It seems every day there are new headlines like “5 Best Personal Finance Apps for Your Wallet!” and “Two Financial Apps Go Head to Head. Which is Best For You?”
The headlines do some pretty standard, surface-level copywriting tricks:
- They use a specific number. Five. Digestible. You’re curious. Five? Not four or six? No. Five.
- They (weakly) tie it back to you by mentioning “your wallet” or which is “best for you.”
- They spark a bit of curiosity by pitting two apps “head to head.” We all love a great competition.
- The articles then go on to discuss…features.
All this talk of features. When do we focus on the result of using the software?
Here’s a thought: The best personal finance software helps you reach your personal finance goals.
That is all.
Our Goal is for you to Reach Your Goals
If you’re already reaching all of your financial goals, don’t change a thing!
However, if you’re looking for positive financial change, whatever your situation, we’ll help you.
- If you’re habitually over drafting, we’ll help you stop.
- If you can’t seem to pay down your credit cards, we’ll help you start.
- If you and your spouse or partner fight about money, we can help with that.
- If holiday spending completely stressed you out last year, we’ll get you to a spot where it, you know, brings joy instead.
- If you just can’t seem to get ahead, we’ll help you get ahead.
- If you have a wildly fluctuating income, we’ll help you stabilize it.
- If you don’t know where to start, we’ll help you start.
No talk of features. This is about life!
In the end, your software is just a tool and nothing more. As my friend Mr. Money Mustache put it for me:
“The financial battle is fought in the real world—cutting out wasted expenses and building a better life for my family. So I prefer to understand and optimize my current income, expenses and savings rate.” – Mr. Money Mustache
I tried to pigeon-hole his answer by getting him to start thinking about software. He didn’t take the bait. He saw behavior as the end game. The software simply supports behavior change.
MMM isn’t alone. J. Money from Budgets Are Sexy (are they not!?) was also quick to discount the role of software, and emphasize the role of…YOU.
“Software can do amazing stuff, but never forget it requires a brain and decision making in the process.” – J. Money
Where Features Lead Astray
I love technology. Love it. We have lots of “technology” coming. It’s going to be great.
Strangely enough, new software features may be just what you’re looking for, but not just what you need.
Set it and Forget it
Personal finance software that promotes the idea of everything being “hands off” will produce very little positive results in people needing a hands on approach.
With my investments this works. I set them on autopilot and open the year-end statement. With my spending, this is disastrous. If I forget about my spending, I grow complacent, weak-kneed in the face of marketing slogans, and less scrutinizing of my purchases.
My friend Jeff Rose, a certified financial planner (and founder of Good Financial Cents and Life Insurance by Jeff) had this to say about personal finance software as it relates to changing your spending. It’s fridge-magnet worthy:
“Ultimately, it’s up to the individual to make the change happen.” – Jeff Rose
You won’t be making any changes if you’ve forgotten there were changes to be made.
Analyze, Analyze! Analyze!!!
Selling personal finance software without a fancy pie chart screenshot is nye to impossible. You think you need the fancy charts. You think you’re doing something when you look at them, change the timeframe, exclude a few categories…
Hey, we’ve all been there. It’s the thing you’re doing that’s easier than the thing you should be doing.
For instance, before sitting down to continue working on this post, I: went to the bathroom, got some water, hung a whiteboard, had lunch with a friend, and opened a bank account. And that was just Wednesday. I also managed to fill Tuesday and Monday with anything-but-writing-this-blog-post things.
That’s the danger with lots of analysis without some accompanying action. We can click around, maybe release a few endorphins, but are we actually taking action to improve our finances?
The fanciest financial tools still require a solid foundation in sound behavior. The action part of things.
Jim Collins gives fantastic investment advice over on his blog. Bookmark his epic series on stocks. He’s a dear friend of mine, so I asked him what kinds of fancy features would be required for personal finance software to really land the title as “the best.”
He went metaphoric on me. I love it:
“You could put me in a shop with the finest and most complete collection of woodworking tools and, with my lack of skills, I’d craft furniture fit to embarrass a six-year-old. Antonio Stradivari produced his famous violins in the 1600s using hand tools.”
“Once you have the skills to reach financial independence, the right software can help carve the path. Until then, your results are likely to embarrass a six-year-old. No matter how good the tools you have.” – Jim Collins
Behavior change. Fundamental changes in your thinking. The late Stephen R. Covey would call what we’re going for a paradigm shift.
Tweak This. Tweak That.
One of YNAB’s Four Rules is to tweak. Roll with the punches. It’s important. You should be able to change your mind as new information and events unfold.
One of my favorite features of YNAB is the Budget. I love that so much information is available without a lot of fiddling. I love that I can move money easily. I love that I can quickly overwrite a value. It’s as simple as typing and hitting Enter.
However, are we all not a little bit guilty of endlessly tweaking our budgets, fiddling with the superficial instead of diving deep and tackling any tough, core issues?
With your analyses, you’re ingesting and assessing information and feeling productive. On the Budget, you’re endlessly rearranging information and pretending it will make a meaningful improvement to your finances! 🙂
Endlessly tweaking eventually lands you right back where you started, because you skipped doing the hard stuff that forces positive change.
The Best Financial Software Drives Personal Change
Honestly, the software can be a pencil and paper. It’s just awareness kicking you into action. Perhaps a few examples to illustrate my point:
Easy: Viewing a report showing you that grocery spending is 35% higher than your goal. Maybe you even feel kind of bad about it.
Hard: Assessing your grocery shopping routine, committing an evening per week to planning meals, and cutting grocery trips from three times to once per week.
Easy: Calculating your retirement savings rate to be 11%.
Hard: Preparing all of your work lunches for an hour on Saturday so you can put the $250 saved toward retirement.
Easy: Reordering your categories so the most important are on top. Reordering them again based on some percentage-breakdown system you found on the internet. Reordering them again into Needs/Wants/Savings.
Hard: Recognizing that your “car payments” category represents 20% of your entire budget, and downsizing to a car (and smaller payment) to reclaim a chunk of that cash flow.
The Best Financial Software Delivers Results
Be honest with yourself about the results you’re trying to accomplish. Evaluate any tool under the microscope of results. Forget about the features for a moment. Forget about the eye candy. Ask yourself what changes you really need to make, and then find the tool suitable for the job.
Years ago, it was a ledger book.
Today, for me, it’s YNAB.