While retirement income planning is extremely complicated and isn’t for do-it-yourselfers (How many of you have heard me say this before?), the ability to organize and maintain personal financial records has never been easier. In particular, the bill paying process has evolved to the point where manual checkbooks and paper invoices are no longer necessary and will soon be a thing of the past for many people.
Quicken – Pioneering Personal Financial Management Software
How did this happen and when did it start? Back in the early 80’s, while computers were becoming widely used and commonplace in the business world, the idea of a home computer was a foreign concept since there were very few applications that had been developed for home use.
Thanks to an accidental meeting in front of the Stanford University library in 1983 between Scott Cook, a former marketing manager at Proctor & Gamble, and Tom Proulx, a computer science major, Intuit, the company, and Quicken were born. Differentiating their software from 46 other personal finance products on the market at the time by designing the program to look just like a checkbook, Quicken became the number-one selling consumer software product in September, 1988.
Speaking from personal experience, after I stumbled upon Quicken in 1986, I proposed to my wife at the time that we purchase a home computer. Her response was, “What are we going to use that for?” I told her that we were going to have an electronic checkbook and organize our finances on the computer. With one application in mind – Quicken – I purchased my first computer that was made by NEC and ran programs on a DOS operating system.
Evolution of Automated Personal Financial Management Systems
To appreciate how far we’ve come since that historic meeting 30 years ago between the founders of Quicken, let’s take a brief look at an overview of the evolution of automated personal financial management systems. Automation of check writing, recording, and bank account reconciliations, which had been performed manually in one form or another since the first millennium, was a major breakthrough and timesaver with the release of Quicken in the mid 80’s.
Quicken quickly advanced, adding the ability to set up and post checking, and later credit card, transactions, to individual categories that could be used to produce financial reports. The ability to print checks, together with automatic recording to a check register and posting to custom categories was the next step. Automated downloading of checking and credit card transactions from financial institution websites, together with associated posting to specified categories, soon followed.
Although bills continued to arrive in the mail, online bill paying was the next major advance in personal financial management. It replaced check printing, check mailing, and eliminated postage for bill paying in the process. Instead of filing bills in paper folders, Quicken added the ability to scan and save bills linked directly to recorded transactions. This enabled bill shredding, elimination of paper folders, and storage of same, preferably with the use an automated back-up system.
In recent years, we gained the ability to choose whether or not we wanted to continue receiving hard copies of bills or simply view them online at each vendor’s website. More and more vendors are also allowing us to choose electronic instead of paper credit card receipts.
The most recent development in electronic billing is the elimination of the need to visit individual vendor’s websites to view one’s bills. Electronic bill aggregators, or digital postal mail solutions, enable electronic delivery of bills to one secure website from where they can be viewed, stored, and downloaded. One popular service that I have recently introduced, and have begun making available, to my clients through their secure online Retirement Income System is Digital Postal Mailbox from Zumbox.
As you can see, personal financial management systems have come a long way in less than 30 years. In addition to their increased efficiency and time-savings, they have significantly reduced the drudgery of manual bill paying, and have even made it fun (OK, I think it’s fun!) to pay bills. It has certainly enabled me to provide more accurate and better advice to clients who record and categorize their financial transactions in Quicken.
Disclosure: I have never, nor do I currently receive, any compensation from Intuit or Zumbox.