July 18, 2011
Mint.com – The Evolution of Personal Financial Software on the Web
Most successful investors start out as diligent savers. Saving is the tried and true path to reach your financial goals. For young people, the goal may be a car, a trip or an education. As we get older our goals expand to include buying a home, starting a family, paying for a child’s education and saving for retirement. Achievement of any savings goal is dependent on your ability and willingness to spend less than you make.
After my first full time job in 1990, I had to take responsibility for managing my own finances. My first budget was quite easy to write since I made very little income and had very few expenses. However, the act of writing down my goals was profound. As life got more complicated I continually searched for easier ways to keep track of my income, expenses and savings goals. Early spreadsheets led to the personal finance software Microsoft Money. Soon, Microsoft and its main rival Quicken dominated the personal finance software market. I spent many hours entering my growing number of transactions. The software became increasingly complex by adding features that I rarely needed or used. Ease of use was not a top priority for either company.
My frustrations were shared by a young engineer from Duke University named Aaron Patzer. In 2005 Patzer was inspired to create Mint.com as an alternative to the frustrating and difficult Quicken product.
Patzer created a simple and easy to use online interface for keeping track of financial transactions. His timing was perfect as online banking had exploded across the country. Patzer leveraged the availability of all that online data to bring the consumer a free resource that could easily and intuitively track all of your transactions electronically. By 2009, the company had 1.6 million users and was quickly bought by Quicken for $170MM. Today, Mint.com boasts about 5 million users. Some of the most impressive features of Mint.com are:
Tracking expenses – When you log onto Mint.com all of your transactions from your various accounts are immediately imported into your Mint.com account. The transactions are categorized for you automatically or you can enter your own categories which will be recognized going forward for future similar transactions.
Overview page – Once your accounts are synced online, you have a quick look at the current balances of all your accounts on one page. Scroll down to see the sum of all your assets, your current liabilities and net worth.
Budgeting – You can create your own budget or let Mint.com do it for you by tracking your expenses over time. It uses inertia in your favor by building a budget based on spending history.
Goal setting – You can set your own savings goals. Mint.com has 10 savings goals that span a saver’s life cycle. Use the ones that most interest you and ignore the others.
There are a few drawbacks to consider. The business model for Mint.com relies heavily on advertising and promotional offers from various sponsors. For example, if Mint.com records a transaction fee in your checking account you may see an ad for a “free checking” account from XYZ Bank. It’s not clear that such a business model is sustainable, but Quicken clearly saw the future of personal finance being on the web.
I am currently a devoted user of Mint.com. At first I was apprehensive about this online startup having access to my online banking, credit and investment information. I tested the waters with one checking account. Slowly I began to see the power of consolidating all of my accounts in one easy to use online location. My Mint.com account now keeps track of 2 checking accounts, a health savings account, 3 credit cards, a mortgage, a brokerage account and several IRA accounts at Charles Schwab.
I do not believe anything can be 100% secure online, but Mint.com does boast bank level encryption to secure your information. It’s a “need only” connection, meaning they cannot access your accounts online to perform actions such as an unauthorized withdrawal or transfer.
I would highly recommend Mint.com for anyone who wants to track their expenses or transition from one of the PC based software options like Quicken.
Please note that Rockbridge Investment Management has no affiliation with or financial interest in Mint.com and accepts no liability arising from the use of their services.