Shortly after graduating from college, I decided to get my finances in order. I had two jobs, neither of which paid much, and I was responsible for paying my own rent for the first time. So I signed up for Mint, a popular online budgeting tool. Once I entered my bank account information, I was able to track all my purchases day by day, keeping an eye on how much money came in and went out. I could check graphs to quickly see how much I spent at bars (too much) or how much I spent on Amazon (way too much), and how that compared to the national average. Mint encouraged me to set up budgets and create savings goals, but I never made it that far. Instead, I took pleasure in tagging my transactions, making sure that my afternoon trips to Starbucks were properly classified as “Coffee” and not “Restaurant.” What was the point of this, I asked myself, if not precision? How was I supposed to save money if I couldn’t properly categorize my expenditures?
Later on that summer, I decided my Mint profile wouldn’t be complete without my student loans. I went through the process of adding the loans from my various lenders, one directly from the federal government, the other from a smaller midwestern bank. Mint easily sniffed out both of my $5,500 loans and added their balance to my financial overview. When I was done, my net worth had dropped from $468 to -$10,531. I didn’t much see the point of Mint after that, and quickly stopped sorting my purchases and setting up savings plans. It’s not that I didn’t realize I was thousands of dollars in debt, but before signing up for Mint it had been easy to compartmentalize the loans apart from the rest of my finances. In my mind, I didn’t owe $11,000; I just had to send $130 to these banks each month. Seeing my financial worth pegged at negative five-digits made the idea of saving money by cutting back on coffee seem a little futile.
That hasn’t stopped Mint, though. Each week I receive an important “ACTION REQUIRED” email, breathlessly informing me that I’ve spent $0.00 in the last seven days and don’t have any budgets set up. I wouldn’t mind if they just gave up. I certainly did.
Internet banking should be this amazing boon. Because I almost never carry cash, each and every transaction I make is catalogued on my bank’s website. Every dollar I spend and make is easily traceable: I pay all my bills electronically, student loan payments are automatically debited each month, and I pay my rent through an electronic check process. I can even deposit a check just by taking a photo of it with my phone. Online banking is so close to magic that managing my money should be as simple.
For the past year and a half, I’ve been a member of PNC Bank. PNC’s online banking portal, branded Virtual Wallet, offers many of the same tools as Mint. I can see graphs of how much I spend each month versus how much I earn, graphs displaying how my utility payments have risen since my girlfriend and I upgraded to digital cable, or graphs telling me that I apparently never go shopping (I do not know why my Virtual Wallet thinks this). All these graphs mean that my account website is painfully slow to load. Each time I need to see the status of my account, I have to wait through an interminable processing screen while PNC loads — in progressive order — my Virtual Wallet, my money bar, my calendar, my wish list, and finally my account activity, even though I’ve set my account to automatically open to my recent activity. I’ve never checked my money bar, and didn’t realize I had a wish list until I took the time to document each step in the process.
Of course, once my account fully loads, I’m confronted with my available balance, which should be the killer feature of online banking; with available balance, I should be able to quickly figure out whether I can safely make a given purchase. It should be the digital equivalent of a balanced checkbook, except without the hassle of actually balancing a checkbook. Except it doesn’t work like that. Let’s say I’m thinking about buying a new TV. The TV is $400, and I have $600 in my available balance. I should be fine, right? However, because my available balance doesn’t always update in real time, it probably doesn’t include the tank of gas I bought earlier in the day, or the tip I left on my meal at lunch, or the season of Louie I bought earlier in the week from iTunes. It definitely doesn’t include the student loan payment that will automatically be deducted tomorrow — as it is on the same day of every month — or the payment I had PNC send to my cable provider on my behalf, which was delivered today, but not yet deposited. The TV is going to need to wait.
I do a decent job keeping all of this in my head, but the benefit of online banking should be that I don’t need to. My bank should do that for me. My bank should be smarter than me.
There are a handful of companies trying to solve this problem. Lemon is a smartphone app that attempts to help better track your expenses. When you make a purchase, you either email the receipt to a personal @lemon.com address or scan it with your phone’s camera. From there, you can sort your history of purchases by type and easily see where your money is going. The problem is that it’s just a fiddlier version of what many online banks already do, with the added benefit of being able to better track cash transactions. Since I don’t carry cash, Lemon would only replicate the transaction sorting that PNC already performs.
Lemon also wouldn’t get at the heart of the matter: I’m just really pretty bad at managing my money. I don’t earn much at my current job, but I earn some, and I feel like some of that I should be saving.
PNC tries to help with that, splitting my virtual wallet into three sections: spend, reserve, and grow. Spend is the money I’m freely able to spend, reserve is where I move a little bit of money for when I’m in a pinch, and grow is like my traditional savings account. My Virtual Wallet has a feature known as “punch the pig” — when I’m logged into my account, and click on the pig icon, $1 is automatically moved from my spend account to growth. The trouble is, it’s far too easy to move money between each account, and I’m not nearly disciplined enough not to move any put I’ve put into grow right back into spend when I need a little extra cash.
I need a little extra cash all too often, according to PNC. Whenever my balance dips below $100, I get a warning email. They send me that email each day until by balance goes back up above the threshold, which generally doesn’t happen until the next pay day. I recently discovered that PNC would be all too happy to send my reminders via text message as well. I have yet to take them up on their offer.
Since I first read about it, I’ve been intrigued by the idea of Simple (formerly Bank Simple). Simple has partnered with a series of banks to provide a friendly, easy to use customer experience. Their aim is to build an online bank unencumbered by brick and mortar locations and outdated banking systems. Beyond that, they’re looking to avoid the adversarial relationship many customers have with their banks, and to that end they’re not charging many of the fees traditional banks get away with: no debit card or low balance fees, and most enticingly for me, no overdraft fees.
I’m excited by the promise of their web platform and mobile application. It’s a service that seems friendly and thoughtfully-designed, which is no surprise because it’s partially run by Alex Payne, an early employee at Twitter. I think part of the reason Simple has built up so much interest online is because they appear to have such a keen understanding about what people don’t like about their current banks. For me, the “safe to spend” feature looks like it might serve the purpose I always hoped “available balance” would. Perhaps their money management methods will prompt me to save more.
Or maybe they won’t. What I’ve ended up realizing is that I earn a small enough amount of money that I have a good idea where each dollar goes. All the charts in the world don’t do much to change the fact that at the end of each month, the main chart in my account, the one chart that matters — money earned vs. money spent — evens out at 1:1. Maybe I just need to keep punching the pig.