Reader Andrew read my series on looking for alternatives to Microsoft Money (I ended up staying with Microsoft Money after all). He asked me why I use a desktop application such as Microsoft Money or Quicken as opposed to a new generation web and mobile tool such as Mint or Personal Capital.
I told him it required a long answer. So here it is, for Andrew, and everybody else.
First of all I want to say desktop versus web or mobile isn’t the critical factor. With the way computer applications are written these days, you can do pretty much the same with a native interface or a web interface. In many ways a web interface looks better. My comments are based on the desktop, web, and mobile financial management applications as they are implemented today, not their theoretical capabilities.
Second, Personal Capital also offers investment consultation and portfolio management service. I’m only looking at its financial tracking tools, not its investment advice or portfolio management service.
History is a big reason why I use Microsoft Money. I started using it when it was Money ’98. I’m familiar with it. I know what works and what not to touch. Other people have the same history with Quicken.
After Microsoft discontinued development, Microsoft Money became a free download for everyone. You need some add-on workarounds to make downloading transactions and security prices work. Quicken costs a little money. If you upgrade every three years it’s pretty minimal, and it works out of the box.
Microsoft Money and Quicken keep your data local on the installed computer, which can be a plus or a minus depending on how you see it.
Quicken has an optional mobile app. There is no mobile app for Microsoft Money.
Mint and Personal Capital on the other hand are always online. You also have a mobile app. You have to give them the passwords to your online banking, credit cards, and investment accounts. They encrypt your passwords and make them secure with special hardware and procedures. See How do mint.com and similar websites avoid storing passwords in plain text? on Quora. David Michaels, then VP of Engineering at Mint.com, received a patent for the encryption system he set up (US Patent 8,566,952).
Although I don’t use Mint or Personal Capital right now, I would be comfortable with using them.
Source of Truth
Who is the source of truth is perhaps the biggest difference between the desktop software Quicken and Microsoft Money and the new generation applications Mint and Personal Capital.
Quicken and Microsoft Money began in the era before constant connectivity and updates. If you only get your bank statement once a month, you would enter your transactions during the month. That’s how you know your balances. You are the source of truth.
Mint and Personal Capital sync with your accounts online. They show you the transactions as reported by your bank, your credit cards, and your investment accounts. They see those financial institutions as the source of truth.
Although Quicken and Microsoft Money can also download your transactions, they maintain the philosophy in who’s the source of truth. You can make entries ahead of time and you can project your account balances. You are still the source of truth.
Which to Use?
Which one to use ultimately depends on how you want to use it.
If you are more interested in the current snapshot and history, Mint and Personal Capital work very well. They tell you what you have now, how much you spent on what last month, your current portfolio allocation, how your net worth grew over time, etc. Mint emphasizes more on bank and credit card accounts, spending, and budget. Personal Capital emphasizes more on investments and net worth.
If you are also interested in projecting into the future, tracking things not held at a financial institution, or making more fine-grained entries, then use Quicken or Microsoft Money. For example you can track how much of your mortgage payment this month is interest and how much is principal as opposed to just lumping them as housing expense. You can track the cost basis of your each investment purchase and verify that your brokerage firm got it right when you sell. Again, it’s that source of truth philosophy.
Acting as the source of truth comes with responsibilities. It’s definitely more work with Quicken or Microsoft Money. Not that many people want to be the source of truth. It’s part of the reason Microsoft discontinued Money and Intuit sold Quicken.
[Photo credit: Flickr user Alastair Green]
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