Diana Clement: Go online before you put it on the plastic

In January I was socked with the biggest Visa bill I've ever received. I pay it off in full each month, so it's no big deal. Nonetheless it was an eye-opener and signalled time for a quick review of my finances. What better way to do that than try out some of the new personal finance websites.

I've used Microsoft Money and Intuit's Quicken in the past. But 21st century personal finance software has moved online and become simpler to use. You no longer need be a money, technology or accounting geek to get to grips with managing your money electronically.

The three obvious choices for Kiwis wanting to track their finances online are Heaps.co.nz, Xero Personal and Who Stole My Money.

Thanks to the evil Visa bill, I've set myself up on all three over the past fortnight for a road test. Cutting to the chase, not one induced a headache during the set-up process, which has to be good, and all three do a fine job.

Each allows you to download your bank and Visa statements, assign categories to your spending, and then slice and dice the results.

The initial setup takes between 30 minutes and an hour, and then you need to update them with your current statements every month or so.

When you upload subsequent statements, regular payees and payments are recognised and categorised automatically. For example, all three websites recognised that entries on my statements from Contact Energy are utility bills and Foodtown spending should be categorised as groceries.

Using these products is even easier if you're a Kiwibank or BNZ customer. That's because Heaps.co.nz pulls in Kiwibank customers' statements automatically and Xero Personal does the same for clients who are BNZ customers, which saves you loading your statements each month.

Budgeting is made really easy by these products. As soon as you've uploaded and categorised your first bank statement the website will populate your budget with your existing income and expenditure. It's then a matter of deciding whether the allocation of money is what you'd like in an ideal world and set targets for areas where you'd like to spend less.

Every time you upload your monthly statement from then on you'll see in black and white (or a coloured graphic) just how you're doing.

None of these products was quite flexible enough for me in a number of ways. One was their categories, which didn't match how I would categorise my spending.

For example, Xero Personal lumped "eating out" as one category, whereas to me, food in a cafe, takeaways, and dinners out are three different types of "eating out" that need sub-categories, so I can see both the overall spending on eating out, and the reality of where I'm doing it.

Both Who Stole My Money and Xero Personal do allow you to add other categories. Heaps.co.nz, doesn't.

None of the products has sub-categories. Xero Personal does, however, have "labels". That meant I could set up a master category of house, for example, and label a transaction "mortgage", "rates", "maintenance" or "lawns" . By clicking on the lawns label, I could then see what I'd paid my lawn mowing man for the month.

Another important function is the ability to split transactions, which both Xero Personal and Who Stole My Money enable you to do. This means you can "split" a cash withdrawal and show what it was actually spent on. Or in my case, if I bought exercise gear and a child's present at the same store, as I did recently, I can split that payment between my Sports category and Gifts.

Not everyone has all of their accounts with the high street banks. Both Who Stole My Money and Xero Personal allow you to add accounts for any financial institution for which you have a downloaded statement. Heaps.co.nz limits it to the main banks, meaning you can't add in accounts you hold with RaboDirect, SBS Bank or XYZ credit union.

Who Stole My Money allows users to add manual transactions. This means you can enter a KiwiSaver account, for example. Xero Personal is about to add this feature.

Each product had features that I liked. The Heaps.co.nz website has a very straightforward Spending page. A drop down box enabled me to look at the past month, three months, year, or other time period.

Xero Personal took more information from my statement than Heaps.co.nz. For example, it recognised one payment as "stationery", which I'd entered in online banking as I made the payment. Heaps.co.nz simply said "debit" and I had to go back to my paper statement to see what it was.

Who Stole My Money auto-categorised more payments than the other websites, leaving me just to check them, rather than have to categorise each payment. Categorisation required fewer clicks of the mouse as well.

One nice feature about Xero Personal is that it interfaces with the company's Xero business accounting product. If you're a business owner, self-employed or property investor you can tag expenditure in Xero Personal to be sent to your business. It appears in that business as an expense to be categorised.

Modern personal finance websites always have a section on goals. In Heaps.co.nz, for example, you can set spending and investment goals such as saving a certain sum of money each month. At the end of the month it shows whether you've succeeded.

Using these websites does take some effort, but the information available to you after a few months is very powerful indeed. If you're fooling yourself about your spending it will highlight that.

If nothing else, you might actually start using a budget.

Readers will to want to know which product I liked best. Who Stole My Money was marginally ahead of Xero Personal - although each had a number of features that were better than the others.

Heaps.co.nz has less flexibility, which on the other side of the coin makes it simpler. It's also free to use, which has to be a bonus. Xero Personal costs $59 a year to use and Who Stole My Money, $79.95 a year, or free for the basic package.

If Xero Personal integrates with more banks than just the BNZ so that you don't have to upload your statements, it will be head and shoulders above the others. Xero Personal has a better chance of doing this than its competitors, because the company's business product, Xero, already has that capability.

From time to time I got bogged down. I could also see room for improvements in each package. For example, Xero Personal splits spending into Essential and Non-Essential spending. I could see the need to have more headings such as Taxes, which are essential, but aren't spending I would compare with going to the cafe.

The choice between these products comes down to personal preference. You can try all these products for free and make a decision. At the end of the day any will do. They are all reasonably idiot-proof and worth their weight in gold for the insight into your finances.

Overall, these products have a long way to go until they're all singing/dancing personal finance websites. They don't show your overall net worth and nor do they allow you to track your personal investments such as shares, managed funds and Kiwisaver, or even property investments.

I haven't mentioned Quicken Personal, which is an excellent PC-based personal software product. It has been around for years and is very good. As well as the functions of the online products mentioned above it also allows you to track your investments and even tracks your reward card points. It's not, however, available online, which means you can't work on your finances both at home, work and elsewhere. Or for that matter do a quick update on your iPad.


www.whostolemymoney.com

www.xero.com/personal

www.heaps.co.nz

www.quicken.co.nz