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Stories in the series:
   Kids and Money
   Reality Checking
   Not Your Mother's Budget
   Financial Planning
   High-Tech Money Management

High-Tech Money Management
Scott Horsley

  Real Audio

Host: Consumers trying to manage their money now have a wide assortment of technological tools to assist them: from computer programs that balance your checkbook to on-line banking systems that let you move money between accounts with the click of a mouse button. But do these tools really improve one's bottom line? Or just dress it up with fancy charts and graphics? As part of our series on personal finance, we sent Marketplace Technology Reporter Scott Horsley to find out.

Accountant Steven Higgins likes to point out there's nothing new about using technology to keep track of one's money. As a reminder, Higgins keeps an abacus on the table in his office.

Higgins: "Basically these are the ones columns, and each of the top ones stand for a five...so when you pull like this...five and two, now you have seven..."

Technology has come a long way in the 25-hundred years since the Chinese developed the abacus. Higgins thinks the next few years will see even more dramatic change in the way we manage our money.

Higgins: "Basically you'll sit down before your TV set...say these are the bills that need to be paid, transfer these to the bank, transfer these to pay them. and you'll be done with it. And by the way, order some ice cream and have the pizza sent up to the house. All in one deal. So that's where we're going it's sort of like eThe Jetsons' y'know."

George, Elroy, Judy, and Jane might feel right at home, managing their money using 1998 technology. And it doesn't take long for yesterday's "gee whiz" innovation to become today's "ho hum" necessity. Take, for example, the ATM.

Here at San Diego's Fashion Valley mall, shoppers stroll up to the cash machine, and instinctively reach into fanny packs and pocketbooks for the card that lets them tap this electronic piggy bank. Mike Dinwiddie can't even remember the last time he visited a real bank. He does all his banking here at the ATM.

Dinwiddie: "Probably a least a couple, three times a week...use it for withdrawals, lunch money. Or to make deposits also."

Once a new technology is widely available, it doesn't take long before people grow dependent on it. And the very convenience of ATMs may encourage shoppers to spend more making cash readily available when the buying impulse strikes. Despite those concerns, ATMs are proliferating. The number of machines has increased 42 percent in the last two years, making your next cash withdrawal as close as the nearest supermarket, library, or even fast food restaurant. And if you don't want fries with that...the Internet is bringing money management even closer to home.

Dinwiddie: "So this is the home page screen you would use to log in. I'm going to go ahead and log in....and you can see the functionality we have to offer.

Senior Vice President Scott Andrews of Wells Fargo shows off his bank's website. About l0-percent of Wells Fargo's customers now do their banking on-line. They can check account balances, transfer money, even pay bills and apply for a loan electronically, 24 hours a day.

Andrews: "Being able to do your banking at ll oclock on a Tuesdqay night y'know, when the bank is not open, it's just very conveinient and very helpful in managing your personal finances."

It's so convenient, Wells Fargo says its on-line customers "visit" the = bank electronically far more frequently than walk-in customers. With instant on-line access, customers can keep their money in interest-bearing accounts longer. Still, that sort of digital commerce doesn't appeal to everyone.

When Kalada Salaam-Alaji wants to move money around, she wants to deal with a live bank teller.

Salaam-Alaji: "I'd like to transfer some money..."

In the lobby of this inner-city bank, customers stop to exchange hugs and gossip, as well as money, and the security guard greets Salaam-Alaji by name. There are two gleaming ATMs outside the bank, but Salaam-Alaji would rather deal with a real person.

Salaam-Alaji: I don't use ATMs I'm sure people do. I just don't. (laughs) I really try to keep it as simple as possible for me.

And Salaam-Alaji is not alone. Experts loooking at ATM usage have discovered a generation gap. Researchers at Georgia Tech say only one third of people over the age of 65 have EVER used an ATM. But among those under 35, ATM use is much higher: 86%. And young people are increasingly using technology not only to move their money but to manage it as well.

33-year-old Jonathon Heller egerly shows off the household budget he keeps on his laptop computer. He's using Quicken, one of several popular personal finance software programs. He got this one as a gift about two years ago.

Heller: "I had a relative who maybe knew I wasn't as organized as I needed to be. And it took several months to get used to it. But then it really started to change the way I manage my finances.

Heller uses the computer to print checks and help with his taxes. More importantly, he says, it helps him keep track of his spending. Credit card purchases are automatically sorted into categories such as groceries, automotive, and a catchall he labels "stuff. Heller says when he's forced to account for his spending, he spends LESS.

Heller: "I mean I realized from doing this that I spent in the neighborhood of 300-350 dollars every two weeks on stuff I couldn't even tell you what I spent it on. And now I can tell you exactly what I spent it on. Dollar for dollar...I'm a better spender now. And I'm a much better saver."

Heller, however, may be the exception. Accountant Higgins says most of h is clients lack the discipline to stick to a household budget. And a software program is no more guaranteed to control your spending than a Palm Pilot organizer can guarantee you'll be on time.

Heller: "It's difficult to get a program, a computer program, to force you to do something you want to do. It's not going to think for you."

Despite that caveat, Higgins says he loves Quicken and uses it all the time himself. At least until the power goes out. Then, he says, it's back to the abacus.

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Related Information: A resource for parents interested in information on kids and money: The Kids Allowance Book, by Amy Nathan. Illustrations by Debbie Palen. A kid-to-kid guide on how to make the most of allowance and other important matters. Practical, informative, accessible and written especially for youngsters, this book is a fun guide to a topic near and dear to kids and adults alike! Available from Walker and Company: 1-800-289-2553. Merrill Lynch recently released the results of a survey regarding teenagers and savings. Read the entire text of the press release. Bank Rate Monitor website: www.bankrate.com. This consumer website has loads of information on bank accounts around the country and charts that can help you do comparison shopping. Also check out the "consumer connection" at the website of the American Banker's Association: www.aba.com. For state by state banks info, check out http://www.bankinfo.com/sba.html This website offers links to associations that are affiliated with the Independent Bankers Association of America, an industry group made up of small, community banks. Internet Banks: with no "brick and mortar" overhead, these "virtual" banks pass on their savings to customers in the form of higher account interest. Here are two of the small handful of internet banks that have so far gained approval from government bank regulators: Netbank (formerly Atlanta Internet Bank): www.atlantabank.com Also check out www.compubank.com Compubank is another startup internet bank. With these banks, as with any bank, make sure your deposits are FDIC insured! The Federal Reserve, the country's top bank and bank regulatory institution, has a survey (dry reading but some interesting information) on retail bank fees. The Fed's home page is: http://www.bog.frb.fed.us/. National Foundation for Consumer Credit, for folks in budget trouble. (800) 388-2227. The American Bankruptcy Institute, at www.abiworld.org. See how other folks are -- or are not -- getting by. The Dollar Stretcher, with the motto, "Living Better...for Less." Articles on "Frugal Fitness" and how to have a spa vacation at home. That's at www.stretcher.com There's a site, hosted by Hypermart, with a sample budget. Find it at http://dacomp.hypermart.net/sample.html. There are lots of links to other financial sites, too. Want help budgeting, and drafting a financial plan for your future? Call the National Association of Personal Financial Advisors at (800) 366-2732, for what's called "fee only" advisors. That is, they only make money off of their fee for their services; they aren't making commission from brokerage houses. They also have a web site at www.feeonly.org. Try the Institute of Certified Financial Planners, too, at (800) 322-4237, or www.cfp-board.org. Their planners must pass tests to belong to their organization.

Our series was reported by: Scott Horsley, Kristian Foden-Vencil, Amy Eddings, Jessica Smith and Michelle Brier; edited by Eve Epstein and Michelle Brier; engineered by Neil Rauch; with production assistance from Sara Ivry, Ben Donovan and Julie Hantman.