Happy Tuesday, everyone.
The ice is finally starting to melt a little around here, so we're going to attempt a day of skiing tomorrow. My kids have never been, and they'd really like to go. I haven't been for about eight years, but we're planning to take it slow since everything will be brand-new to them. I am optimistic that I won't pull, sprain, or break anything. 🤞
...but if next week's post never goes out, at least you all will have some idea of what happened.
As promised last week, I'm following up once more on the topic of financial data tracking and organization. I've spent considerable time over the last couple of weeks looking into different methods for getting access to account, balance, and transaction data, and I think I have enough to confidently make some general recommendations.
The Quantified Self
I'll preface this by admitting that I'm quite a "data nerd," which is to say that I can easily fall into the trap of collecting interesting data simply because it's interesting, rather than because it is practically useful in obvious ways. This is especially true information about myself or my own activities. These days, this idea is commonly referred to as the Quantified Self, at least among people who do it on purpose.
Perhaps the most common instance of this kind of tracking is the simple fitness/movement data you get with a smartwatch or something like a Fitbit or Oura Ring. These devices provide near-frictionless capture and analysis of a few basic body metrics, like how often you stand, how much you move, how many steps you take, and the presumed quality of your sleep. We all know they aren't 100% accurate, but they provide a "good enough" picture for us to review and act on, if we choose to do so.
However, there are people who go much deeper than this, often for medical reasons but sometimes just because they're curious and willing to put in the effort to satisfy their curiosity. One website dedicated to the topic has a Show & Tell page revealing a bunch of fascinating self-tracking projects that are often run with the precision of a scientific study--just with a single participant. "What I do vs. what I say I'll do," "Which grasses aggravate my allergies," and "Physiological measurements at classical concerts" are some of the more unexpected examples.
The good news for anyone doing this is that the data tends almost to "self-organize" itself, because you go into the capture process with a specific structure in mind: some numerically expressed value (or set of values) that can be written in a table or spreadsheet, recorded at regular intervals.
Tracking personal finances falls into the same category. It's a type of information that we all understand intuitively, at least at a high level, but the specifics are always unique to each person. How many accounts? What details do you need to capture? How do you categorize transactions? And, perhaps most importantly, what do you want to do with this information?
What's the Point?
I can confidently say that anyone tracking personal finances wants to be able to answer at least two questions:
- Do I have enough money to pay for the goods and services I want?
- Can I manage my money differently to achieve a better outcome in the future?
The first question is immediately practical and, strictly speaking, requires only a quick glance at the balance of your checking account. The second one considers long-term behavioral patterns and cannot be answered well unless you keep a record of transactions over time.
Depending on your situation in life, you might focus on one of these questions more than the other. But unless somebody else is 100% in charge of your finances--an unlikely situation for most readers of this post--tracking the flow of your money can only help.
This brings us to the next question: what's the best way to do it?
My Financial Tracking Adventure
My adventure in personal finance tracking started with Microsoft Money sometime around 2000, when I got tired of keeping track of allowance and small side-job transactions in a small hand-written ledger. Although MS Money has long since been discontinued, I still think it was one of the best tools available. Sometime around 2004, for reasons which I believe were related to compatibility problems with automatic bank imports, I switched to the Quicken, which was similar in many ways but had more "bloat" than MS Money. I put up with it because it actually connected to my bank accounts, and I didn't want to enter transactions manually.
The continuous shift towards web-based services made it harder and harder to put up with the obnoxiously slow user interface in the Quicken desktop software. Intuit sold Quicken to another company in 2016, and it didn't get any better--at least in my view. I tried experimenting with Mint (now rolled into Credit Karma) and simultaneously with Personal Capital (now re-branded as Empower with a different focus), but they had too many features I didn't need, including pointless hand-holding and upsells/advertising for financial services I didn't want. That's the cost of "free" platforms, I suppose.
I limped along with an unpleasant but functional experience in Quicken until I discovered Moneydance in 2022, which felt like a breath of fresh air. It's a much simpler, cleaner, and faster interface that reminded me of what Quicken was like 20 years earlier. It actually connected properly with all my accounts, and it had dark mode, which I can't live without these days. I've been using it since then with good results.
...except that it's hard to share with my wife, which is why I've been trying Monarch on the side.
So Many Choices
Unsurprisingly, there are a ton of options to choose from: well-known cloud-based solutions like Monarch or Quicken or You Need A Budget (YNAB) or the direct-to-spreadsheet Tiller, self-hosted tools like Firefly III or Actual Budget or Sure, standalone apps like Moneydance or Banktivity or even GnuCash, and bare-bones command-line tools for the geekiest among us like Ledger or Beancount.
There are also dozens, if not hundreds, of smartphone or tablet apps offering various similar levels of money-tracking functionality, though many of these are 100% manual rather than providing any automatic transaction import features.
The tools listed above are just a drop in the bucket. An online search will reveal many more, each with a slightly different focus or implementation. They all attempt to solve the same basic problem--answering the two questions above--but prioritize different methods for doing so.
The main question to help point you in the right direction is this: What problem are you trying to solve, and how much effort are you willing to put in?
Some of you may simply want visibility. In that case, Monarch will do a perfectly good job with very little effort. Rocket Money (free at the basic level), Quicken, Origin, and others will likewise let you see what's happening in your accounts. All of these will even do a pretty good job of auto-categorizing transactions without any training at all, which further allows for pretty good out-of-the-box reporting or budgeting. Some even identify recurring transactions for you, like a Netflix subscription, which is great for forecasting as well as revealing things you may have forgotten about.
Other readers may be specifically focused on budgeting. The obviously named "You Need A Budget" app has an almost cult-like following of users who swear by its life-changing requirement to pre-plan the role of every dollar. I was never drawn to this type of money management, but it clearly works for many people. Actual Budget is an interesting self-hosted option that incorporates some of the same ideas. You can budget using other tools, too, including both Monarch and Moneydance; it's just more of a secondary feature rather than the core principle around which the entire app is built.
Still others might crave fine-grained control over every transaction, being able to access the entire ledger everywhere. Moneydance is one of the closest still-user-friendly solutions I've found that doesn't require a lot of extra effort to work with. GnuCash is even further down this road, but it demands more understanding of general accounting principles than many people have these days. Beyond GnuCash, you get into solutions that are either self-hosted (requiring a different kind of effort) or else so low-level that you certainly don't need my help understanding how they work--like the Linux command line ledger.
A Fine Line
The other question that drives your choice concerns privacy, which I discussed last week. In short: Are you willing to compromise some security for convenience?
This trade-off applies anytime we consider a cloud service provider for anything: photo hosting, email, file sharing, and so on. But it feels more significant when it comes to financial data. Are we really willing to use a "bridge" service like Plaid, Finicity, Yodlee, or SimpleFIN to allow automated access to financial transaction details, so we don't have to enter everything by hand?
The vast majority of people (maybe not readers of this post, but people in general) are okay with the tremendous convenience that comes from allowing a 3rd-party service to handle financial data aggregation. The worst-case scenario is bad: someone else can access your accounts, at least partially. But this is also quite unlikely, in large part because of the way Plaid/Finicity/Yodlee/SimpleFIN works.
Rather than actually giving a third party your direct bank login credentials, these platforms use a technology called OAuth to set up a revocable read-only access "token" to request (but not modify) account and transaction details. The bridge/aggregator platform never sees your real credentials, so even in the case of a data breach, all anyone could get is the same read-only access that OAuth token provided.
Not great, but also much less bad than a hacker having the immediate ability to transfer all of your money somewhere else.
Of course, even read-only visibility into transaction data can give someone a lot of information to work with if they are trying to impersonate you. The risk is still there, but if you keep a close eye on your finances, anything unexpected in your accounts should jump out pretty quickly. Also, you can (and arguably should these days) freeze your credit and possibly look into identity theft monitoring, and be sure to enable two-factor authentication on all financial accounts--and all accounts in general, really.
I don't personally have a problem using a platform like Monarch, with a back-end financial aggregator like Plaid, because of the benefit I get from comprehensive financial management, forecasting, budgeting, and sharing with my wife. The risk, which I see as relatively small, is worth the reward.
The Manual Option
If you care enough about privacy to avoid 3rd-party aggregators and cloud finance tracking platforms, is it even worth the effort? That's a very subjective question, but it also depends on how much work it really is.
If you operate from a single checking account, manual transaction entry is trivial and easily justified. If you strategically use a dozen credit cards for various reward schemes, and have multiple retirement accounts, crypto wallets, sub-divided high-yield savings accounts, and more, then it's much harder to accomplish.
As part of my research over the last couple of weeks, I made a list of accounts that I track. Together, my wife and I have 39 accounts at 17 different institutions. This may seem insane (and perhaps it is), but note that it includes 11 different goal-specific savings accounts at SmartyPig and a variety of store-specific consumer credit cards that almost never see any use. We actively use perhaps six of the accounts on a regular basis, and even that is only because of specifically high rewards on credit cards for groceries and gas.
If we wanted to consolidate and give up those small reward boosts, 99% of our transactions would happen in only three accounts at two institutions. That would be manageable, especially because those accounts support CSV history downloads.
But, as I said above, I'm okay with the risk of using an aggregator service with OAuth read-only access. It makes my life much easier.
General Recommendations
In light of all of that, here's where I land:
- If you trust OAuth security and cloud services enough to use them, try Monarch or YNAB or similar, or possibly Moneydance if you like the old Quicken style but want the option of automated transaction imports.
- If you don't trust OAuth security and/or cloud services, Moneydance without automatic imports is an impressive cross-platform tool that still works fine if you enter transactions by hand. Banktivity for Mac can also operate in an offline mode, if you opt out of cloud sync and transaction import.
- If you like self-hosting options for control and/or privacy, check out Firefly III, Actual Budget, and Sure to see if any of those look appealing. I'm tempted by those just for the fun of trying them.
Financial tracking is a huge space, and I've only scratched the surface of what's out there and some of the considerations involved, but hopefully the discussion here has been informative and interesting.
If you have any questions, be sure to send them my way--I'm always happy to elaborate. And if you're looking for something specific, but none of the tools I mentioned above seem like a good fit, I'll see if I can find something better if you let me know what you're after.
Until next time, happy data-taming!