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Personal Financial Software

Can Quicken and Money fend off competition from Web-based money-management software? Don’t bank on it.

This month marks the fifteenth year that I have used Quicken to track my personal finances. I previously used a now-defunct program called Dollars and Sense, and before that I just kept a lot of money in my checking account and hoped that I wouldn’t bounce any checks.

I recently upgraded to Quicken 2003 For Home and Business, the latest version of Intuit’s personal money management software. Crammed with features, Quicken 2003 is designed to woo three groups of customers: Intuit’s own, who must be goaded to upgrade from older versions of Quicken; Microsoft’s, who must be persuaded to switch from MS Money; and all of those potential customers out there who don’t use any personal finance software at all. But to compete for the first two groups, both Quicken and MS Money are getting bigger-and buggier-and are in danger of losing an entire generation of new customers who are finding simpler and more appealing solutions elsewhere.

Intuit and Microsoft are also increasingly offering services once the domain of financial institutions, from bill payment to brokering. But the banks are pushing back, with Web-based software that enables customers to manage their accounts online. After trying all three options-Quicken, Money, and Web-based software-I’ve concluded that there is no conclusion: each choice benefits different users, and we all benefit from the competition.  I really wish there were a “best of breed,” but right now it’s just not out there.

The Soft Sell

Overall, my relationship with Quicken has been grudgingly successful. As a freelance writer, I depend on it: practically every dollar that I spend is logged in Quicken’s database, with the hope that it somehow will yield another 50-cent tax deduction. To help keep accurate records I charge practically everything on my credit cards, and dutifully download the transactions every few days. What’s more, with a wife and three kids, tax laws dictate numerous separate investment accounts for retirement, college savings, and estate planning. My net worth is far less than a million dollars, yet for some reason I have more than 40 different accounts that I track with Quicken-the majority of which are set up for download.

I started with Quicken on DOS, moved my files to the Mac in 1992, and then moved to Windows in 1997. Each of these moves was quite difficult: even though the Mac and Windows version have the same name and similar user interfaces, they have different file formats and entirely different underlying database engines. To move data between the two versions of the program, you must manually export each checking account or credit-card register as a QIF (Quicken Interchange Format) file, and then import each file on the other side. This is an error-prone process that frequently results in both lost transaction detail and duplicated transactions-quite a technical feat, if you think about it.

What’s most annoying to me, though, is that the majority of the delays that I experience with Windows Quicken are clearly the result of poor programming. Needless screen redraws slow performance, and the software also plays poorly with other Windows programs. For example, at times Quicken writes directly to the Windows screen rather than going through the Windows Application Programming Interface (API). As a result, the program sometimes draws in windows belonging to other applications. As Quicken was ported from DOS to Windows 3.1 to Windows 95 and so on, Intuit’s programmers slapped new features on top of old and rushed to make their annual deadline. But while Quicken 2003 is in desperate need of a complete rewrite, the economics of the personal finance software industry, combined with the management practices at Intuit, all but assures that such a rewrite will never take place.

As with previous upgrades, Quicken 2003 for Windows adds new features without addressing the longstanding technical problems that I’ve identified above. With Quicken 2003 it is much easier to set up Quicken for online account access. The 2003 version has a nicer “heads-up” display of your finances. There’s also a heavy emphasis on taxes, including an investment analyzer that tells you if your mutual funds make sense for your tax bracket and a “capital gains” estimator that tells what your real proceeds will be after a sell of stock. Finally, the 2003 version does a harder sell on Quicken Bill Pay (an electronic check server) and Quicken Brokerage (a cross-marketing deal with online broker Muriel Siebert & Co.). Overall, I prefer the new interface, but I’d happily trade it for a product that runs faster and more smoothly.

At the same time I upgraded Quicken, I also tried out its rival software, Microsoft Money 2003 Deluxe and Business. Overall, Money and Quicken are more alike than different: both have registers where you put individual transactions, both can issue reports on your finances, and both can download transactions from banks and credit cards. Both organizations have partnered with a huge number of financial institutions: the chances are quite good that if your bank supports either Quicken or Money, it probably supports both of them.

Money has a program that’s supposed to convert a Quicken file to Money format, but the converter crashed the first few times that I tried it. Eventually, though, I was able to get a good chunk of my Quicken file converted into Money format.

Money 2003 looks and feels like a Web site. The buttons are all flat. There are lots of embedded graphics, photographs of friendly-looking people who appear to be effectively managing their finances. And there’s lots of cool blue-and-gray color coordination.

The program is also tightly integrated with Microsoft’s online service, MSN. You might be looking at a transaction, click on a button, and-wham-you’re suddenly looking at a profile of a stock or a company on the MSN Web site. There is a menu called “Shopping” that takes you to shopping Web sites. And the first few times that I ran the program, Money gave me the hard sell on Microsoft’s “.NET Passport”-the program wanted me to use my .NET account (which I don’t have) to “conveniently and securely access your Money file as well as to access many of Money’s convenient online features.” This actually made me feel quite uncomfortable, so I declined.
Like Quicken, Money displays a variety of advertisements from Microsoft partners. Thanks to one session’s bombardment, I now know that interest on NetBank checking accounts is three times the national average and ING Direct has great rates and no fees. You can turn off some of these “sponsored links,” but few people probably will. (I didn’t, for example.)

From a performance point of view, Money had even more problems with my large transaction file that Quicken did. (This is all the more surprising when you consider that the 19 megabyte Quicken file only took up 13 megabytes in Money; once again, the culprit is poor programming.) Sometimes I would click on a button and wait 15 or 20 seconds before Money responded-all the while consuming 99% of the CPU of my 500 megahertz Pentium III computer. (And lest you think that my file is the problem, consider this: I imported the same QIF file into Quicken 2003 for Macintosh OS X. Once the data was imported, Quicken for Mac ran fast and flawless.)

If I was starting out from scratch, and if I didn’t have nearly a dozen different financial institutions set up with Quicken, I might very well start off with Microsoft Money. I like Money’s clean interface. And the program doesn’t seem to have the fits of starts and stops that Quicken has. As things are, even though I thought I had the freedom to switch, it turns out that I didn’t.

New Competition

But moving forward, the real battle isn’t between Quicken and Money: it’s between financial software that runs on your home computer and Web-based applications run by banks and brokerage houses.

I asked a friend who used to work at Intuit what he uses for keeping track of his home finances, and I was shocked by the answer: he’s given up on Quicken. Instead, he does his banking over the Web using Fleet. Another person I know is doing much the same, but with Commerce Bank in Philadelphia. Both systems let you get up-to-the-minute bank balances, view historical information, and even reconcile your checkbook online. One of the things that really impressed me about the Commerce Bank system is that the company lets you download images of canceled checks over the Internet.

I get the same sort of service with my online account at Cambridge Trust: what’s more, the records go back for five years. The only thing missing is the Payee from each check. It’s a shame that there is no easy way to upload this data from Quicken. On the other hand, I could just do away with Quicken and do everything online. 

Indeed, pure Web-based online banking overcomes many of the problems that I’ve experienced. The banks presumably do a better job backing up their data than you ever could. And you can access your banking information from anywhere-for example, a library, your office, or even a cell phone.

The real problem with the online services is that they don’t allow you to easily knit together transactions between multiple financial institutions: with Quicken I can easily indicate that money from one bank is transferred to another. That’s hard or impossible with the Web-based systems. But comparatively few users need that kind of sophistication. Even the simple Web-based systems will let you categorize transactions and create reports that are subtotaled by category, which is really all you need for figuring out taxes. And these systems have a huge advantage over running your own accounting software: the numbers are the real numbers from your bank.

People like me who are self-employed or have small businesses and need to accurately track their expenses will continue to use programs like Quicken, QuickBooks, and Money. But it’s increasingly likely that people who are yet to make the jump to such software never will: they will simply do Web banking and keep paper records for when they switch institutions.

Web banking applications are still crude, but I believe that they are the future.

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