Why I Gave Up Quicken (And You Should Too)

For years and years (if not decades...I'm too young to remember) Quicken has been synonymous with personal finance. If you wanted to keep track of your finances on your computer, Quicken was it. Sure, there was Microsoft Money, but we all know how that turned out. If you are still using Quicken, I think you should give it up. Details follow.

Literally the day after returning from our honeymoon, my wife and I went to Wal-Mart and bought Quicken 2006. I had never used it before but I am pretty good with figuring out software; it certainly wasn't rocket science. Away I went setting up all of our bank accounts so I could download the data directly. We also entered a "budget" that we were going to follow. Problem was, it wasn't very easy to follow.

This became very evident to us when, about seven months after being married, we realized we didn't have as much money as we thought we had. We had about $4,000 in cash. Granted, this is more than a lot of people probably have, but it was not where we wanted to be. That was when we decided it was time for a change. Enter You Need A Budget (YNAB).

I can get pretty carried away with endorsing YNAB. I'm a big fan. That being said, it is certainly not the only alternative to Quicken. I would advocate that the most important thing when choosing a budgeting system is one that uses the "envelope budgeting method" or something along those lines. Why is this such a big deal? Glad you asked.

Quicken is very good at what it is intended for: keeping track of what has already happened. You can have numerous accounts of all types; checking, savings and investing accounts as well as your assets and liabilities. What Quicken is not so good at is helping you stay on budget. Quicken will let you know if you have gone over the amount that you have budgeted for a particular category in a month. However there is no way to match up your budget with the actual amount of cash you have on hand. The cash in your bank account and the amounts budgeted are never interconnected. But they should be. In fact they need to me to have an accurate picture of your finances.

With YNAB or similar systems the money coming in and out will always match your budget. You cannot budget money unless it has come in and you cannot spend money unless it has been budgeted. They allow you to look forward to how you are spending money. Quicken on the other hand only shows you what has happened in the past.

The best thing about this is that you no longer have to guess what your budget should be. You already know how much money you have and can work with that. You are not constantly readjusting budget amounts to stay on target. Even if you do adjust your budgeted amount, you can only budget as much as you have available for that month.

I will admit that Quicken does have a lot of bells and whistles that are nice to have. I thought I would miss them. In fact, until recently I was using Quicken and YNAB simultaneously. I would use Quicken to update all of our accounts at once, then import the data from Quicken over to YNAB and use YNAB for the budget.

In March I finally decided this was a waste of my time and I should be able to get by without Quicken just fine. And I haven't looked back since. I spend at least half as much time updating our budget as before. Instead of updating our investments every time a look at the budget or enter transactions, I just update the balances on the first of the month. It still takes me less time than when I was using Quicken.

To wrap things up I should let you know that I do not receive any affiliate commissions from YNAB if you decide to purchase it. I only recommend it because of how much I believe in it. It has revolutionized our budget and kept my wife and I from having many arguments. If you think YNAB isn't for you, here are some other options that have found that have similar characteristics. Please note that I have never tried them out so I cannot comment on their functionality. I just know that they use a similar system of budgeting with money you actually have, as opposed to a "guessing budget" in Quicken.

1. Mvelopes (online only; there is a monthly or annual fee)
2. Moneywell (Mac Only; uses "buckets" which is the equivalent to an envelope)

I'm sure there are lots of other options, but these are the ones I am aware of. Let me know of any I missed in the comments.

Update: Browsing through the archives on Get Rich Slowly I found this list of personal finance applications. Note that not all of them use the envelope budgeting method (Quicken is included on the list) but there are some that do. Also, another application that a friend mentioned was the simply titled Budget.

Comments

[Jenn @ Paying Myself]

I found this post through the Carnival of Personal Finance this week. Thanks for sharing! I am downloading Moneywell now to play with. I have high hopes!

[Rob]

Thanks for visiting Jenn! I hope it works out for you.