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In a recent informal study, former Quicken users discussed why they made the switch to Mvelopes Personal, and what keeps them using the online spending management service.
"There were four recurring themes that we kept hearing," said Brian Howell, senior product manager for Mvelopes. "Almost every respondent cited the proactive and forward-thinking approach of Mvelopes cash allocation method of budgeting as a key factor in their decision to switch to and keep using Mvelopes. Simplicity or ease of use, accessibility and price were also cited as key factors."
Both Quicken and Mvelopes are designed to simplify the process of managing one's personal finances, but the programs differ in how they track and categorize expenses, according to the former Quicken users who have switched to Mvelopes.
"Quicken, and pretty much everything else out there, is about tracking spending after the fact," stated Pete, who made the switch to Mvelopes in 2003. "Mvelopes is about allocating your money and planning your spending before the fact. That's what brought me to Mvelopes and what keeps me here."
Mvelopes Personal focuses on helping users avoid spending money they don't have by allocating money to spending categories before it's spent, not after.
Mvelopes is based on a cash allocation method of budgeting, similar to the traditional envelope method where money is categorized in envelopes as it is received as income. As spending occurs, the money is then drawn from the corresponding 'virtual' envelope to pay for the purchase. The envelopes act as a sort of miniature spending account for each spending category. The envelope balances are tied to actual funds, not simply 'target' spending amounts. This helps users to avoid spending money they don't really have.
Quicken's approach is more reactive than proactive. Unlike Mvelopes, funds aren't allocated to spending categories before the spending happens. Quicken focuses on the bank account balances, so users tend to make spending decisions based on those checking account balances instead of the individual budget categories. Then, only after money has already been spent is it categorized to show where it went.
Quicken users can set up a budget, and use the 'target' amounts within the budget to make spending decisions, but the 'target' amounts aren't tied to any actual funds, meaning that the amounts may rely on future paychecks the user hasn't yet received. To avoid overdrafting an account, Quicken users have to combine the information from the budget with the information from the account balances to make informed spending decisions.
With Mvelopes, money can only be put into the envelopes once it is received, meaning that the envelope balances always represent actual funds. The information is all integrated into the user's spending plan, so Mvelopes users only need to check the envelope balances to make informed spending decisions.
"For me, the best way to sum up the compelling difference between Mvelopes and Quicken (or MS Money for that matter) is this: Mvelopes is category-centric and Quicken is register-centric," explained Dave, who used Quicken for years before becoming an Mvelopes member in 2005. Mvelopes users utilize the categories, or envelope spending accounts within the spending plan as the guiding information when making a purchase, instead of simply whether or not the checking account has enough money for the next check to clear.
"One huge benefit of that category-centric approach is that I see all transactions as a group of transactions rather than separated by account," Dave continued. "In the Quicken world it is all too easy to spend down your checking account and run up a balance on your credit card – both accounts laying claim to the same money. So when it comes time to pay the credit card, there is not enough in the checking account to do so."
Mvelopes, on the other hand, tracks credit card spending as it happens, and even though the money is not immediately withdrawn from the checking account, it is reallocated in the spending plan from the corresponding spending envelope to a "money for credit card" envelope. For example, if Dave purchases a $40 sweater using his credit card, the $40 is withdrawn from his 'Clothing' envelope and put into his 'Money for Credit Card' envelope. Then, if Dave is later considering purchasing a new shirt, even though the money is still in his checking account, Mvelopes shows him that he's already spent the money on the sweater. Based only on the checking account balance, Dave has the money available to purchase the shirt, but Mvelopes shows more accurately that the money has already been spent.
Using the spending plan as a guide instead of simply the checking account balance, users get a more accurate picture of their spending, allowing them to avoid overspending. "No more butterflies when it is time to open the credit card bill," he stated.
Since the envelopes function as spending accounts, the balances carry over from month to month, instead of simply resetting as they do in Quicken. This continuity not only allows users to know exactly how much money they have in each envelope, it also allows them to accumulate money in any of the envelopes over time.
"With Quicken, the only way to save up money for specific purchases is through 'Savings Goals,'" stated Kathy, a long-time Quicken user who made the switch to Mvelopes last year. "They want you to be saving towards a one-time purchase. But that means having to set up the same 'Goal' over and over again, such as with auto insurance that comes due every six months or real estate taxes that come due once a year. I don't want to have to go through all that nonsense. I just want to slam a certain amount into a hidden account every time I get paid and know that I'll have the money when I need it. And forget trying to use the 'Savings Goals' for truly irregular expenses like clothes shopping or car repairs."
Since Mvelopes allows users to categorize their money as it comes in, they can easily set aside a desired amount each month or each paycheck into a categories for things like periodic insurance payments, holiday gifts, car maintenance or clothing. That means that when December rolls around, the money is already set aside to cover the gifts. "And if I decide that I've accumulated more in the clothing envelope than I could possibly spend, then I can just move some of that into other envelopes, and then adjust how much I'm putting into that category each paycheck," said Kathy.
Since the balances carry over, users have incentive to save money and build up envelope balances. Because the budget doesn't simply reset at the beginning of the month, users don't get a 'use-it-or-lose-it' feel.
Unlike Quicken, which is downloaded and stored on the customer's hard drive, Mvelopes Personal is a Web-based program. Mvelopes functions more like the user's online bank, meaning that users aren't tied to a single computer. Users can login and check their spending plan and pay bills from home, work or anywhere with an Internet connection. Spouses and partners can share information and stay on top of their finances – regardless of their locations.
Mary and her husband are retired, and spend months at a time traveling the country. Mvelopes anytime, anywhere access allows them to monitor their finances and pay their bills from wherever they happen to be. "Mvelopes has made traveling much less complicated and we can just relax and enjoy our trips!" said Mary.
Mvelopes Personal supports over 10,000 financial institutions, nearly three times the number supported by Quicken. That means not only do Mvelopes users have access to all their spending and transaction information regardless of where they are, but also regardless of where their money is. If a user has an account with an institution that is not supported by Mvelopes, the user can submit a request and the institution is usually added within 2-3 weeks.
"The feature I like most about Mvelopes", stated Kathy, "is having ALL my accounts' transactions just 'magically' show up." Mvelopes automatically retrieves all new transactions daily, but users can also refresh their account information and Mvelopes will pull in all new transactions as soon as they are posted online. That means that transactions can be pulled into Mvelopes literally minutes after the transaction takes place if the bank posts in real time.
Because Mvelopes automatically retrieves all the user's transaction and balance information, it takes most users only a few minutes a day to log in, view and assign any new transactions and then check their envelope balances. One user compared using Mvelopes to checking their email in the morning.
"With Quicken, there's just too much 'stuff' that quite honestly wasn't important," said Joani. "I like that Mvelopes focuses on what's most important, and what I have the most control over – where and how I'm spending my money. I'm a visual person, and Mvelopes just gives me a better visual picture. It's just easier to work with."
A number of respondents also indicated that while Quicken's purchase price of $59.99 was rather reasonable, there were too many additional 'hidden' costs.
"The thing that really killed off Quicken for me though is that the version that came out last year will require a higher outlay of money on the part of my credit union in order to support it," stated Kathy. "The credit union put out a survey and I, along with many other credit union members, voted to not go with the new version of Quicken."
While prices vary by bank, many banks charge their customers for the ability to download transactions into Quicken, or to use a Quicken-compatible bill pay service. Mvelopes, however, is a subscription service, which includes a free full-featured bill pay service and requires no additional fees from any bank in order to use it.
Click here to see a price comparison breakdown of Quicken and Mvelopes Personal
*Based on a 2-year membership plan, other plans available.
**To avoid being charged the full service plan fee, simply cancel before the free trial period ends.
* Quicken is a registered trademark of Intuit®.
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