A Basic Guide For Choosing An Effective Financial Management Program

Posted on April 6, 2010 by admin

Deciding on just the right program to help you get your finances in order can be as important a process as the actual finance management itself. If you have decided against hiring a financial planner and for software, the program you settle on will ultimately play a huge role in how effective and successful you are at organizing and managing your finances and how financially secure you will be years down the road. Here is a strategy guide to help you out in this endeavor.

Step 1: What type of software do you need

First, decide what you want to get from the program you choose. There are fairly simplistic programs that simply assist in balancing the check book, provide online banking, and organize your information for tax season. More advanced (and more expensive) programs will calculate further into your financial recesses integrating your small business, estate planning, double-entry bookkeeping, playing out probability scenarios and developing strategies.

Step 2: Where to find your programs

Next, start looking for programs. You can shop around manually by walking into every Best Buy, CompUSA or other computer store you see, or you can do it the normal way and surf the web for finance software. To get a general idea of what the various different programs have to offer you can look into magazines that will give reviews of and rate the software. They will also cover how complicated the programs are, how expensive they are, and what exactly your computer will need to run the program. Also, ask around. Friends and business associates that might have some experience with a program you are considering or even have a suggestion for a program you have not located. This will allow you to compile a list of workable options.

Step 3: Test drives

After getting an idea of some of the financial planning software programs you might be interested in, start test driving the programs. The advantage to shopping for the programs online is that they often will offer a demo version to allow you to try it before you buy it. Compare the programs how easy the programs are to use for you. Keep in mind if you are looking for a more comprehensive program the learning curve will be a little steeper than a program with less extensive capabilities.

Step 4: Narrow the list

If you have not already narrowed down your list to one or two programs, you can either flip a coin or (since this is your money at stake) get a little more picky. Dig a little deeper into what the programs have to offer. Integration is an important feature. For instance, Quicken is a popular program that integrates with Intuit’s TurboTax; another popular program that is dedicated specifically to the handling of taxes. Quicken also works with QuickBooks which is an accounting program small businesses frequently use. You can also check to see what program might be recommended by your bank for the most effective interface.

 Step 5: Use the program

Once you have your program chosen, it is time to start putting it to use. If you chose to go with a program you had to pay for, hopefully it will be worth the investment and pay for itself. The more expensive programs can offer strategies and suggestions for ways to save money. However even the simpler programs can be a very effective way to help save money if it shows you exactly how much money you are spending in every area in a clear and understandable manner. Sometimes just seeing how much money you have blown on arbitrary things will give you pause and bring it to the forefront of your financial consciousness thereby reducing the likelihood of continued spending. This is one of the basic purposes of the programs. But be sure to use it. If you purchase the program and do not adhere to any sort of savings plan or even update it with spending habits (if it does not do it automatically) there is no point in having purchased a financial planning program in the first place.

The very first step in managing your finances effectively is to choose the right program to take care of your investments. By taking the time to make the right choice in financial management software you are ensuring a good base from which to handle your financial affairs. Remember that you are going to have to learn this software and you are going to become familiar with it. Once you have that sort of momentum built and a rhythm it is going to be more difficult to break away and into another program. This is why it is worth it to take a little extra time and choose a program that fits you most suitably.

The financial management is a very important process and therefore deciding on the suitable program to help you get your finances in order is just as important if you want to get things right.

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The Security Of Using Financial Planning Software

Posted on April 6, 2010 by admin

Technology

Since the advent of the World Wide Web and the consistent improvements of computers more and more people have been taking advantage of the technologically advanced environment choosing to electronically access many accounts and as well pay for many accounts using the same interface. This is a natural symptom of providing an alternative that is cheaper and more convenient than using traditional systems of mailing out envelopes with checks or even driving to an actual location to pay for or deposit into an account.

Identity theft

The down side of all the technologically provided convenience and expedience is that for those equipped with the knowledge and possessing the capabilities to do so can also access your information.However, identity theft has been going on since long before the internet and computers have existed. But with financial planning software, now all of your accounts can be accessed from a single point; one program, one password. Does the ultra convenience and accessibility of these programs put you at greater risk for identity fraud?

On one hand the argument is made that identity theft has been going on since identities have existed. Thus technology and further accessibility to information that in aggregate comprises your identity will do no more harm than for instance a postal service. In other words the detrimental effects of technological innovation do not outweigh the benefits that it has provided.

On the other hand, though, the argument can also be made that by focusing all of your information into one access point, this will increase dramatically the temptation and likelihood of identity theft; a classic case of ‘putting all the eggs in one basket’. That while identity theft may have preceded computers, interconnectivity, and programs such as financial planning software in particular, you will be dramatically more at risk not only for the probability of becoming a victim of identity fraud, but additionally to more thoroughly suffer as a thief will have access to virtually every piece of your financial world. The answer to this depends on how you approach the fight against identity theft.

Defense

One approach is an absolute defense. This will mean going in the direction of protecting all your information as much as possible. Followed to the extreme this logic would result in having none of your information online, doing no online payments, banking, or even email and social networking; going off the grid entirely. Unfortunately as was stated previously, identity theft can still occur. Your mail can always be intercepted or your garbage might yield plenty of documents that can be used in order to gain important personal information. A credit card or cell phone company might get hacked with your information in the database. So the only absolute defense is to have no accounts with your information stored in them anywhere. Imagine how hard life would be with no cell phone, no credit cards, no car payment or house payment; everything you ever use must be paid for in cash. Though this might offer a nearly full proof defense for identity theft it is fairly unrealistic in practice. For those that are extremely dedicated to protection against identity theft, it will ultimately come down to a question of just how much you are willing to sacrifice for protection.

The best defense is a good offense

A more effective defense is to go on the offense. By embracing the technology available today and using that to your advantage in the fight against identity theft, you can assure your safety and also live realistically within the demands of modern reality. By not only not shying away from the connectivity of the internet and the focused accessibility of financial management software programs but by utilizing these services completely you will yourself be absolutely appraised of everything that is happening at all times with every dollar of your financial world. While this is less of a defensive approach, as shown, defense is never absolute. By focusing more on early detection of identity theft rather than on prevention altogether identity theft is weakened extensively. This can be evidenced by identity theft trends which have consistently decreased over the course of the last five years.

Financial planning software is an excellent deterrent against identity theft due to the very same reason some opponents accuse it of being vulnerable. It is an integrated program that allows for keeping track of all aspects of a financial environment from one central location or program. Relying on a defensive strategy for prevention of identity fraud is ineffective in moderation and unrealistic in the extreme thus making it an alternative not as choiceas the offensive technique of early detection. Early detection is a much more effective, not to mention realistic, approach to ensuring you are not a victim of identity theft.

In the modern world of computing and doing business online the most important thing is security. With good financial planning software you will have no worries.

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A Few Financial Planning Programs For Comparison

Posted on April 6, 2010 by admin

The Financial Planning software industry is fairly varied and dynamic. What most Financial Planning programs strive to enable you to do is to effectively build a strategy for saving money. There is likely a program specifically for you whether you are saving for retirement, which is a large portion of the financial planning community, or simply trying to regain control over a budget which has wrestled out of your control and is hemorrhaging your hard earned dollars all over the market place. This is good news in that there is a program that can specifically cater to nearly every financially organized fantasy you can imagine, however it is also bad news as it can be quite tedious to sort through an overwhelming availability of information.

By determining how much of a comprehensive program you need it is possible to begin paring down the amount of programs that will be appropriate for your situation. There are programs that are fairly simplistic and have a price tag of $0. On the other end of the spectrum there are programs as high as $2000 for a yearly license. If you have an extremely diverse and complicated portfolio of assets, it might benefit you to attain a program that can effectively organize and assess your entire financial environment giving you a strategy for savings. If, however you are simply trying to pay down your credit card debt and free up some cash to spend on the weekends, you do not necessarily need a Monte Carlo simulator or stock program to handle it. If you are not sure what some of that means, you probably need to go with a simpler program.

Here are just a few of the many available financial planning programs with a relatively brief overview of each:

Advice America

  • AdvisorVision Retirement Income Edition(RIE) $750 annually or $75 monthly
  • Monte Carlo simulations
  • Focuses on retirement goals
  • Retirement income products ie annuities
  • Reverse mortgages and bond ladders
  • Risk (ie early death or long term disability)
  • Risk strategy that enefits of life insurance, annuity, long term care policy

AdvisorVision Comprehensive Planning Edition (CPE) $1500 annually or $150 monthly

  • More multi faceted and comprehensive
  • Option and hedging strategies
  • Estate and tax planning
  • Life Insurance and Long Term Care
  • Asset allocation
  • Business Intelligence Reports (Advisor trends, customer conversion rates, revenue opportunities)
  • For high net worth clients with detailed needs

Mint (part of Quicken now) free

One interesting aspect of Mint is that it is free. Mint profits from referrals (ie you switch to certain banks etc to save money)

  • Products however are ranked in order of savings to you
  • Anonymous information (does not require social security, name, address, or account numbers)
  • It is a read only program; it cannot access funds from programs
  • Mint maintains a database of checking, savings, credit cards, brokerages, CDs and IRA rollover offers that can save you money
  • Shows interest rates on all debts, how much you owe, and which would be most beneficial to pay off first
  • Tracks investments; performance, returns, and fees

MoneyGuidePro $1295 (annual license)

  • Offers a Roth Conversion Calculator
  • Four Calculation Methods:  SmartCalculation,  MonteCarlo,  Custom,  Custom with MonteCarlo
  • Smart options which integrates preferences into calculations,   Retirement Ages,  Goals with a ranking scale and  Extra Savings
  • Utilizes Morningstar to determine assets (stocks, mutual funds, annuities)
  • Risk tolerance assessment
  • Links to all accounts with up to date and current values

MoneyTree offers two different programsSilver Financial Planner $495

  • Utilize up to 10,000 Monte Carlo simulations
  • Income and expenses
  • Savings and investments
  • Social Security and benefits
  • Asset allocation advice, adjustment for inflation, tuition and housing estimates for most major colleges, credit shelter, and life insurance trust

TOTAL Planning Suite $850

More comprehensive program designed to fit every phase of financial planning a client may need

Separated into three phases:

‘Easy Money’ which is goal based:

  • For use with middle-income clients, it determines retirement needs with solutions to potential shortfalls.
  • Analyze long term care, life insurance and disability
  • Assets and net worth

‘Golden Years’ which is based on the cash flow:

  • For the client that seeks fine-tuned detail and extremely accurate tax analysis on the yearly basis
  • Focuses on asset growth, expenses, taxes, and income
  • Monte Carlo simulations
  • Capital accumulation and draw down

‘Strategic Solutions’ which has specialized reports

  • A specific module for quick analysis and reports of specific scenarios
  • Early IRA withdrawals
  • Taxable account and deductible retirement plan
  • Single-life or joint pension distribution
  • Monte Carlo Simulations
  • Retirement taxes and cost of delayed start to savings

As you can see the options available in each program can become quickly overwhelming if you are window shopping. Determine your specific needs for financial planning and your price range. Keep in mind that if your financial situation is complicated enough, the more expensive software could more than pay for itself via the savings and strategies that can be organized. If you are not sure where to start, begin with a simpler program that costs less. Or even consider a trial or demo version which many companies will offer.

Before purchasing a financial planning program make sure to compare all the best programs offered and try a demo version where available so you could get the best possible deal.

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