Being Thanksgiving and all, I thought it might be a good change of pace to talk about something I’m thankful for.
I’m not sure how all of you manage your finances, but for some time now I’ve been manually updating a set of spreadsheets to track my budget, plan savings, balance credit cards, and establish general financial goals. Keeping track of my budget is perhaps the most important of these tasks, since it’s so easy to get out of line and blow too much money month to month. As a recent college grad, it’s also important for me to stay on budget so I can afford to save money, especially for retirement, since every dollar saved now makes a huge difference twenty years from now.
I’ve tried a few different methods for staying on budget, but in general my budget is no more than a “vague idea” in the back of my mind as I make purchases. Short of placing every single item I buy in Quicken, there really wasn’t a great way to tie my actual expenditures to my budget on a day-to-day basis. This is doubly true of free services/software. I simply don’t have the conviction or the time to tediously check every item from every merchant into categories in Quicken, tally them up, and then finally review how much is left to budget (or how far over I’ve already gone). If you asked me today, “how far under/over budget are you on groceries?” I could at best ballpark an answer for you. I’d guesstimate I’m over by less than $50 (darn expensive Thanksgiving meals!).
What’s worse is trying to manage accounts from different banks, different types of accounts, track credit cards, IRA’s, stocks – all at different websites and login portals. Even just checking in on these accounts from so many sources makes budgeting hard. If I had any hope at all of tracking not just my budget, but my overall “financial health,” a spreadsheet would no longer suffice.
I heard about a service called Mint.com that could automatically track your expenses a good while back. Reviewers were calling it a “Quicken Killer,” which piqued my interest, but I was reluctant. Frankly, it sounded too risky. Even Michael Scott a la The Office probably knows not to hand out banking credentials willy-nilly. At the time, Mint was too new for me to even think of trying it out. Now that they’ve been around (they’ve aggregated billions in transactions), and there are a lot of real professionals out their using it (see Forbes, WSJ, NY Times…), I was a little less skeptical. Add to the fact that they were recently acquired by Intuit (makes of QuickBooks), and they had officially caught my attention.
Now, I know what some of you are thinking, because I was thinking the same thing, even given their large customer base and great service record – how secure is it really? Before I took the plug I checked out the security setup in more detail, starting with Mint’s pages on this, as well as several outside reviews. Basically, there are risks, yes, but in reality they are minimal, and in the end it’s up to you to decide if that also qualifies as acceptable.
If I were to break it down – there are three main points of attack on any online system (it’s a gross oversimplification, but a realistic one). First, someone is able to intercept your credentials as they are sent to Mint. In reality, this is difficult to execute, and the data itself is encrypted – in other words, you already take that risk by logging on to your bank’s own website. The second is that Mint’s security itself is compromised and their data is stolen. What would the hacker have obtained? The banking login credentials you gave to Mint, right? Actually, no. Mint doesn’t store these credentials nor are the accessible by Mint employees. The credentials are used to set up a 1-way link through a 1-way read-only banking connection system called Yodlee. And since Mint is ‘anonymous’ (it doesn’t take nor want your real name, address, social security number etc.) the hacker couldn’t even steal your identity, let alone your funds. The third and final attack point is an internal breach, a disgruntled employee might try to steal records. Since Mint doesn’t store any of your login information, the worst that could happen is someone walks away with your monthly budget and a ledger of your recent transactions. BFD.
In other words, these are the same risks you already have by simply having an account at a major banking institution. Let’s, for the sake of argument, say the worst happens, and a hacker compromised the security at your bank’s online portal, or similarly something happened at Mint or Yodlee. If the most unlikely occured, and your account was emptied fruadulently, there are a lot of ways you’d be protected. Even without Mint’s help. If it was a credit card account, the company’s own policies for fraud protection would assist you. Past that, if it’s a regular checking or savings account, you’re protected under the Electronic Funds Protection act, also known as Regulation E, which is a set of Federal Reserve policies designed to to encourage consumers to feel safe about electronic transactions. Even in cases of negligence (if you fell for a phishing scam, for example), your general liability is $50 in most cases, or $500 if you don’t report it within 2 days. The same rules apply for Mint as they do for your banks website.
I won’t say recovering from fraud would be easy, or fun – but it won’t ruin you. Your protected already more than you probably know. In reality if Mint itself was compromised, the effect on your accounts is literally nil (do you really care if the hacker knows you spent $82 on shoes last month?) – but if Bank of America’s site was compromised (which roughly as secure as Mint), you could lose money and have your identity stolen. Knowing that – the “risk” of using Mint seemed more than acceptable to me. You’re free to be your own judge.
Now that I’ve dove head first in Mint for a good month, I’m disappointed that I waited so long to get started. Mint’s website is extremely clean and well executed – every interface is simply, well, slick. The amount of information it could figure out from my transactions automatically was staggering. I didn’t really even need to make a budget – it automatically calculated one based on previous month’s expenditures. With just a couple of minutes of tweaking, I had a complete and exhaustive account of my weekly budgets in each category – showing I was on budget for fast food, but over-budget on groceries. It shows a line where I am at now, helping me know if I’m already off track – for instance, showing that month-to-date I was $13 over in “Alcohol & Bars”, but that I had $12 left before the end of the month. All of this automatic.
I also am instantly in love with it’s alerting features. No more will I have to wait for the bank to ‘feel like’ sending me a low-balance alert (or worse, an overdraft alert – what I like to call a BTW We Fee’d You letter). Mint will send me an email, even text me for free, when I’m low on cash on any one account. It even sends me emails when I’m simply over budget. I can then know at an instant when to stop spending without having to keep mental records or reconcile my checking accounts with Quicken.
That’s pretty cool stuff for a free service.
It also tracks my investments, so I can tell where I’m at overall without having to check separate accounts. It can even project your estimated savings, or even estimated net worth based on other major assets, and shows you how your money is distributed in each sector, helping you diversify.
The reports it can generate are pretty cool too. Since they aggregate a staging number of transactions nationally (somewhere in the near-hundred billion dollar range) they can actually show you how you compare with U.S. averages. Apparently I spend almost three times the national average at Wendy’s – but about a tenth on Comcast (in other words, I have my priorities straight). Plus you can check out things like which merchants you spend the most money on (damn you Amazon.com!) or just where your money goes overall (1/3 just in Housing expenses in September? Ouch.)
If you’re looking for a damn straightforward way to manage your money and stick to a budget – Mint.com has a lot to offer you. Give it a try, you won’t be disappointed.