Financial management programs helpful, but they take work

Personal Computers

January 26, 1998|By Stephen Manes | Stephen Manes,New York Times News Service

IF YOU ARE willing to let a computer program try to help set your financial house in order, the arrival of your January bank statement heralds the best time to do it. For reasons involving the Internal Revenue Service, getting your records organized for the entire year may help reduce the pain on April 15, 1999.

Both Intuit's Quicken 98 and Microsoft Money 98 can do a good job of tracking accounts, assets and budgets, but "computerized" financial management is not the same as "effortless." Getting the most from either program requires spending plenty of time entering data and mastering unfamiliar conventions. I remain unseduced, preferring simpler strategies, such as keeping track of income and tax deductions in a spreadsheet or database, and rumor has it that others rely on such high-tech devices as pencils, papers and shoe boxes. But millions of users of personal finance programs have come to rely on them.

This year's version of Money has received a face lift and a major overhaul that brings its features more in line with its competitor's. Quicken has long been the market leader, so far ahead that its improvements this year seem incremental, but it still seems to come out ahead. Few Quicken users are likely to find a good reason to switch.

Both programs run with Windows 95, but versions of Quicken are available for Windows 3.1 and the Macintosh. Money offers a standard edition for about $30. The version I tested, a financial suite with extra features, costs about $50. Quicken's basic version costs about $40, a deluxe version with extra features (the one I tested) runs about $60, and there are suite and home-and-business versions for about $90. Users of earlier versions of both programs can get rebates for upgrading.

"To use Money effectively, you need to keep up with your data entry," the manual says. Truer words were never spoken. To get the most out of this type of software, every check, deposit, withdrawal, credit card slip and security transaction must be entered and categorized, which means a lot of upfront effort before you see any semblance of a reward.

The programs do remember much of what you have done before and make it fairly easy to handle repeating entries, like a monthly cable television bill. By using the programs for online banking, you can simplify things by paying bills and downloading statements over a modem, but at a minimum, you will have to type in the names of those to be paid for any checks you write and look carefully for problems like doubled entries. More and more banks, credit card providers and financial services participate, but many still do not, and most charge monthly fees for the service. Some banks offer their own online service with charges lower than those they impose if you use Quicken or Money.

Money has a clean new look that resembles a Web browser; Quicken's screens remain cluttered and ugly. Both organize information in quirky ways that require some effort to understand and master. But Quicken tends to make smarter decisions. When you enter a deposit, it knows enough to propose an income category rather than one for expenses. Its debt-reduction planner offers suggestions for cuts in spending and recommends paying off high-interest loans first, two good ideas that Money's planner ignores. When Quicken reminds you to back up your files, it recommends using a floppy disk; Money's RTC faster but riskier backup default is to make a copy of the file on the hard drive.

Some of what the programs deliver is surprisingly unsophisticated. Both offer calculators that figure the break-even point in refinancing a mortgage by simply dividing loan fees by monthly payment savings. That ignores such important points as tax considerations, the amount of payment toward principal and the disadvantages of trading in a short-term loan for a longer one. Their retirement planning calculators fudge complex tax issues and, with the determined optimism of Pollyanna, refuse to let you examine the potential effects of deflation on your holdings and expenses. These oversimplifi- cations shortchange users who expect programs like these to tackle the complicated calculations that computers do so well.

Both programs offer extensive ties to the Internet, including the ability to download updated data, including stock quotes.

Both programs come with home inventory software that can come in handy in the event of fire, flood or theft. Quicken's is more loosely integrated but far more detailed, helpful and easy to use.

But nowhere in either program could I find a calculator that could answer the important question: Will this kind of software really save you as much time and effort as you put into it?

Pub Date: 1/26/98

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