Is tracking your money online too risky?
Tim Johnson, 30, says he wanted to do a better job of organizing his family’s finances.
“I just wanted to see how much money we had. I have a Roth IRA and some investments from my grandparents. My wife and I both have 401(k) from our jobs. My wife has a substantial amount of 401(k) from her previous job, as well.”
Tired of the paper clutter, Johnson went out and purchased a version Intuit’s Quicken for around $50.
“It was a little expensive but it helped us gain a better perspective of our finances,” Johnson said.
With the economy in its current funk, more people are turning to online money management tools. Free financial software sites such as Mint, Moneycenter and Wesabe are enjoying an increase in users.
Mint’s founder and CEO, Aaron Patzer, says more than 625,000 people currently use his budgeting and money management site.
The biggest obstacle for these free financial sites is assuring users that their information is safe and secure.
“I’ve heard a little bit about free financial software options, but I like knowing our information is safely stored on my computer at home,” Johnson said.
Are They Safe?
“There will always be an opportunity — whether from the inside or the outside — for a hacker to get in,” says Robert Siciliano, CEO of IDTheftSecurity.com, a website that protects consumers from identity theft.”
Before entering any sensitive information onto a site, Siciliano says consumers should understand each site’s policies in the event there is a breach.
“It’s important to know who ultimately is responsible for any security failures and what their policy for retribution is,” he said.
On Mint, you never share your name or Social Security number. Also, there is an option that will send a text message if there is an expensive purchase made on your credit card.
“If anything, Mint will help you keep an eye on suspicious activity,” Patzer said.
Patzer said that even in the event your account is accessed by someone else, the amount of damage they could inflict is minimal.
“You can’t move money from account to account on Mint, so they wouldn’t be able to do much,” Patzer said.
Siciliano said financial sites — whether they are free or not — are required to have the software and encryption methods to protect users.
“As a consumer, I would try my best to understand their revenue model and how they are paying for all that security,” he said.
Free And Accessible
Besides being free, Patzer said, the best thing about his site, “is that allows you set a budget.
Moneycenter and Mint both allow users to create categories and subcategories for budgeting. Because all of your bills can be computed, users can set goals and the system will offer ways to help attain them.
One of the best features online financial sites offer is accessibility. With an Internet connection and a browser — or sometimes just a mobile phone — you can access all of your financial data.
Help With Taxes
With all your financial information in one place, filing your taxes is a whole lot easier.
“If you’re traveling to New York for business, Mint allows you print off all your business-related expenses, Patzer said.
Because each site has their financial tools available online, there’s no downloading or software you have to deal with. You’ll always be dealing with their most updated version.
If you upload your credit card information into Mint.com’s system, it will calculate the amount of interest you’re paying and notify you if could save money with another credit card.
This is also how Mint pays for its services. But Patzer said the system will give you the best rates results regardless of sponsorship.
Mint allows users to set their retirement goals and offers tools to help them reach it.
“It’s sort of an automatic financial advisor,” Patzer said.