Americans under 35 spend 16% more than they earn, on average. College graduates leave school with an average of $20,000 in student loans and almost $3,000 in credit-card debt. This demographic, in sum, is sorely in need of an easy-to-use solution to their ample money woes. "There's this dull throbbing sense of guilt that we should be doing something, but where do we start?" says recent Stanford grad Ramit Sethi, who draws more than 150,000 readers a month to his blog Iwillteachyoutoberich.com.
In the past six months, a slew of free online services has popped up to answer this question, offering widgets for budgeting, automatic bill pay, mobile alerts, and social networking. All are fighting to be the anti-Quicken. Although Intuit's venerable personal-finance software commands 70% of the market, its $30 to $100 price tag, hundreds of features, and required hour or two a week of data entry are unlikely to appeal to a generation raised on Halo and diagnosed with ADD. Sure enough, Quicken's 15 million users have an average age of 47. If personal finance for most folks is like personal hygiene--an unpleasant chore motivated by necessity--Quicken is Old Spice.
Meanwhile, the Axe Bodyspray of personal finance--cool, fresh, and even sexy--is an upstart named Mint. Its unique features, wrapped in an exceedingly clean and appealing design, are winning tech-industry plaudits and brisk traffic. Mint went live on September 18, the same day it won $50,000 in the TechCrunch40, a demo derby run by Web impresario Jason Calacanis. Two weeks later, Mint won best in show at Finovate 2007, a personal-finance confab. It also signed up more than 40,000 users in the two weeks after launch. So has Mint cracked the code on getting Generation Debt to buckle down and take responsibility for its finances?
Mint founder and CEO Aaron Patzer, 26, sells his product this way: "Your parents say, 'Balance your checkbook,' but you don't have to anymore." To create a free account on Mint, enter an email address, password, and zip code, and then within Mint sign in to all bank and credit-card accounts. With this info at its disposal, Mint crunches the numbers. The secret sauce is a patent-pending algorithm that matches transactions with a database of 14 million U.S. merchants, the better to automatically categorize and track spending, obviating the need to keep a check register. (When I tried this, I spotted only a couple of mistakes: "Greenhouse," a yoga studio, for example, was labeled "House and Garden.") With automatic categorization, there's the big payoff of budgeting--a neat pie chart labeled "home," "food," "entertainment," and so on--within a few seconds, with no effort. Most of Mint's new competitors, sites such as Geezeo, Spendview, and Wesabe, emphasize users' tagging transactions themselves. Quicken Online, a Web product launching early next year, is unlikely to be as automated as Mint.
Mint's business edge is its fully integrated revenue model, something all too rare in the Web 2.0 world. Mint partners with financial-services companies such as ING and Discover Card, who pay for new sign-ups. Alongside accounts, the site objectively suggests ways to save, including sponsored offers for a higher-interest-rate savings account, say, or a cheaper credit card. Patzer says the user will like this product placement, because it offers customized savings, but only time will tell if it's a value-add or a value-annoyed.
Linking bank and credit-card accounts in one place naturally raises security issues. As we've heard ad nauseam, though, young people are used to baring all sorts of information online. Mint uses a company called Yodlee on the back end to retrieve account data--the same technology employed by Bank of America and Microsoft Money, among others.
Patzer says the competitor he's aiming at is not any of the startups but online banking itself, with its 65 million users. But the true threat to his ambition may be the gulf between Patzer's enthusiasm for number crunching and the more blasé attitude of the average person he's designing for. As a 16-year-old running an Internet marketing business out of his bedroom in Evansville, Indiana, Patzer started using Quicken for his personal and business accounts. While completing three computer and engineering majors at Duke, he also took accounting and updated his own Quicken ledgers every Sunday, a practice he continued until a frenetic job at a startup slowed him down for a few months. One fateful day, "I logged on, and it downloaded 500 transactions. I'm thinking, This is going to take me all weekend, I have to categorize them, and all I really want to know is, how much do I spend on gas and groceries? Am I going out too much this month, or buying too many DVDs at Best Buy?"
Actually, it's hard to see most young people getting that excited about such insight, even if they can get the information instantly. (I know I spend too much at Amazon and Forever 21. So what?) And when you already know you're broke, it doesn't seem all that helpful to get a text message from Mint reminding you that your bank balance is low. Nor is it clear that doohickeys like slider graphs and a blog will be enough to keep ordinary dudes from wandering away instead of continuing to feed their financial Webkinz after an initial sign-up.
In the long run, for Mint to succeed in being useful, it may have to give up being fun. It's telling that the first additional feature Patzer's users asked for was a way to monitor their student-loan accounts, not exactly an enjoyable task for most people. Mint is selling its users a way to overcome a "pain point," that "dull, throbbing" feeling described by Sethi. But the less responsible among us may continue to choose the temporary bliss of denial. "You set this up in two minutes, and that's the only work you ever have to do," Patzer claimed in his Finovate presentation. He got laughs when he added, "It's so easy to use, people will actually use it." But Mint may take longer to catch on than using deodorant ever did.