Remember how last week I mentioned that there was a monster snowstorm headed our way? The forecast for our area varied quite a bit up until the snow finally came, with estimates between about three inches and 30 inches (!!). Even after the flakes had been falling for some time, there was still a crazy discrepancy between most sources and the one app that predicted a snowpocalypse. (I'm looking at you, Apple Weather!)
Well, we ended up with about four inches of snow, followed by freezing rain and sleet for many hours, culminating in absolutely frigid temperatures to help the ice really settle in as of Sunday evening. There wasn't any of the really fun, powdery snow involved at all, much to the disappointment of our kids. They did get to sled a bit though, managing not to kill themselves in the process despite the slick packed ice.
My wife and I tag-teamed a shoveling effort over the last two days and managed to chip the ice apart enough to shovel a car-width path most of the way to the street as of this afternoon. A kind neighbor offered to use his tractor with a front-end loader to finish the last bit at the end, including the pile left by the city snowplow as it cleaned the street. Three cheers for teamwork!
My fingers have warmed up enough to type again, so I'm back for this week's newsletter.
I had more feedback than I expected regarding the topic of financial data organization after I mentioned my foray into using Monarch for staying on top of all of my accounts and sharing regular insights and visibility with my wife. I'm not about to turn Tidy Bytes into a financial literacy program, but clearly I can spend a bit more time on the subject than I have so far.
Continuing the Monarch Trial Run
I'm still in what I'd consider a "trial run" for Monarch with my own accounts, although I've had it long enough that I'm past the official free trial period, so I'm in for the first year at least (at a nice discounted rate, still active). But I'm not sure yet whether it will be a good long-term fit. My instinct is that it's an excellent tool, better than most and wonderful for visuals, reporting, budgeting, and a "bird's eye view" of how things are going--but I'll need something more in order to satisfy my desire for comprehensive and context-linked transaction data.
To explain Monarch's limitation with the simplest example: if you have a checking account and a savings account, and you transfer $100 from checking to savings, this is intuitively a single operation. $100 leaves one account and appears in another account. Double-entry accounting practices mean it would still be recorded in two places--the source account and the destination account--but you'd also ideally want them to be linked, at least in an electronic system. But in Monarch (and actually many other similar tools), they aren't linked at all. Every transaction inside an account is independent. No account is aware, in any meaningful way, that other accounts exist.
This really only impacts transfers between accounts, such as in the $100 checking-to-savings example or in the case of a credit card payment. It's not actually that big of a deal. It's not a loss of information, just a loss of context about a transaction--context that, in most cases, I'll probably never need and could likely figure out again easily if I really did need it.
Even so it still bugs me enough to grumble to myself. How hard would it be to allow linked transactions? (As a developer, I know the answer is not "super easy," but I also know it's 100% possible and therefore a nice feature to build into a flagship consumer finance product like this.
But is it a deal-breaker? Honestly, no.
Will I augment my finance tracking with something that gives me what I want? Definitely yes. Because I'm picky, and I'm used to a system that already does it.
Monarch also has a limitation with how recurring transactions are handled, but I'm still experimenting with a solution that might be suitable without feeling too hack-ish. Stay tuned.
For the moment, I'm simultaneously continuing to use Moneydance--the standalone Windows app that fits my brain type. I don't like duplicating effort, so at some point I'll stop doing it...I'm just not sure what the end result will look like yet.
Money Management Goals
Keeping track of your financial data gives you insight and opportunities that you can't get any other way. Maybe you aren't someone who wants to create and stick to a rigid budget (spoiler: I'm not one of these people). But if you can't even see the inflows and outflows of money, you're flying blind and asking for trouble.
Of course, your habits with money might mean you get along perfectly well with a mostly hands-off approach. If you intuitively know how much you spend and you never overdraw your accounts--or you buffer with a credit card and always have enough to pay the statement balance each month--you might think you don't need to expend any more effort than that. And you might be right, objectively speaking.
But even a little more information can alert you to habits you didn't know you had, easily spotted and easily changed, that can add up to significant improvement over time.
One reader this last week (you know who you are--thanks for the detail!) outlined a set of target features that would make an ideal system/app/platform for tracking personal finances for him. Here's the list he provided, modified slightly by me to make it more generally applicable:
- Automatically import all transactions
- Automatically categorize incoming transactions
- Have good envelope budgeting
- Have good reporting
- Be able to share with my spouse
- Do this all without giving out my banking credentials
You might have a slightly different set of goals, and that's fine. Maybe you don't have a spouse, or maybe you track finances separately and don't need shared visibility. Also, "good" in the context of budgeting and reporting are definitely subjective.
There are two big challenges in this list:
- Automatic transaction import is messy because US banks haven't standardized on a single access method and data format for accounts and transactions. Working in investment accounts and stock/ETF/option holdings makes this even worse.
- Automatic transaction import is practically impossible if you aren't willing to give out banking credentials.
Basically every app or platform in existence that allows automatic transaction import requires giving out your banking credentials to somebody. In practice, this means one of a few big financial data access "bridge" services: usually Plaid or Finicity. These are the services that standardize all the various formats of finance data from banks, credit card providers, brokerages, etc. into something that a platform like Monarch can actually use. (And yes, Monarch uses both of these services behind the scenes. Moneydance uses Plaid. Most things use Plaid, in fact.)
If you truly want to avoid sharing your credentials with any 3rd-party service or cloud platform (like Plaid), you have exactly three options:
- Attempt to write your own automated data access tool for all accounts you care about. (This is HARD, if not impossible in some cases.)
- Use whatever export format your accounts provide, e.g. CSV or QIF, and hope you can import data--without duplicates or errors--into your financial tracking platform. (This is also hard, but not as hard as #1.)
- Simply enter all transactions manually in your financial tracking platform. (This is easy but extremely tedious.)
For the truly privacy-conscious among us, CSV/QIF imports and manual entry are the only viable options. For everyone else, or those willing to compromise on that point, Plaid and Finicity do a pretty decent job of streamlining what would otherwise be a really, really painful process--especially if you have lots of accounts.
Where does that leave us? How do you choose what app to use? How do you prioritize various features and compromise on others?
Next week, I'll write about the different apps I've used for finance tracking over the last 20 years and explain why I hopped between different solutions when I did--what I like about them, what I don't, and what I'd like to change if I could. We'll also explore some of the more interesting options I've stumbled across recently.
For now, I'm off to go find a place to stay warm for the rest of the week as we drop back below freezing and wait for even more snow next weekend. 🥶
Until next time, happy data-taming!