Using Mint.com to Manage Family Finances

As we draw towards the end of the year, Sarah and I are preparing for 2013 in a number of ways. One way is to improve how we manage our household finances.  We have a method (described below), but it is cumbersome, time-consuming, and complex.  So today we set out to find a better way, which I’ll describe here.

But First, What’s the Problem?

Our objectives are simple; namely, to have a way to:

• Goal 1: Aggregate all our spending into one interface, to be able to monitor against our budget; and
• Goal 2: Project into the future to see how short-term changes impact long-term goals.

For example, in our first year of marriage, we wanted to measure the impact of short-term sacrifices on long-term goals (like our goal of acquiring rental property), as well as the impact of Sarah staying home from work if we were to have a baby.  (You probably know that we’ve accomplished both goals.  Hooray!)

The Current Method (which sucks!)

As a single and wild guy, I used a variety of methods, including Excel, Google Docs, Mint, Quicken, etc. When we got married, we tried using Mint.com (which was fine for a while), but we had problems running various what-if scenarios to see the impact of changes in our monthly budget.

So we devised a method using a Google spreadsheet.  The spreadsheet has 12 columns, one for each month, and 145 rows. The rows either represent income sources, expense categories, or bank balances. The sheet is dynamic so that we’re able to make a change in January, and see how it impacts us in December. Tied to that sheet is another one that summarizes our goals and shows us how we’re doing (this method is great if you need clear visibility into the future — I’ve used it for business cash-flow purposes as well).

Sound complex? It is!

It gets worse, as each month we have to reconcile our spending against what was budgeted, making updates to the spreadsheet to see how we’re doing. I won’t even bother describing the process — it’s a royal PITA.

The New Method: Mint.com

After some discussion, we’ve decided to go back to using Mint.com, which seems to have added some features for people like us in this situation.

We’re going to try Mint.com for aggregating our finances

If you’ve never used it, Mint makes it easy to meet goal #1, which is to aggregate all your accounts into one place. It makes its best guess as to what each transaction is to categorize your spending. You can train it as you go along so that it gets smarter each time.

With respect to goal #2, we’re going to take advantage of their Goals & Budgets feature, to see if it will save us time and make things easier to manage.  We still might need to make a spreadsheet for certain calculations, but we’ll see how it goes for now.

It took me about an hour to connect our accounts within Mint. You can connect accounts like checking, savings, investment, mortgage, credit card, and more.  Many of our accounts had issues that had to be resolved, but they were easy. Most were issues like the banks asking if I wanted to receive e-statements, which I had to resolve at the bank’s website first before Mint would connect to it.

All in all, the process of getting started is relatively easy.  Once your accounts are connected, you get a sweet picture of everything in one place.  Here’s an example.

Next Steps …

We need to institute a regular rhythm of keeping Mint updated (by that, I mean making sure we review the transactions and assign them the proper category if they’re wrong), set our budgets for each type of spending, and set our goals to track progress.  We’ll work on these things over the next few days, and see if we can save ourselves hours of time each month, and make the process simpler.

What about you? How do you manage your family’s finances?