There’s a fantastic new tool available for those who want to track their spending. Wesabe went public yesterday.

Our site is live and available for everyone to use. We set out to build a tool to help people gain control over their money, and we believe we have accomplished our goal. It isn’t perfect and we have a ton of features we want to add, but this product helps people right now.

Wesabe is a community-based personal finance site which allows users to track their bank accounts (privately) while sharing money tips and goals (publicly). Think del.icio.us or Flickr or 43things, but for money. To quote the FAQ:

What does Wesabe do?
Wesabe is a community of people who share our experiences with our money so we can help each other make better financial decisions. We do this by aggregating and analyzing our community members’ personal financial data, and showing tips — recommendations to get the most from our money. These tips and recommendations come from the collective wisdom of our entire community. When one of us figures out how to make a great decision, we all learn.

I’ve been playing with Wesabe for a couple of weeks now. Here are some first impressions.

Accounts

When you first login to Wesabe, you’re given an opportunity to upload data from your bank accounts. You can do this manually by exporting the information from your bank’s web site and then uploading it to Wesabe (sort of like uploading a photo to Flickr). Or you can download and install a tool (for Mac or Windows) that will do this for you automatically.

Once account data has been imported, you can modify it by entering store names and by tagging each transaction. For example, I bought new tires for my wife’s car at the beginning of November. I had to change my bank’s metadata after importing the transaction. I changed the gibberish to “Les Schwab” (the name of the tire store), and then tagged the transaction “car hondacivic”. This transaction is now visible whenever I view my entries tagged “car”, and whenever I view my entries tagged “hondacivic”.

Your account data is visible only to you. But your numbers are included in community aggregates. For example, nobody else can see that I spent $4.98 for milk and bread at Safeway yesterday, but my $4.98 tagged “food groceries” is included anonymously in the aggregate community data. This helps users get some idea of what is “normal”. It also helps when offering tips and setting goals.

Tips

Wesabe members can share money-saving ideas with one another. These, too, can be tagged. For example, the following tip was tagged “art entertainment museum”:

Nearly every art museum has free admission at least one day a month. By doing a bit of research, you can enjoy some culture on the cheap.

Other users can comment on tips. They can also save them as favorites. (So each user will gradually acquire a list of favorite money tips to use for inspiration.) I love this because it draws upon the wisdom of the community — the power of this feature will surely grow with Wesabe’s user base.

Goals

Users can also designate goals, such as “avoid overdraft fees”, “save for vacation”, or “contribute to my IRA”. There’s a discussion area where the Wesabe community can comment on goals, offering advice and encouragement. Tips for each goal appear based on its tags. To track your progress, you can link tags from your own accounts to a goal. For example, if one of my goals is “contribute to my IRA”, I would link it to the IRA tag from my accounts. I haven’t used this feature yet, so cannot comment on its effectiveness.

Tags

Wesabe’s tagging system is a key to its power. Every transaction, every tip, and every goal can be tagged. If you’ve ever used Flickr or del.icio.us, tags will be instantly familiar. They’re one-word descriptors used to categorize your transactions (and tips and goals). For example, if you take your friend Sue out for dinner at a nice restaurant, you might use three tags for the transaction: “food restaurant friends”. The ever-present list of tags can be used to check your spending. If I click on the “food” tag, for example, I get a list of all my recent food transactions, as well as graphs representing my food spending over time. I can also access tips tagged “food” from other Wesabeans.

For example, check out this tip from Matt Haughey:

I’ve taken to tagging any purchase that is a gift to myself, or an extravagance, or any non-necessary thing with: extra. In a click, I can see how much money I waste each month on silly gadgets, bike upgrades, and wacky t-shirts. There was never an easy way to get that kind of data from Quicken.

On Matt’s advice, I’ve been tagging my unnecessary spending as “extra”, too. Whenever I buy comic books, for example, they’re tagged “comicbooks extra”. This is something you cannot do in Quicken, and it’s surprisingly powerful.

Conclusion

I often stress the importance of tracking what you earn and spend. It’s one of keys to accumulating wealth. From my limited use of Wesabe (I’ve only been using it for a couple of weeks) it offers some keen features. I can’t foresee it replacing Quicken at this point (and I’m not sure its creators intend for it do so), but it’s certainly an excellent supplemental tool.

So far, I’ve had just two issues with the site. The tagging system can take some getting used to. Wesabe cleverly uses two levels of tags: one for “just this entry” and another for “each time this transaction occurs”. This is powerful, but can be confusing, too. I recommend being cautious in the use of global tags. Also, Wesabe had some difficulty parsing data from my credit union. But the response to my bug reports has been quick and efficient.

If you’re worried about uploading your bank data to another site, perhaps Wesabe’s security policy may set your mind at ease.

Others around the web are writing about Wesabe, too.

You can also get great tips from Wheaties for Your Wallet, the Wesabe blog. This is a great app for those looking to track their finances. I recommend it.

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