There are scads of online tools that ask you key questions about your retirement goals and then provide you a dollar figure for how much money you need to be setting aside to reach those goals. And that's all they do. The rest is up to you. Mint.com, a 3-year-old personal finance site that was bought late last year by Intuit, has just launched a new series of planning tools called Mint Goals that can follow your spending, income, investment, and retirement plans in real time, and provide informed advice on how you should proceed. It is not alone in this space and future Best Life articles will explore other online tools. Also, I'm explaining the service, not endorsing it.
[ See America's Best Affordable Places to Retire.] Having said that, it is clear that we are seeing the evolution of web-based tools into truly powerful ways to help consumers track their personal finances and make important decisions. Aaron Forth, director of product design at the Intuit Personal Finance Group, says Mint.com has more than 3 million registered users. The site is free to use but in order to take full advantage of Mint.com, you will need to give it access to your online banking, credit card, and investment accounts.
Given what seem to be daily horror stories of identify theft and misuse of sensitive personal information, any decision to provide personal information over the Internet should not be taken lightly. "Mint user accounts are 'read only' and have bank level security," a spokeswoman says. "Account data is not connected to any personal information, so even if someone could miraculously break into an account, they would not be able to do anything."
Even if you don't use the Internet to access and manage your personal finances, rest assured that your accounts are available online and that you could access this information if you choose to. I've been doing this intensively for several years. I began when my bank started offering free online bill paying. Once that hurdle was cleared, it became relatively easy to add credit cards and investment accounts. Today, I spend very little cash, and my online accounts capture nearly all of the money I spend and invest. So, for me, the Mint.com service is not a big leap. But I know it may be an enormous chasm to traverse if you're not comfortable using the Internet in this way. Many younger consumers have developed all-digital spending habits, and it's no surprise that the average Mint.com user is 35 years old -- relatively young for a personal finance site.
Mint.com says it gathers no personal information that would let it identify you and that it doesn't share your information with any other party. What it does do is collect the information you use to log into your online accounts -- web address, username, and password. Then, it logs into these accounts every night and pulls out your transaction and performance information and builds a running record of your activity. Mint.com users are asked to set up budgets, and the refreshed online information flows into these budgets and builds a real-time picture of how you're doing. If you've overspent on meals, Mint.com will know (assuming you don't pay for them using cash).
The typical Mint.com user has about seven online accounts, Forth says. "Part of the benefit of the application is the aggregation of the information" in one place. The more Mint.com knows about you, the more informed it can be in monitoring your activities and providing you advice. Another main feature of Mint.com is that it is constantly looking -- online of course -- for better deals for its registered consumers. That's how it makes money.
"We know lots of the details of what’s in your wallet," Forth says. "We can scan the financial landscape and look for products that will save you money." It might be a credit card or an online investment account with lower fees, for example. Mint.com will let you know of these offers, and if you decide to use a new product, Mint.com might get paid by its provider. "Many of the recommendations we make we are not compensated for," Forth emphasizes, "and we don’t recommend based on how much money we might get paid."
Armed with in-depth information about a user's spending and investment patterns, Mint.com can provide advisory alerts. For example, Forth says, if the service notices that a 401(k) account has displayed no transactional activity in recent weeks, it will issue a notice that perhaps the account is no longer active and suggest the holder consider rolling it over into a self-directed IRA (Individual Retirement Account). As the annual deadline for paying taxes nears, Mint.com can tote up that year's contributions to retirement accounts and alert users about how much more they can contribute for that tax year.
The new Mint Goals service involves a series of planning guides. These include getting out of debt, saving for an emergency, saving for retirement, buying a home, buying a car, saving for college, taking a trip, improving a home, or creating a more customized goal. In each case, the user responds to a series of online questions, enters the answers, and sees the decisions they will need to make, and follow, to achieve a goal. Mint.com's edge is that it then can track actual progress toward these goals. "Each month, we'll send you an update showing your progress," Forth says.
"We want to help people to be realistic and set up goals that are consistent with their own financial ecosystem," he explains. Over time, the Mint.com tools are likely to become more sophisticated. For example, the retirement planning tool now asks users to input the future rates of inflation they expect, and the level of annual percentage gain they expect from their investments. In the future, such choices might be accompanied with information about historic rates of inflation and market performance. For now, such background is not linked with the Mint Goals applications.