You may not look upon your computer as a cost-cutting device, but when properly used your PC can help you become a discerning, value-conscious consumer, well-able to keep your spending within your personal budget.
There is no online remedy that will suddenly get you out of debt or help you save for a new car, but software programs and online services can ease the pain of financial difficulties or making a major purchase.
If you are planning to go to this year’s World Cup finals, send your children to a private boarding school or are hoping to drive away in a new 02-reg sportscar, then your PC could be a big help.
We take you through the potential of budgeting software and show you some the best online financial services to ensure you get more bucks for your bytes by using your PC as a sleek money-management machine.
Software that saves
If you decide to bite the bullet and reduce your debts or if you want to plan for your financial future, manage your investments or would just like to balance your current account, then an investment in budgeting software like Microsoft Money or Intuit Quicken could be well worth the cost of the programs.
Both Money and Quicken are powerful tools that will pay for themselves over and again should you become disciplined enough to use them regularly. Whether you are on a tight budget trying to make ends meet or own a small business, both Money and Quicken will help you budget, plan and track investments.
But be warned — they both require a lot of work to get started. You will need to have a bank statement and a raft of bills and other documents to hand to create accounts in the programs. After a while of monotonously entering figures you will know why you never dreamed of being a bank clerk.
We installed Microsoft’s Money 2002 Standard (priced at around €42.21) and Intuit’s Quicken 2001 Deluxe (costing €96.47) and compared how each application performed in a number of areas.
Microsoft Money comes with an instruction manual that is easy to follow. Installing the program and getting it up and running took just a few minutes. But it took far longer to get going in the application as the preliminary ‘interview process’ takes at least half an hour.
You are asked questions about your income, expenses and your priorities. Your will have to enter at least a month’s worth of income and expenditure data. However, often just asking these questions is enough to set you on the road to improving your financial situation and having them on a screen can be a strong pointer to where you are going wrong.
The program asks about what you want to do, such as getting out of debt, planning for retirement, buying a new house, savings for that World Cup trip or setting a new budget. Once you have entered a raft of details about your bills and income, Money emphasises your priorities as you use the program.
For example, if you said you want to reduce your debts, Money displays debt reduction priorities and gives you various options to cut your borrowings.
Money warns you about upcoming bills and its debt reduction section has progress reports on your home page and good advice through the online links. The application takes the information you have entered and produces graphs to help you plot your spending patterns.
Choosing the euro as our currency of choice presented somewhat of a problem. Microsoft Money did not recognise the euro as a ‘base currency’. Another downside was that as a customer of AIB, we did not have the option of using the online banking part of the program.
One major problem we encountered was that our Web page within the application jumped from www.msn.co.uk to the Australian equivalent. Fine if you are from Freemantle but not much use in Fermoy! Microsoft’s support site confirmed this unasked for home page change as a problem with Money 2001. It took a while to sort this out.
However, overall Money was easy to use and clearly laid out. If you are new to budgeting software and want to set long-term goals then it is a powerful budgeting tool that could prove indispensable.
Fast debt reduction
Quicken was painless to load and comes with a neat but compact manual. The questionnaire for inputting personal data was completed far more quickly than was the case with Money. However, creating an account was equally as time-consuming, but there was no problem in using the euro.
The program automatically saves your information and prompts you for additional information, as it needs it. Again, a lot of data entry is required to enable the program to be of any use.
It is easier to get into Quicken than Money, but not as easy for a first time user to navigate around.
The main ‘My Finances’ page offers a solid overview of personal accounts and finances. You can also click into areas entitled ‘investing’, ‘household’, ‘tax’, ‘planning’, ‘reports’ and ‘graphs’ to get snapshots of your overall financial situation.
The Debt Reduction Planner was particularly good. It claims to help you to get out of debt at the earliest possible date, while paying the least amount of interest. It advises you on the order to pay off debts and whether or not to use some of your savings for a lump-sum payment on the debt. It was equally interesting and frightening to see how much in interest charges could be saved by making a one-off, lump-sum payment to clear some debt.
Some of the debt-reduction advice was a bit trite – for example being told to leave your credit card at home more often – but that does not mean that it was not sound advice all the same.
As with Money, integrating the application with online banking proved a no-no. We tried unsuccessfully to download a bank statement from our online account.
Quicken is a powerful planning too,l but it is less flexible than Money. For example, Money does a better job of monitoring your plans, accommodating changes and comparing your progress against the original targets. Both Quicken and Money have sections on retirement planning, but this is more suited to the US where retirement options are less restricted by legislation than they are here.
Quicken is probably for the slightly more sophisticated user but there is not much in it. Despite some problems, we preferred Money for its ease of use. It is also half the price of Quicken. But both programs could prove invaluable in helping you improve your financial situation.
Money and Quicken are solid programs but they can’t do it for you — they can only point you in the right direction and give you well-ordered information. They require application but will reward the smart user.
Investing online
The Internet has long being recognised as a winner when it comes to stock market investing, mainly because online investing tends to be cheaper than going to a traditional stockbroker.
However, with share buying you need to be well informed and know what you are doing. And even if you do, you could still get burned (For expert advice on online investing in PC Live! every month, check out our regular Virtual Trader column penned by professional online trader Mícheál ó Brolacháin).
In Ireland at the moment only Goodbody Stockbrokers in partnership with AIB (www.goodbodyonline.ie/products/aib.html) offers online share dealing, once you are a current account customer. The site offers a free test drive. You can buy and sell more than 650 listed shares from your computer screen.
Helpfully, AIB’s Market Monitor offers up-to-date information in the form of share graphs, news and market reports.
For US shares Charles Schwab (www.charlesschwab.com) or Scottrade (www.scottrade.com) charge a flat fee from around €21.59 for dealing.
If you want to get hold of UK listed shares in addition to US stocks then Etrade (www.etrade.com) is good value as it offers a flat fee rather than a potentially much more costly commission.
Etrade’s flat-rate charge is about €24.13 per quarter, if you make less than 30 trades, falling to €13.97 for more than 30 deals. Note that there is also a monthly maintenance fee of around €7.95, which works out at €95.23 a year.
But be warned, these online brokers are inexpensive because they do not offer you advice on your investments. In other words, they offer execution-only services. Going to a traditional brokerage is expensive, but the brokers will try to point you in the right direction.
Pooling the resources of a number of people to buy shares into an investment club can cut dealing costs further. This also allows you to spread your risk, as a club will be able to buy a wider range of shares than an individual.
Most investment clubs are formed as partnerships, with membership restricted to a maximum of 20 people. However, because every member is responsible for the partnership’s commitments there can be problems, particularly losses are made on shares bought with borrowings. Also, all members are equally liable for tax.
For more information on investment clubs, check out the Irish Stock Exchange Website (www.ise.ie).
Painless tax payments
It is not often the taxman comes in for praise, but the boys and girls at the Revenue Commissioners can rightly be proud of the Revenue Online Service (www.ros.ie). The ROS service contains masses of information on tax matters, but more importantly it is a time-saving and inexpensive way to file tax returns.
Last year alone, some €2bn in tax liabilities was paid mainly by business via ROS. The service now caters for the filing of most tax returns with payments being made either through a debit instruction or a Laser card for business tax liabilities.
The services allows you to view your current income tax, corporation tax, employer tax and VAT position, file your Form 11 income tax return (self-employed individual); file your CT1 corporation tax return; file your P30, P35 and Vat3 tax return forms and P45 forms.
You can also make payments online for your income tax, corporation tax, employer tax or VAT liability.
In addition, the service provides 24-hour online access for taxpayers, up-to-date tax information and instant acknowledgements when a return is electronically filed.
A nice feature is a query service where the Revenue people promise to reply to you within a few days. To use the service you have to undergo a cumbersome registration process. This is to ensure the security of the service.
The Revenue Commissioners now has plans to further extend the service by introducing online vehicle registration tax and capital tax payment options. The site also allows you to do a trial run without extracting any tax payment.
Banking without the queues
Online banking is the great hassle saver of the past few years. Little wonder then that a recent report suggested that more than half of all bank customers will use the Internet or telephone for banking by 2004.
Bank opening times are very restrictive while there always seem to be queues just when you need to transact with a teller. Using a banking Website you can access you account 24 hours a day, seven days a week — with no queues, car parking problems or traffic hassles.
In addition, online banking is often cheaper than entering the branch. For example with AIB (www.aib.ie) the electronic transaction charge is 22 cent compared with 30 cent at your branch.
Paying bills online beats the hell out of queuing up in a bank, post office or ESB office.
You can also monitor your transactions and spending on your Laser and credit cards.
Using AIB’s online service you can view all your accounts, from current to deposit, buy shares, view the latest business news and request a balance statement to be sent to you.
You can also go through your cheque transactions and transfer funds between various accounts. There is also a section that helps you learn about personal finance. However, AIB customers can’t apply for a bank loan online.
At Bank of Ireland (www.365online.com) you can do all that is offered by AIB and more. An interesting feature of 365 Online is the option to customise your statements and adjust your banking data to, for example, compare this year’s spending to the same period last year.
You can apply online for a credit card or a Special Savings Incentive Account (SSIA) where the Government gives you one euro for every four you save.
With Ulster Bank there is the option of dragging your personal banking information into a money management program like Quicken. TSB also allows you to access your account via its online service.
There are still a number of Irish financial houses that have yet to offer e-banking to their customers; these include: National Irish Bank, EBS, Irish Permanent, First Active and Irish Nationwide.
Debt reduction and online pensions
There are several sites that help you save money, reduce debts and advise you on taking out a good value pension. The World Wide Web and wily e-mail marketing campaigns continually bombard us with money-saving offers and information on debt reduction, but you need to be very careful about some of them.
Don’t rush into anything or be taken in by Internet adverts from debt-management companies. These adverts often claim that you can significantly reduce your monthly debt repayments by consolidating all your debts into one loan. It sounds great, but there is a catch. While your monthly repayments may be reduced, it will take longer overall to clear your debt and you may well discover you are paying a higher rate of interest. You may also find that you are charged an initial fee for a consultation on your financial problems.
So before you rush off and sign up with one of these companies, make sure you are fully aware of their terms and conditions.
Better advice on managing your money is available at three excellent Irish Websites: Best Value Ireland (www.bestvalueireland.com), Prima Finance (www.primafinance.ie) and Ask About Money (www.askaboutmoney.com).
Chartered accountant Brendan Burgess runs Askaboutmoney as a non-profit-making, consumer service. For people with questions about their debts, savings, tax, mortgage, or pensions, it is worth a visit.
There are suggestions on what to look out for when making a financial decision and what to avoid. Trained professionals are available to answer your query. Reassuringly, they are independent and not swayed by the prospect of commission.
Personal finance journalist Eddie Lennon set up Bestvalueireland and his site offers news on the best finance offers, plus advice on savings and investments.
It contains a huge range of information on everything from cutting your mobile phone bills, to details on the best value Internet connections, a guide to free internet software and how to minimise time online.
Primafinance is a new Website that is aimed at busy professionals and claims to be the country’s first full service online financial management tool. It offers a range of useful insights into financial affairs.
There are any number of Irish Websites that offer you the facility to set up a pension but one that caught the eye of this writer is Pensions Unplugged (www.pensionsunplugged.com). It aims to get you online access to your pension fund details, allow you switch fund managers and increase or decrease your premium.
Good value is available at Monitum (www.monitum.com) where this broker is offering up to a 75 per cent refund of the commission received in the first year of an investment.
Now that the punt is no more, it may be wise to let your PC help you work out how to get best value out of the euro.
Subscribers 0
Fans 0
Followers 0
Followers