How to choose and use personal-finance software. (Software Review) (Compute's Getting Started with Personal Money Management) (Evaluation)
by Richard O. Mann

When it comes to dollars and cents, some of us are fairly talented operators. However, many more of us find ourselves at sea when it comes to things financial. Our skills and understanding vary from the what-do-you-mean-I'm-overdrawn-I-still-have-checks crowd to the Wall-Street-Journal-reading, CD-rate-watching gang. You might be surprised to find all kinds of professionals and business people in the checkbook-as-a-mystic-experience group.

Wherever you fall on the scale, your PC can be a financial lifesaver. Today's personal-finance software practically runs itself. If you can fill out a check and a deposit slip properly, you can use these programs. In fact, with your basic skills and the computer's advanced skills, you can accomplish financial miracles.

What can personal-finance programs do for you? Their feature lists get longer each year and include some impressive-sounding functions. Basic features offered by all the programs include checkbook functions, writing checks, budgeting, bank reconciliation, tax information summarization, and electronic bill paying. The more ambitious programs add investment management, payables and receivables tracking, and dozens of other snazzy functions. One program even offers its own Visa card with electronic statements.

In a nutshell, they can free you from worry about your financial situation--at least the worries that come from not knowing where you stand. They can convert confusion to control, mystery to management, and aimless wandering to unerring progress. You invest time and the software provides financial expertise. Even those with no math or money skills can find substantial help here.

Basic Checkbook Functions

Begin by automating the checkbook itself. As you write checks and make deposits, you record them in your check register. Every few days, enter the checks and deposits into the computer's check register. The program draws a virtual check on the screen--fill it out just like writing a check. Or you can use the check register screen, which looks just like your paper check register. Either way, the computer handles all the arithmetic with its usual flawless accuracy.

If you take a few minutes every few days, you'll always be accurately up-to-date. Then, when the bank statement comes, you'll be ready for a new and marvelous experience.

Bank Reconciliation

Once a month, you get a bank statement. Your job is to reconcile it with your checkbook to ensure that what you've recorded in your checkbook matches what the bank processed. This is how you find errors in your checkbook and the less frequent but very real bank errors. Most bank statements have a printed form on the back that attempts to walk you through the reconcilation process. It's not fun, and it's not easy.

If, however, you've been entering your checkbook in the computer, the process is simplicity itself. It takes about ten minutes and involves merely following the onscreen instructions. You'll love it; I promise.

Check Writing

Next comes writing your checks on the computer. Enter the information on the screen for a batch of checks, then send them to the printer. Of course, you'll need to buy pre-printed checks, which are more expensive than hand-written checks. If your bill-paying sessions involve a dozen or more checks at a sitting, the time and effort saved can justify the extra cost.

Electronic Bill-Paying

If you have a modem, you can pay bills through an electronic service. Authorize the payments on your computer, then send the information via the modem. The bill-paying service electronically transfers funds from your account to the payee's account (if the payee is set up for such payments) or prints and mails a paper check to the payee.

This service isn't free. The leading service, Check-Free, charges $9.95 per month for the first 20 payments and $3.50 for each additional block of ten payments. Many people love it, however, for its paperless, effortless ease.

Reporting and Budgeting

As you enter each transaction, you assign it to a category or account. (Income categories could include salary, while expense categories could include groceries, rent, utilities, and entertainment.) With this information in the computer, you can run reports at any time showing totals by month or year in each category. These reports can provide an informal budget review--as you see the totals for entertainment or Christmas gifts, for example, you may strike your forehead and say, "We've got to cut back!"

Formal budgeting is also easy. Decide what your monthly income and expenses will be (or should be) and enter it by category into the computer at the beginning of the year. Every report from then on can show actual results compared to budget, revealing how well you're doing at living within your plan. Many who would like to keep a budget haven't because the record keeping is so painful. With the computer, it's a snap.

Tax Summaries

If you design your categories properly, at the end of the year most of the information needed for your tax return will be at your fingertips. Run your income and expense report and pick out the deductible totals. (Some programs offer a report listing only tax return items.)

Many of these programs also perform tax estimates during the year. If you tell the program which categories are deductible, the program can perform a rough estimate of your eventual liability.

Advanced Functions

Many of these programs meet the needs of casual investors; one (Managing Your Money) is suitable for professional home investors. Some let you record unpaid bills outside your checkbook, then write checks to pay them later. Some will track sums owed to you. They all have some degree of export to spreadsheet programs, where you can massage your data to your heart's content. If you have a specific need beyond the normal, check out several programs; chances are that one of them has the feature you need.

Each of the programs we'll examine has its own personality, its own targeted users, and its own abilities.

Quicken 6.0 and Quicken for Windows 2.0

Quicken (Intuit, 155 Linfield Drive, P.O. Box 3014, Menio Park, California 94026; 800-624-8742; $69.95 for either DOS or Windows version) is the perennial best-selling personal-finance program--in fact, it's usually the top-selling of all programs for home use. There's good reason for this success. From the beginning, Intuit's single-minded mission has been simplicity and ease of use, resulting in a product legendary for its friendliness.

Over the years, it has been a challenge to continue to add advanced features to Quicken without compromising its essential simplicity. You get to the advanced features through inconspicuous menu choices; users interested only in the basic features may never see the advanced items. Thus, the basic functions remain extremely easy to learn and use, but the more exotic features can be hard to find and less than easy to use.

Quicken shines in the details of daily use. For example, the plus and minus keys change dates one day at a time. The M key moves you to the first day of the month. (M is the first letter in the word month. Y does similar things for the year.)

Throughout the program, if there's a way to make entry easier or faster, Quicken provides it. The competition tries to match this philosophy; even though each program has valuable unique features, none can match Quicken's overall feeling of speed and ease.

The DOS and Windows versions of Quicken have almost identical feature sets, although the details of using each interface differs. The new Windows version 2.0 displays the Quicken magic in abundance. Innovative touches include grayed-out labels in blank check register fields. Quicken uses the Windows interface in the most innovative yet comfortably natural way I've seen.

The newest feature in Quicken is IntelliCharge: Quicken's own Visa card. With the IntelliCharge card, you get your monthly credit card statements either on disk ($4.50 per month) or by modem ($3.00 per month). Quicken reads in all your credit card transactions without any data entry on your part.

Another outstanding feature is QuickZoom. Click on any report total or graph item, and Quicken shows you a list of the underlying transactions. Click on a transaction to go to its check register entry. It's unbeatable for digging into the details supporting your reports.

Quicken offers an adequate investment tracking system, an awkward way to track payables and receivables, an excellent automatic tutorial and practice data set, and a canned set of categories for both home and business use.

The DOS version of Quicken is outstanding; the Windows version is even better.

Andrew Tobias' Managing Your Money 9.0

Managing Your Money (MECA Software, 55 Walls Drive Fairfield, Connecticut 06430; 800-288-6322; $79.95) is the most complete product in the field. It provides tools for the serious investor, including general advice on when to buy and sell, as well as optional real-time stock quotes and online stock market trading. In its effort to cover every nook and cranny of your financial situation, it gives advice on your insurance coverage, estimates your life expectancy, and helps you plan your retirement savings program.

MYM is a showcase for the Andrew Tobias personality. Tobias, the author of best-selling personal-finance books, writes with a common-sense, down-to-earth style full of humor. MYM is comfortable, chatty, and friendly.

Version 9.0 updates the interface to a standard top-menu-bar mouse interface that is decidedly easier to work with than the quirky function-key-based system of the earlier versions.

The basic tools for writing checks and recording deposits are top-notch. MYM includes a way to record bills in a list of payables. Until you mark them for payment and generate the checks, the expenses associated with these bills do not show in your reports. (With Quicken and MoneyCounts, such future payments appear in your check register without check numbers, muddying the picture of your status.) There's a similar accounts receivable function, which can be used to print invoices and track monies owing to you.

While it's not quite as easy to use as Quicken, the many additional features and full-line investment features make MYM better for investors. With its new pricing (reduced from $220 to $80) and new interface, MYM is now in a better position to compete head-to-head with Quicken for users who aren't sophisticated investors.

MoneyCounts 7.0 Personal Edition

MoneyCounts (Parsons Technology, One Parsons Drive, P.O. Box 100, Hiawatha, Iowa 52233; 800 223-6925; $49) has long been the low-cost best buy in the field. The new 7.0 version represents a major shift in philosophy and interface for the product.

In version 7.0, MoneyCounts adopts a mousebased interface similar to its competition. You now enter checks in a screen that looks like a paper check and have a check register that mimics its paper counterpart. An important addition is the standard chart of accounts (list of categories); older versions required you to build your category list from scratch.

The new version removes certain features that Parsons has moved to a forthcoming Business Edition. One such item is the ability to list future bills in a payables list, a standard feature of previous versions that set MoneyCounts apart from the competition.

Despite the changes, you can still tell that MoneyCounts was written by an accountant; the accounting jargon and the essential double-entry nature of the accounting system are not as well disguised here as they are in Quicken. MoneyCounts feels like home to anyone with a bookkeeping background, but is still appropriate for those without accounting training.

The program's selection of 25 reports as well as pie charts and other graphs is unusually rich, but its investment tracking tools are only adequate.

I've been a happy MoneyCounts user for several years, but the new version confuses me. It's no longer fast and efficient (data converted from the old version now takes over 4 times as much disk space) and several important features have been dropped. Now it feels like a weak imitation of Quicken.

Nevertheless, it's still a solid program at an excellent price--if you haven't been spoiled by its earlier versions.

Microsoft Money 2.0

Although new to the field, MicrosoftMoney (Microsoft, One Microsoft Way, Redmond, Washington 98052; 800-426-9400; $79.95) is a pleasant, easy-to-use Windows application. Getting into the program is easy; a coach gives onscreen instructions on setting things up and entering transactions. The coach's comments appear at the bottom of the screen until you feel confident enough to turn them off.

The basic checkbook functions are a snap to learn and use, but the program begins to show its weaknesses when you move to advanced features. It doesn't track investments except as individual asset accounts and won't help much with financial planning.

The program links to Bill-Pay USA, the Prodigy network's electronic bill paying function, but doesn't support CheckFree.

Money isn't trying to be all things to all users. It does an excellent job of providing basic checkbook management services and is a good choice for a beginner who wants only basic functions in the Windows environment.