Wayne Thorp recently spoke at the 2015 AAII Investor Conference. For information on how to subscribe to recordings of the presentations, go to www.aaii.com/conferenceaudio for more details.
As we start a new year, many people resolve to get a better handle on their financial situation. The current economic climate makes such an undertaking even more important.
Personal finance programs, for the most part, allow you to track your budget, spending, banking, bills, savings, investment, retirement plans, and debt levels, all in one place. By combining with the power of the Internet, many personal finance programs allow you to pay bills electronically, and download data from financial institutions to reconcile account balances. Furthermore, you usually have the ability to get current financial data to track the values of your investment portfolios. The benefit is that all of this information is stored in a singular program.
Today, arguably the two most widely used personal finance programs are Microsoft’s Money Plus and Intuit’s Quicken. While both programs come in multiple versions, this article will outline the capabilities of the most robust versions of both packages—Money Plus Premium and Quicken Premier. In addition to discussing the key offerings of both programs, we will tabulate an overall winner based on our head-to-head comparison using a check-box scoring system. Beyond awarding points for functionality, we also consider ease-of-use and support resources in the final tabulation.
Historically, both Intuit and Microsoft have followed an annual update schedule for their programs. However, this past August Microsoft announced that there would not be a Money Plus 2009 and that the company would no longer be releasing a new version of Money on an annual basis. Microsoft cited customer feedback as the main reason for the change, which suggested annual incremental updates weren’t necessary. However, given the challenging business environment Microsoft is facing, the choice was more than likely an economic one. As a result, Microsoft Money Plus 2008 is the latest version available and served as the basis for this article. Furthermore, they are moving to a download-only model whereby buyers will download the program after purchase.
Intuit did release Quicken 2009, its annual update to this personal finance software. However, when you hear Intuit CEO, Brad Smith, refer to Quicken as “yesterday’s news,” it makes you begin to wonder about its future as well. We will have to wait until this fall to see what Intuit and Microsoft have planned for their personal financial programs.
Over the history of both programs, the updates for Quicken and Money have been incremental in nature, meaning that year-to-year the changes are usually more enhancements to existing features than wholesale changes.
For those familiar with Quicken 2008, there are several minor changes designed to improve ease-of-use and navigation. First, Intuit did away with the setup interviews that you used to have to go through so the program could determine what functionality you required. Instead, on the new tabbed navigation, you can go to the Setup tab and activate the features you wish to use. Also with the new navigation tabs, all of the financial centers—banking, investing, and net worth—have their own tabs.
Quicken’s new bill management center shows you what bills are coming due in the next week, in the next two weeks, or in the next 30 days. On the bills tab you can enter a bill and when it is due.
The new Quicken sidebar includes the “to do” tab, which shows you the tasks you need to perform; Guide Me gives you advice about the current task; and the Community and Services tabs link you to the Quicken Web page where you can find additional user resources.
In 2008, Microsoft renamed Money as Money Plus and made a series of additions and enhancements to the software. Money Plus added a variety of “insights”—customizable alerts. The Bills Insights alert you when bills are due; Spending Insights help you stay on top of your spending within specific categories; and Cash Flow Insights provide an easy way to monitor your spending and deposit patterns.
Money Plus also added the ability to attach links to important files, including check images and scanned receipts—a feature Quicken introduced with its 2007 versions.
Finally, Money Plus continues its integration with Microsoft’s top-flight MSN Money Web site (moneycentral.msn.com). The new MSN Money market dashboard allows you to track U.S. markets, Treasury markets, currencies, commodities, and world markets from within the program. In addition, Money Plus allows users to get the top 10 daily updates from MSN Money’s StockScouter rating service, and see Morningstar ratings for exchange-traded funds in the MSN Money ETF center.
Both Quicken Premier and Money Plus Premium have menu-driven installations, typical of most software packages today, and I was able to install both programs on my Microsoft Vista Ultimate laptop without incident. Note that both Quicken Premier and Money Plus Premium will only run on Windows XP SP2 (or later) or Vista. For Mac users, there is not a Mac-compatible version of Money Plus. Historically, Quicken Mac was a scaled-down version of the more full-functioned Windows versions. However, at this time there is no 2009 version of Quicken for Mac. In fact, the latest version for Mac users was 2007.
When installing Money Plus, I was pleased to see that you no longer need a Windows Live account in order to log in to the software. However, you can still set up a password to access the program and protect your account information.
Upon opening Quicken Premier 2009 for the first time, the program walks you through creating your Quicken data file. If you are upgrading from a previous version of Quicken (post 2005), the program will convert your existing data files for use with 2009. You can point the program to an existing data file already on your PC or restore a Quicken data file from a disk or CD.
Once you have created a data file, you are taken to the Quicken Setup Center. As mentioned earlier, the Guided Setup/Express Setup of earlier versions has been replaced with the Setup Center, where you can enter information about yourself, create accounts, and create categories to track your spending habits. You can also tell Quicken what features you want to use; the program will only provide the tabs for those areas that pertain to you.
Opening Money Plus after setting up Quicken Premier, it was immediately apparent how easy Quicken has made it to navigate the program (but that is not to say that Money Plus is difficult to navigate). Money Plus has the look and feel of the MSN Money Web site, and the home page of the program provides an overview of your accounts. The Money Plus home page is customizable, meaning you can add or delete content that interests you as well as change the layout of the home page itself.
If you are upgrading from an earlier version of Money, the Money Plus installation will detect the earlier version, create a backup, and convert your existing data for use with Money Plus.
Money Plus Premium 2008
System Requirements: Windows XP SP2 or later or Vista; 30 MB hard-disk space (+200 MB to install updates); Internet access
Quicken Premier 2009
System Requirements: Windows XP SP2 or later or Vista; 100 MB hard-disk space, Internet access; Internet Explorer
Just like any other type of financial software, Quicken and Money Plus require data in order to be useful—in this case, your financial data. While both programs allow you to input data manually, this can be a tedious endeavor. Luckily, both programs allow you to download your financial data directly from your financial institutions.
The data format used by the majority of financial institutions today to securely exchange financial data over the Internet is called Open Financial Exchange, or OFX. OFX was created in 1997 by a consortium started (not surprisingly) by Intuit, Microsoft, and CheckFree.
In order to import data directly from a financial institution into Money Plus, it must support OFX. Quicken uses a variant of OFX, called Quicken Financial Exchange or QFX. From reading various Quicken user message boards, it is important to point out that just because an institution supports OFX does not mean that you will be able to automatically import the data into Quicken, since it supports the QFX variant. You may wish to contact your financial institution beforehand to see if they support the QFX data format in order to download its data directly into Quicken.
For convenience and security, you can store your on-line account information in Quicken’s Password Vault so you do not have to re-enter the information every time you want to download balance and transaction data from your financial institutions. Otherwise, you can opt to not save the information, meaning you will need to enter your financial institution’s password each time you download transactions.
With Money Plus Premium, the account setup is relatively easy, but not quite as straightforward as it is with Quicken Premier. Money Plus, similar to Quicken, uses the same user names and passwords when downloading on-line transaction data from your financial institutions. One nice feature, in theory, is the ability to dictate how many days of past transactions you wish to include for your accounts. While you have the option of downloading “all” transactions for an account, in reality the transaction history you can download is set by the financial institution. In most cases, you can download no more than a six months’ worth of transactions with both Quicken and Money Plus.
When downloading my financial data into Money Plus from my bank, credit card companies and broker, the only problem I encountered was with my 403(b) account. Instead of downloading all transactions, I was only able to download the current holdings.
Many people using personal finance software such as Quicken or Money Plus are trying to identify spending habits and establish financial goals. In order to help do this, Quicken and Money Plus allow you to classify transactions using categories.
Categories allow you to break your finances into more detailed pieces, which in turn allows you to get a more detailed picture of your income and spending patterns. Income categories may include salary, consulting income, part-time income, or gambling winnings. Likewise, expenses may include mortgage payments, cell phone bills, or electric utilities.
Subcategories allow you to further clarify your spending within a broad category classification. For example, under the category food, you could set up subcategories for groceries and dining out.
Both Money Plus and Quicken attempt to categorize the financial transactions you download. Neither program is 100% successful, although Quicken Premier did seem to do a somewhat better job. In any case, both programs allow you to alter the category assigned to a transaction. Furthermore, you can assign subcategories to analyze your spending in greater detail. Lastly, both Quicken and Money Plus allow you to create customized categories and subcategories.
With the evolution of on-line banking and on-line bill payment, Money Plus and Quicken offer centralized bill tracking and on-line bill payment features. These features allow you to see whether you have enough cash on hand to pay upcoming bills as well as avoid late fees by receiving reminders of bills.
After setting up your financial accounts within Quicken, you can set up bill reminders on the Setup tab. Here, you enter in all the specifics—who to pay, the amount, when it is due next and how often it comes due, etc. You can also categorize a bill just as you can with transactions within the account register. Once you set up your bill reminders, the timeline on the bills tab displays upcoming bill reminders.
Using Bank Bill Pay or Quicken Bill Pay, you can also pay bills as reminders come due within the program. If you already pay bills electronically through a bank, you can set up those same payments within Quicken. Alternatively, you can subscribe to Quicken Bill Pay for $9.95 per month, with up to 20 free transactions the first month. Since some banks offer free bill payment, this could be a cheaper alternative to paying for Quicken Bill Pay.
With Money Plus, you have two options for tracking your bills. Essential Bills streamlines bill scheduling and payment by providing a snapshot of future bills. Advanced Bills provides more options, such as making electronic transfers or tracking income so you know how much money is coming in relative to the bills that are going to be due.
Money Plus also allows you to pay bills electronically. However, Microsoft does not offer an on-line bill-paying service such as Quicken Bill Pay. This means you will either have to enroll in your bank’s on-line bill payment service or sign up with a third-party payment service provider.
Beyond merely tracking your financial accounts and providing reminders of bills you need to pay, personal finance programs are a means for you to get a handle on your financial future by helping you to create budgets and achieve financial goals.
As we touched upon earlier, both Money Plus and Quicken Premier assign budget categories and subcategories to transactions within their respective account registers. Speaking from experience, it is tempting to skip this seemingly innocuous step when going through transaction data. However, you would deprive yourself of making full use of other features of both programs in the future. Mainly, you will not get an accurate reflection of your spending habits, nor will the budgets and financial plans these programs create reflect your real financial situation.
Money Plus offers two budget tools—the Savings and Spending Budget and the Essential Budget. The Savings and Spending Budget is more of a “total” budgeting approach, helping you with retirement planning, debt reduction and irregular expenses, along with your basic monthly expenses. It is based on the budgeting strategy developed by the editors at MSN Money, which advocates holding regular, recurring expenses—such as basic food and clothing needs, essential household expenses, and bills—to 60% of gross income, allocating 10% each to “irregular” expenses, savings and debt, retirement, and “fun money.” However, users can choose the percentages that best fit their situations. The Savings and Spending Budget tool tracks your spending behavior within the broader budgetary categories—for example, committed expenses or savings and debt—along with the more specific categories you select.
With the Essential Budget, you start with your net income and track expenses versus income. It is designed for day-to-day budgeting instead of more detailed, long-term planning. With this tool, you are able to discern quickly whether your income exceeds your expenses, compare actual monthly spending to budgetary targets, and select those expense categories to watch more closely using the Spending Tracker. With the Spending Tracker, you can monitor your spending within selected expense categories. The tracker shows up on the Budget summary and program home pages.
Within the Planning area of Quicken Premier, you have two budget choices—automatic and manual. When you select automatic budget, Quicken creates a budget based on your existing data. It is advisable to use this tool only if you have several months of transactions. Otherwise, the budget that the program creates will not be realistic. You can specify the date range Quicken scans and a budgeting method based on average spending amounts over a variety of periods or based on monthly or quarterly details. If you don’t have a sufficient amount of data to create an automatic budget, you also have the choice of creating one manually.
Beyond their budgeting tools, Money Plus and Quicken offer a number of other planning tools aimed at helping you reduce debt, create a lifetime financial plan, and save for specific financial goals. These tools look at your current financial situation, based on the data you have downloaded and provided—including current income, savings and investments, home or rental property, loans and debts, and current expenses. Based on assumptions such as life expectancy, expected inflation, rates of return on investments, expected contributions to retirement accounts, expected increases in your income, and any expected pensions, the programs will develop plans to meet your desired financial goals.
Looking at endless columns or rows of data can become confusing over time. Ideally, any investment or financial software will provide a feature that pulls together the underlying data and generates a report with insight into the data. Within Quicken and Money Plus, there are a number of reports that offer summaries and breakdowns of your financial information.
Money Plus offers both Essential and Advanced reports, depending on your needs. Essential reports provide snapshots of your spending by category or payee, your net worth, and your amount of credit card debt.
Advanced reports in Money Plus cover several categories:
Monthly reports allow you to compare your income and expenses based on actual monthly data entered into Money Plus. The monthly reports offer insights into your cyclical spending habits, how much you spend in a given month, and on what. You can also see how much you saved in a given month, how well you are following a debt-reduction plan suggested by Money Plus, and the performance of any investments you have entered into the program.
Users of Money Plus can also customize reports to cover specific time periods as well as create favorite reports for easier access. Finally, with Money Plus you can export report data to an Excel spreadsheet for further manipulation and analysis.
Quicken Premier’s Reports & Graphs Center offers reports covering seven different areas:
Of particular interest are the EasyAnswer reports, which are essentially pre-customized versions of built-in reports and graphs designed to answer some of most common questions we ask about our finances—including where you are spending your money, what your savings habits are, what your net worth is, and how well you are sticking to your budget.
While both programs offer a bevy of reports, I was slightly more impressed with the breadth and look of the reports provided by Microsoft Money Plus.
While not intended to be tax preparation software, Quicken Premier and Money Plus recognize that taxes can impact finances and, thus, should play a role in the financial budgeting and planning process.
Given Inuit’s experience with TurboTax, arguably the most popular consumer-level tax preparation software, it is not surprising that Quicken’s Tax Center is a bit more robust than the tax tools available with Money Plus.
Within Quicken, you can set up your paycheck, state and federal payroll deductions, and pretax deductions, insurance deductions, etc., as well as assign tax-related categories for your transactions (Quicken automatically does this for you with investment accounts). When it comes time to prepare your tax return, you can import Quicken data into TurboTax, which is where the time spent properly categorizing your transactions becomes apparent.
Quicken also offers several wizards to help you pay the right amount of taxes given your financial situation. The deduction finder covers several different deduction types, such as employee, homeowner, and medical. When you select a deduction type, such as homeowner, the wizard lists deductions you might qualify for and asks you questions about them. Based on your answers to these questions, the wizard then provides an action plan with information on how to earn additional tax deductions.
Quicken’s Tax Planner helps you estimate your current tax-year tax liability. Based on this estimate, you may wish to adjust your payroll exemptions. The Tax Planner also provides tools that allow you to perform “what if” analysis to judge the tax implications of certain tax-related activities, such as selling stock or buying a home.
Quicken offers a better array of tax-related reports, including a capital gains report, a tax schedule displaying tax-related transactions subtotaled by tax form line, and a tax summary with tax-related transactions subtotaled by category. The program can also generate IRS Schedules A, B, and D, and it offers seamless integration with Intuit’s TurboTax tax preparation software and the TurboTax Web site. Within Quicken, there is information on how to export data to TurboTax and import last year’s TurboTax data into Quicken.
Like Quicken, Money Plus Premium is equipped with a deduction finder that suggests potential deductions based on your answers to a series of questions. Once you have set up your deductions, Money can monitor your tax-deductible expenses in order to estimate your tax liability. This helps you know whether you are having enough taxes withheld from your paycheck.
Money Plus Premium also allows you to manage each tax deduction line and review the transactions you import into the program. The program can also generate an estimate of your taxes for the year to help you decide whether you need to set aside money or if you can expect a tax refund for the year.
When it is time to file your taxes, you can print reports to refer to while filing by hand or export your data to a tax preparation program. Money is a bit lacking in the tax reports it offers, but you can print reports displaying tax-related income and expenses, capital gains or losses, loan interest, or an itemized list of tax-deductible expenses.
Any investments we hold, whether they are in a tax-deferred retirement account or in a regular taxable account, affect our overall financial position. For some, these investments may be providing current income, used to cover day-to-day expenses. For others, investments contribute “only” to current net worth, as funds will not be tapped into until after retirement. However they may be classified, investments influence your finances, including your taxes and long-term financial goals. As a result, both Quicken Premier and Money Plus Premium have expanded their portfolio tracking and analysis capabilities over the last several years.
Quicken not only tracks your investments, it analyzes your investment activities and helps you generate reports at tax time, calculate capital gains on mutual fund distribution reinvestments, and helps you decide whether your portfolio is overexposed to a given investment or asset class. Depending on your stage in life, Quicken can offer detailed investment tracking or simply an overview of your holdings. If you are generating investment income—capital gains, dividends, or interest—chances are you would opt for detailed investment tracking. However, if you are only investing in a 401(k) or 403(b) retirement account, Quicken’s 401(k) tracker is an easy way to track and update your account balance to see exactly where you stand.
Overall, Quicken Premier allows you to set up several different investment accounts—standard brokerage, IRA (traditional, Roth, educational, SEP, or simple) or Keogh, 401(k)/403(b), and 529 college savings plan. Within your investment accounts, Quicken handles stocks, mutual funds, REITs (real estate investment trusts), bonds, employee stock options, and cash. Just like with a savings or checking account or credit card, you can set up Quicken to download transaction data directly from your broker. However, again, keep in mind that you will probably only be able to download a few months’ worth of transactions. Therefore, you may face a lot of manual data entry if you wish Quicken to have the full picture of your investing history.
Quicken Premier also includes several investment-related reports—capital gains, investing activity, asset allocation, investment income, performance, transactions, portfolio value, and portfolio value & cost basis. You can customize these reports and generate them over a variety of time periods.
Since both Money and Quicken expanded their capabilities to include portfolio tracking, Money has held the edge between the two. The portfolio manager in Money Plus Premium is exactly the same one found at the MSN Web site (discussed later) and is one of the best on-line portfolio trackers available.
Money Plus Premium focuses on the investment tracking and analysis aspect, with more of a tertiary thought to the tax implications of your investments. Money Plus Premium also handles a variety of investments and investment accounts—stocks, mutual funds, exchange-traded funds, bonds, employee stock options, and equity and index options. Investments that you have imported from your financial institutions are automatically added to the portfolio manager. The layout of the portfolio manager is customizable, with 11 different data views from which to choose, including performance, fundamental data, stock options, and bonds. If you wish, you can also create and save your own data views.
As with Quicken Premier, Money Plus Premium has a 401(k) Manager, which only tracks the quantity and current price of the holdings in your 401(k) or 403(b) retirement accounts. The manager also provides links to 401(k)/403(b) investing tips, mutual fund comparisons, and retirement planning research.
Microsoft Money Plus has also partnered with GainsKeeper to help you manage the tax implications of your investment portfolio. A what-if tool illustrates the tax impact of purchasing or selling a stock and GainsKeeper can monitor your cost basis by lot as well as provide Capital Gains and Losses Schedule D for tax filing.
Both Money Plus Premium and Quicken Premier have a great deal of Internet connectivity. This includes cross-pollination with the MSN Money Web site (moneycentral.msn.com) and Quicken Investing (investing.quicken.com), respectively.
Given its design, it is often hard to tell whether you are operating within Money Plus or the MSN Money Web site. MSN Money is a comprehensive one-stop investment super center, offering analysis tools, research, company reports, current and historical financial data, company and market news, investment advice and columns, financial planning resources, and educational materials. The site also offers one of the best on-line stock screeners, within the MSN Money Investment Toolbox.
After falling by the wayside the last few years, a new Quicken Investing Web site has recently re-emerged, with mixed results. Within Quicken Premier, you are supposedly able to link the investments you have set up to the new site. After having no luck bringing up my investments at the site, and reading numerous user complaints about the portfolio tracker, I can see why the site is called beta.
Beyond the basic portfolio tracker, the Quicken Investing site does offer a couple of unique items for individual company analysis. One of them, the One-Click Scorecard, was one of the most interesting features of the old Quicken.com site. You can now rate your stocks based on the investment strategies of Robert Hagstrom (The Warren Buffett Way) and Geraldine Weiss (Blue Chip Strategy).
As in years past, the MSN Money Web site stands in a class by itself. The new Quicken Investing site is promising; let’s just hope Intuit continues to improve upon it over time.
The last thing you want to do is spend money for a software program and find that you cannot use it, either because of technical issues or because you don’t understand how to use it. Luckily, both Money Plus Premium and Quicken Premier offer a variety of help resources and tutorials to ensure you get the most out of both programs.
Money users have access to instructional videos that offer a tour of the program and tips on managing your accounts, paying your bills on-line, and creating a budget. Each page within the program has a help icon that opens the program’s help system to topics related to the features available on that page. The Money Plus User’s Guide covers all of the areas of the program, providing step-by-step instructions on using the program.
For technical issues, there is a link within Money Plus’ help menu to the Microsoft Help and Support Web site. Here you will find solutions to top issues, technical support documents pertaining to specific error messages, as well as trouble-shooting and how-to guides.
If all else fails, Microsoft also offers telephone and E-mail support. Depending on the level of support you need, however, this could cost you $35.
Within the Overview area of Quicken Premier’s Setup tab is a collection of videos including an overview of the program, a getting started guide, and tips on how to manage your bills and how to pay your bills on-line. The useful “first steps after setup” guide in the Help area offers a suggested sequence for setting up your accounts within Quicken and learning new features. Most impressive, however, is the Quicken Community, where you interact with thousands of Quicken users. There are also on-line tutorials available at the Quicken Community site. Intuit also offers E-mail and telephone support. E-mail support is free and you can expect to receive a response within 48 hours. If you require immediate support, you can opt for call-back support, which may cost you $24.95, but you can expect a call usually within an hour.
Once again, Money Plus Premium and Quicken Premier are two evenly matched programs. Because these programs are so similar, giving the nod to one over the other comes down to subjective criteria and personal preferences.
Table 1 provides a checklist showing our head-to-head comparison of Quicken Premier 2009 and Money Plus Premium 2008. Each check in the finance, portfolio management, and technical support sections rates one point. One-half point was awarded for each checkmark in the companion Web site section. In those instances where one program did not have a clear advantage over the other, check marks were awarded to both programs.
In the end, Quicken Premier 2009 once again emerges as this year’s winner. Its newly designed navigation is more intuitive than that of Money Plus Premium. Quicken also does a better job helping you prepare for tax day. Money Plus Premium does hold a clear advantage when it comes to handling investments, along with the resources available at the MSN Money Web site. However, neither program attempts to be a full-featured portfolio manager.
Perhaps the biggest knock against Money Plus Premium is its cloudy future. The ambiguous statements issued by Microsoft about future versions of the program have only added to the confusion. Personally, I would be hesitant to commit to the program until I knew it still had the full support of Microsoft.