As I mentioned before, when I first began my financial turnaround, I constructed a tight budget and stuck to it like glue for the first few months. That tight budget was invaluable – it taught me how to ride the proverbial bicycle that is personal finance management.
One of the biggest tools I used during this process was PearBudget, which was a free Microsoft Excel spreadsheet that helped automate many of the basic tasks of developing a budget. That spreadsheet is still available for free online – it requires Microsoft Excel, but it’s still one heck of a useful tool. While I didn’t end up using that PearBudget sheet for my own budget (I used it to evaluate a lot of ideas, but I had a lot of fun hacking Excel to do things exactly how I visualized in my head – not really in a way that makes sense to anyone else), I used it a ton in figuring out my own ideas and assembling them.
Not too long ago, I discovered that the people who developed PearBudget were converting it into a web application – and I was immediately apprehensive. I am very concerned about personal information security, especially when it comes to personal finance and the modern web. Here’s what I wrote on that issue a while back when reviewing other online personal finance tools:
The problem is something I like to call “information creep.” When you use these tools, you expose your personal information to them. With Mint, for example, you transmit your account information through mint.com and then through Yodlee to aggregate your info. Intuit (the Quicken Online folks) communicates directly with your account providers to scoop in information. Wesabe is perhaps the least onerous – you don’t directly submit account information to them, ever – but their tool isn’t as robust because of this limitation and they still do create a history of your spending.
In all three cases, you’re building up a substantial data set about yourself. With Quicken Online, they don’t milk the data (at least not on the surface) but you are charged a fee for their service. With Mint, it’s free – but they make their cash by showing you targeted ads based on that data. Again, Wesabe has the best method at the moment – they’re currently handling everything via venture capital money and plan a “Wesabe Pro” to generate revenue.
If that doesn’t concern you, consider this: the more information you have out there about yourself, the more likely it is that some sort of identity theft will happen no matter how secure individual sites are. It only takes one little accident for your data to get into the wrong hands – and even the most secure of places can have a little flaw. The more places you put your data, the more “little flaws” you’re exposed to.
I had zero interest in using PearBudget Online unless there was a compelling solution to this issue – and their solution is actually pretty good. Basically, it doesn’t want any of your account information. None. Instead, you just enter your expenses and income as raw numbers and add them into the categories you’ve defined yourself. Since your account info there is essentially anonymous and there’s no association to your real financial data, the privacy concern is almost nonexistent.
Even better, PearBudget distinguishes itself from other such online tools by not including ads in the service – Mint, for example, uses targeted advertising to cover the bills. PearBudget has a 30 day free trial, then charges $3 a month for the service – a nominal fee if you find it useful.
So how does it work?
A Brief Walkthrough of PearBudget Online
When you first visit PearBudget Online, you’re guided through a wizard that lets you define the categories in your budget (they offer a bunch of suggestions and groupings, but let you add your own as you want). You then identify them as regular expenses (ones you have every month) or irregular ones (like property taxes), identify how much you spend monthly on the regular expenses and annually on the irregular ones, enter how much income you get (you can identify as many income sources as you want), and you’re done! It generates a spending plan for you. Seriously, try it out – it only takes a few minutes and it’s really slick. To try it out, I entered a bunch of dummy data and it took me about three minutes – but when I saw how slick and useful it was, I wanted to do it with real data – and so I did.
Once you’ve set up your categories, you basically have three modes: plan (where you look at your spending plan and possibly add new spending categories as you see fit), enter (where you enter receipts as you spend money throughout the month), and review (where you look over how your spending matches your budget).
I was genuinely impressed with how slick the software is. For most people trying to figure out a budget, it’s a great way to dig in and get started very quickly and effortlessly. It’s very flexible – you can define your own categories however you like, which is something that I think is essential when budgeting in the real world, as everyone groups their spending in different ways. PearBudget lets you group it pretty much however you want.
First, the bad. I really only have one significant criticism when it comes to PearBudget Online. First, it does cost $3 a month after the 30 day trial. While that’s a nominal fee (in my eyes), some people will be hesitant to dive in and really try the tool because if they get involved with the tool, that $3 a month effectively becomes another bill. One option the creators might want to consider is to have a “free” account that displays ads or a paid account that does not. I, for one, would pay the $3 not to have the ads. Alternately, a person could just do the whole thing offline and use the old PearBudget spreadsheet for free.
Aside from that, the tool is impressive to use and handles my security concerns better than any online tool I’ve seen. If you’re trying to budget, I heartily recommend giving PearBudget Online a try. If you’re concerned about the $3 a month fee (and for people on tight budgets, this can be an issue), give the old PearBudget spreadsheet a whirl – it helped me out once upon a time.