by Nick Owens

Lately, I’ve been ruminating on Personal Finance Management (PFM) – managing the various inflows and outflows of one’s financial life. I’ve been trying to imagine a nicely ordered flowchart that represents the workings of my family’s monthly finances, but instead what keeps coming to mind is the confused and pathetic-looking image of “kabelsalat”. Kabelsalat is a German word which translates to ‘cable salad’. It’s a polite description of what happens with unmanaged wires in our media entertainment system, or a terribly mismanaged server room.

After a week or so of examining my own financial snapshot, I exhaled and summed up my discoveries in one sentence:

“Holy shit, this is a mess.”

I started asking around, wondering what other people do, figuring that somehow I was just out of the loop – and that everyone else had this PFM thing down. However, that was not what I found. Kabelsalat seemed to be plaguing everyone I talked to about finances – friends, family and colleagues alike. Due to the scrambled nature of the various monetary inflows and outflows – paychecks, investment return, taxes, bills and other expenses – the management of our finances was a mess. Most people’s PFM space was a network held together with post-it notes, reminders, emails to self, phone calls, and a mass of horrifying spreadsheets – and these were the scenarios of people who were actually trying to keep things organized.

If you’re trying your best to make sense of your PFM space, it probably looks something like this:

Flow of Money

We have money going in and money going out, but rather than a nicely managed stream, it looks like the map of a distributed, decentralized network. Odd payments crop up everywhere, credit cards create mutated orbits around bank accounts and purchases – like a binary pulsar constantly causing gravitational havoc on the universe around it.

This messy system creates tons of stress for people. But what’s worse is the negative impact it has on our financial strategies. Currently, our personal finance information isn’t being transformed into actionable knowledge. Instead, it actually creates a shell of permanently evolving noise around us, like boxes full of receipts and external hard drives loaded down with useless spreadsheets. Each month we prepare for the outflows of money, which are often taken care of manually with ancient technology. In some cases, this means waiting in lines to meet with someone to pay a bill or having to climb into the ring with companies like Comcast, whose phone etiquette saps our time and freedom. Sure, we can place specific bills on auto-pay, but this only adds more byways to the already overly complicated maze of our PFM space.

Currently, there is no insight and no strategy evolving from our continued participation in managing our bills and revenue streams, which reminds me of a quote from Marshall McLuhan, “We shape our tools and thereafter our tools shape us”. The tools we have available to manage money are so bad, they’re shaping us into bad financial people.

What would it look like if we had a powerful, insightful and well-organized system that brought cohesion to our PFM space? What if this system was a nicely managed stream of inflows and outflows, like this?

Money Flows Distributed

Altering the basic architecture of our PFM space would vastly simplify and improve our financial management and strategy. This could be done in the following ways:

  • Build tools that transform the decentralized network-relationship mental-model into a flow-diagram mental-model. We need to take a map and convert it into something more useful than a map. The map guides us through the tangle of wires in our kabelsalat, but that doesn’t really solve for the tangle of wires itself, which is the goal. 
  • Connect the break points. In the current process, there are too many break points in managing PFM. It’s those micro-transitions between, say a bill, and a payment, that are currently not joined in a way that could create a better user experience.
  • Use predictive checklists. A perfect example of this is the connection between our past transactions and our upcoming transactions, which should be a predictive checklist. By cross-referencing those past and present transactions, we can build a bridge and close a gap.
  • Create seamless connections between the separate products that represent the various inflows and outflows in our PFM space. 

If and when the banks decide to create a seamless experience between our fractured online PFM lifestyle, they could effectively win the battle, since they already own lots of IP that can be used to create amazing products. But maybe we shouldn’t be looking to the banks to create our financial tools. According the The Millennial Disruption Index, 73% of millennials would be more excited about new financial services offered by Google, Apple, Paypal, Square or Amazon than from their bank. The desire to change is there. People – from millennials to 50 year olds – want tools, and are looking for tools, but most are not satisfied with what they’ve found so far.

However, there is hope. Stay tuned for my post on fintech apps that are disrupting the banking industry.


“We should not feel embarrassed by our difficulties, only by our failure to grow anything beautiful from them.”

ALAIN DE BOTTON