Todd Biske: Outside the Box

Here’s an idea for some entrepreneur to go and run with, or even better, for someone to read and go, “That’s already been done! Go visit -blank-.” I was thinking about banking, budgets, and money management and was thinking just how inconvenient it is to move money around between various accounts. I’ve been a Quicken user for over a decade now, and it’s frustrating that there are still financial institutions that don’t download into Quicken easily. The second thing that occurred to me is that it still seems to difficult to move money around between different accounts. The average person can have a checking account, a saving account, a retirement account, an investment account (which may also require having accounts with each company that manages a mutual fund in that account), plus accounts for their family, credit cards, etc.

I thought back to when I was growing up and remember my Mom having a collection of envelopes at her desk, each of them containing the cash for the month for a particular category. This was how she created her budget. I also found out later about some of the other tricks my parents used for handling things like Christmas and vacations. They had additional bank accounts that were reserved for these expenses that were going to be larger and thus required a longer time period of savings. They’d rather get interest on it from a bank somewhere than keep it in an envelope on the desk.

Then it clicked. Why can’t a financial institution today provide an electronic equivalent of the envelopes my Mom used years ago? All the pieces should be there. We leverage electronic fund transfers every day, there’s absolutely no reason that this can’t be made more consumer friendly so that performing a transfer from my checking account into a custodial investment account for my kids is as simple as doing a “Transfer Funds” operation in Quicken. Does anyone make this easy today? I know there’s lots of room for improvement with my financial institution. What about budgets? If you pay cash for everything, you may as well stick with the envelopes. If you pay with credit card, once again, the technology is there. I just entered an expense report at work and the system has visibility into expenses charged to my corporate card. It was able to pre-populate the category of the expense by looking at who the payee was. Take this a step further, and it would be great if I could place controls over the charges (this would be very good for debit cards) so that I wouldn’t be warned (or even stopped) that I was going to blow the budget with a particular purchase. This would be great for kids, as well, where a parent could give them a limited access debit card that could only spend up to a budgeted amount and only for certain categories of expenses.

What about those long term items like vacations and saving for Christmas presents? Why on earth should I need to open up another account to do this? Can’t the bank allow me to create a “virtual” account where money can be transferred in and out, but checks and debit card transactions couldn’t go against it?

It’s certainly true that one can probably execute sound financial management with today’s tools, but it just seems to me that it can be made much easier, and if it’s easier, maybe more people will have better luck with it. So, what do you think? I’m of the opinion that someone out there has to be doing this already, it seems too obvious for someone not to be jumping all over it. If someone has, please comment or send me mail. Maybe one of the new Internet banks is doing this today. If not, well, make you thank me for the idea and give me a free toaster or something when I open my account.

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