Personal finance is one of those aspects of our lives where accountability and objective measurement are of outmost importance. Any financial book or blog, whether it is about becoming rich, starting your own business, or getting out of debt, will mention financial discipline, and in particular, budgeting and tracking expenses, as one of the prerequisites for success. The true financial freedom implies that you have control over the money, not the other way around, and the accurate tracking of your expenses is the first step towards the freedom. The tracking also helps you to ensure that you live within your means and to meet your savings goals. There are two tools that I have been personally using to track my financial fitness, and in this post I will briefly discuss the first (and primary) one: Mint.
There are tons of virtual ink spilled by folks on the Internet describing Mint.com, so I will keep this post short. Mint is a web-based free online personal finance platform that allows you to track your transactions across multiple accounts, including checking and savings, credit cards, retirement and investments, all conveniently aggregated, analyzed and visually summarized in one place. To set up an account, you enter user IDs and passwords to all of your above mentioned accounts (banks, credit cards, stock trading, etc.); you will need to perform this operation only once. After that, all your financial transactions will be downloaded, categorized and aggregated automatically, and every time you log in, you will be presented with a snapshot of all your financial activities, all conveniently shown on one page. Every transaction can be categorized and compared against the budget benchmarks. The main advantage of the Mint is that tracking is automated for you, as long as you are using credit and debit cards. The ATM withdrawals are recorded automatically, too, but the actual transactions in cash have to be logged in manually. This, however, can be done easily, especially if you have Mint mobile app. You also receive alerts on certain transactions and activities (e.g., if you are about to miss your credit card payment deadline or your bank account balance is low).
There are two neat features in the Mint that I especially love. First, you can always export and download your transaction data in Excel (CSV format) and analyze it yourself. Believe me, you can gain a lot of interesting insights about your spending patterns that way, and in one of the following posts I will give a couple of examples. Second, you can compare your spendings in any given category against the average spending by other Mint users in the US (it used to be that you could narrow the comparison down to your state, but not anymore). For instance, from the charts below you can see that in July I spent less on music and more on mobile phone, compared to other Mint users:
There are also two drawbacks of Mint, although very minor, in my personal opinion. First, your investment accounts (e.g., Scottrade or Fidelity) are updated only after markets are closed, so to have a complete picture of your accounts you may want to log in before 9:30 am and after 4 pm just to sync your investment transactions. Second, the automatic categorization of the expenses sometimes is not as accurate, as one would expect. Naturally, it has the greatest difficulties with classifying purchases at little independent stores and abroad. This does not bother me much, though as I prefer to go over transactions at the end of each week anyway, so I tag them manually, if necessary. A small price to pay for the convenience of having all your transactions automatically aggregated in one place. And having web-based software is much more convenient than locally installed programs like Quicken: I can literally keep an eye on my financial activities on the go! Overall, I am very happy with Mint, and would definitely recommend it to anyone who is interested in having a finger on their financial pulse. Give it a try!
Are you using Mint? How do you like it?