Online money managers take strain out of finances
If you have trouble keeping track of your monthly spending, a new type of website can help you to stay out of the red. Chiara Cavaglieri reports
Sunday 06 February 2011
How much do you spend on clothes, food, fuel or just dining out each month?
What returns are you getting on your savings or investments? Most of us would not be able to answer such questions, but with prices of even basic goods rising at the fastest rate in a generation, it could be time that we should be able too. Without keeping ledgers and every receipt or account statement, though, how can you keep an eye on your finances? This is where a new breed of all-in-one money-manager websites steps in.
As the name suggests, this type of website assembles information from various accounts in one place. It is already well established in the US with personal finance manager Mint.com proving a success. The UK has been slower to react, but independent sites such as the newly launched Money Dashboard are hoping to change that.
"Not so many people know who their bank manager is and even fewer have access to a financial adviser as a result of which they need to learn how to self-serve," says Gavin Littlejohn, the founder and chief executive of Money Dashboard.
Many banks are keen to get in on the action, too, with Lloyds rolling out a new free online Money Manager service for its customers this month. Lloyds already offers free text alerts to its current account customers when they are near their account limit to avoid slipping into the red, as well as weekly balance alerts featuring the last six transactions of the week and overseas transaction alerts when their debit cards are used abroad.
This move into account-pooling follows the example of other banks including First Direct's Internet Banking Plus service and the Egg Money Manager, both of which enable customers to access balances for their current accounts, credit cards, savings and even loans on the same summary page.
Both of these are limited to simply showing you the balances of all your accounts. But the new Lloyds service takes things a step further. Firstly, you can categorise your outgoings into groups which helps you to identify at a glance where potential problems lie. Lloyds Money Manager will even be able to look at how your spending has accumulated over set periods to reveal any bad habits and underline just how much of your cash is frittered away on the daily sandwich and coffee run.
"Users can see their spending broken down into categories, such as entertainment or rent, and track spending trends for up to two years. Money Manager does all the hard work so customers don't have to upload their own data. It's all done at the click of a button, backed up with the protection of their banking internet site," says Annie Hind of Lloyds.
This service is limited to Lloyds credit cards and current accounts only. If you want to get a clearer understanding of your overall financial health, an independent service such as Money Dashboard is probably a better bet: it allows you to track your finances in real time and offers an extensive range of budgeting tools to help you to manage your money.
As with the services offered by First Direct, Egg and Lloyds, you can save time by accessing all of your financial products on one page and with only one set of password and security questions. The clever bit is that you can tag different transactions, for example, your monthly direct debit for rent or payments to your favourite supermarket, which automatically enables you to assign them a category.
One of the most useful features is the alert and messaging system which can be set up to warn you, via text or email, when you've overspent, when you're nearing your overdraft, or even when you have a bill to pay. For now, Money Dashboard allows you to load only current accounts, credit cards and savings, but there are plans to integrate other investments and loans and a smartphone mobile application is also on its way.
From a security perspective, the likes of Money Dashboard offer a read-only service so you cannot make transactions. Your bank account numbers and passwords are not actually stored on the servers but are encrypted and sent to Yodlee – a platform used by some of the biggest banks in America – so fraudsters are not in a position to ransack your accounts easily.
If your motto is better safe than sorry, though, you may decide that having all your financial details in one place is simply too risky. And as another word of caution, it is worth noting that several online aggregator sites have fallen by the wayside, including Kublax, which went under last year after struggling to get funding.
Another concern is that these services may not sit well with your bank. Several banks, including HSBC, Barclays and NatWest, seem to take a dim view of online account aggregation services to the point that you could be liable for any fraud or mistakes because you are, in effect, handing over your passwords and login details. Other banks take a different stance, so you will need to speak to them before signing up to ensure the software is approved.
There is also the issue of how these services make money, and this will predominantly be by cross-selling other financial products to you. Armed with comprehensive details of exactly how users spend and borrow money, there could be unease that they can all too easily target consumers for specific products that they don't necessarily need or want.
This is more of a concern with banks flogging only their own products and potentially using the service to keep a firm grip on their customers by becoming a one-stop shop for all their financial needs. However, Andrew Hagger of Moneynet argues that as long as you remember that there is no obligation to buy any product, this shouldn't be a problem. Furthermore, with the independent websites, there is no reason why this cannot be a good thing for consumers.
"In fact, with all the information at their disposal you'd expect and hope that any marketing material would be a bit more targeted and relevant to your financial circumstances rather than the scatter-gun mailings used by some financial providers at the moment," he says.
Andrew Hagger, Moneynet.co.uk
"With people leading busy lives and having less spare time on their hands, aggregation services are a time efficient way to monitor and manage all your financial products. The security provided by account aggregators will probably be one of the initial concerns to would-be new customers. However, most of the providers are financial heavyweights which take security measures extremely seriously. I've never heard of any security issues with any of these services."
The FTSE 100 is inching closer to its record high but can it maintain these levels?
MPs call for Equitable Life policyholders to be paid £2.8bn owed by government
Fuel poverty could claim 100,000 lives over next 15 years, warns energy charity
Bank-beating exchange rates on your international payments
Weekly Money: Round-up of the personal finance stories you may have missed 23-27 February
- 1 The black and blue dress: Makers considering a white and gold version
- 2 Husband and wife die holding hands within hours of each other after 67 years of marriage
- 3 What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
- 4 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
- 5 Fearne Cotton quits Radio 1 after ten years for 'family and new adventures'
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
This is what it's like to be dead, according to a guy who died for a bit
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
iJobs Money & Business
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...
Day In a Page
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads