory that is reactionary instead of proactive. What I mean is that most budgeting software tends to force you to reconcile your checkbook after you've already spent money. How do you control your finances when you are reacting to your spending habits? How do you determine, change, alter, or improve upon your habits? You can't - not by reacting to your budget.
For this, you need to create a simple, yet solid budget plan. In another article, I explained the differences between traditional budgeting and what I would call a "bulletproof" budget. I also explained why real budgeting is really just a method of saving money.
When I looked on the shelves of my local Staples office supply store, I found the usual suspects - Quicken and MS Money. I would probably say that if you have your heart set on either of these two programs, you should take the time to learn how Microsoft Excel spreadsheets work and save yourself the $30-$100 these programs can cost and just design a simple spreadsheet.
Excel can be made to act like MS Money, and chances are, you already have it on your computer.
Searching on the Internet, there is no shortage of software products promising to help you manage your money.
A few of the more notable ones are Mint, from mint.com, and Mvelopes from mvelopes.com. These two, I think, are a good example of why an expensive program (mvelopes) is not always a great one and why a free program (mint.com) is...well...free for a reason.
I'm not saying that both of the above programs are worthless. There are a lot of folks who really enjoy them. I'm not one of them. The issue I have with remotely located software programs like mint and Mvelopes is: what happens if (or rather when) the server is slow due to high traffic (I experienced it with both sites), or if the server crashes? I don't like my budget being hosted on a remote computer for that reason alone.
In the end, I thought Mvelopes was too expensive for what it actually does (an envelope style budget program that links up to your bank account and will pay your bills on time for you - which if you have online bill pay like many banks do nowadays, is really a redundant service).
They claim it is inexpensive at $7.90/mo. But that's only if you pay for a two year subscription, and you have to pay that up front. So the actual cost is $189.60. I think that gets to be a lot of money for the software if you plan on using it the rest of your life. After 10 renewals (20 years), you've spend over $1,800 for budget software. Granted, you expect software updates along the way, but the envelope method itself is simple and straightforward and hasn't really changed...ever.
Mint.com offers a unique money management service...unique in that it is free. Now, some of the best things in life are free...right? Well, this isn't one of them. At least I didn't think so. Mint does a great job of presenting all sorts of graphs, pie charts, and can organize your financial data in several different and impressive (and colorful) ways.
In the end, it's just a basic accounting software program with some "neat" extras tacked on. It uses yodlee (another software program hosted online) to help make bill payments for you, but again, if you have online bill pay...it's a moot point.
One issue I had with Mint was that it has a nifty feature that analyzes your expenses (it links up to your bank account and "looks" at your expenses) and the program tries to save you money. Now, ordinarily, I wouldn't mind. However, the program suggested that I switch from my local cable company to Verizon's FiOS service in order to save money on my phone, Internet, and cable bill.
The problem was, Mint advertised the introductory offer from Verizon and not the "real" cost of service. Since Verizon has long service contracts, had I taken that offer I would have paid much more money than I am now for my phone/Internet/T.V. package with my local cable company after the 3 month introductory period was over.
My other issue with Mint was that it wasn't able to organize my finances the way I wanted to.
Now, those weren't the only four programs I looked at. Those seem to be some of the more popular ones though. I also looked at Wesabe and YNAB ("You Need A Budget" software) as well as many different kinds of Excel-based "budget software" programs. There is also Dave Ramsey's faux "system", which really isn't his system...it's actually just a very (and I mean very) basic envelope budget system.
The Common Problem
The common problem with every single piece of software is that it doesn't solve the problem of money management. It simply teaches you to reorganize your income and expenses and offers unique ways to account for them.
Micromanaging, the pragmatic problem of traditional budgets, works to make you more aware of the complexity of your financial life. But, it doesn't really simplify it. True budgeting - true money management - is a solution to the many little financial problems in a life that has grown increasingly complex caused by living and operating in an economy of scale.
Aside from budgeting, the alternative is to return to the primitive - the so called "minimalist" lifestyle. This is both unnecessary and demeaning to your life.
The real solution is to use the conceptual power of your mind to simplify your financial life.
