We’ve added a new feature today: cash accounts, one of our most requested features in the Make Wesabe Better group. It’s available on the site by clicking “New Account,” then clicking “Quick Start” and choosing a “cash” account. Of course, cash accounts are ideal for people like restaurant employees, who often receive most of their income in cash tips, but it can be great for other people, too.
One of the great pieces of received wisdom in the world of personal finance is to “watch out for the Latte Factor” (which, I had no idea until today, is actually a registered trademark of personal finance personality David Bach — zoinks, I thought it was just a cliché!). The basic idea of this maxim is that a lot of your money slips through your fingers in small purchases like lattes, and if you cut out the lattes, you’d be much better off.
It’s easy for me to see in Wesabe that this hasn’t proven true for my accounts (though others of Bach’s ideas have; he’s worth a read). I buy $20 gift cards from Peet’s Coffee once a month (they give you $1 free for each $20 card, and I reliably use up the cards, so it’s a good deal for me). That usually lasts me the whole month, since I will often make coffee at home instead of buying it in a store. About $10 in beans and $20 in store purchases a month adds up to $360 a year — less than most of my other discretionary categories. So far, it hasn’t proven true for Wesabeans in general, either — the ‘coffee’ tag has a monthly average of just $17.19 for everybody on the site.
I’m not, however, a latte drinker, and Wesabeans in general probably don’t buy all of their coffee on gift cards like I do. Since we haven’t had a way to track cash purchases, we haven’t really been able to put the latte factor to the test. If you’re concerned about this in your own finances, the cash account feature is for you. It’s a great way to keep track of the small purchases that do add up, whether for you they are lattes, magazines, cab or bus fares, or the like.
We’ve done it differently than other personal finance programs, however. One of the problems I’ve had with other programs is that they show a cash balance, as if it were just like a checking account, and expect you to track every single penny you spend through it. You’re supposed to have your ATM withdrawals be “transfers” into your cash account, and if you track every penny, the account balance they show will precisely match the amount in your pocket. That’s always been much more work than I’m willing to do — at the end of every month, I’d have to have one big “miscellaneous” fake-purchase to zero-out the balance. If I didn’t do that, my balance listing just went up and up, and made it look like I had hundreds of dollars in my wallet that I knew for a fact just weren’t there.
Instead, we’ve tried to make our cash accounts as lightweight as possible. You’re welcome to keep track of every penny if you want to, but for those of us who just want to track the expenses we think are problems, just enter those. We don’t show a running balance (if you want the balance, just open your wallet!) and if you forget or decide not to enter some expenses, no problem.
We’ve been working our way down the list of feature requests we hear the most. This coming week, we’re adding another feature that has been very much requested, and we’re thrilled about how it came out. Thanks again to everyone who lets us know what we can do better — your ideas and feedback are incredibly valuable. Keep it coming.