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Money-Management Update

Free Personal Finance Web Sites

Personal finance has a whole new look thanks to Web sites that allow you to create budgets and manage your money free of charge. But choosing the best site for your needs can be a challenge because many sites are difficult to test.

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In June 2009 Microsoft Money pulled the plug on its personal finance software and stated in a news release that “consumer need” for its product had changed. The translation was clear: It’s difficult to sell personal finance software when a smorgasbord of Web sites provides free of charge many of the same services that are delivered by a $30 software program.

Since 2007, at least 11 free personal finance Web sites emerged, compared with just four personal finance software programs still available today. The free Web sites all make a tantalizing offer: Give us your bank account and credit-card information, and we’ll help you to figure out how to save and manage your money. And maybe, as the sites suggest, you’ll have fun, too.

Personal finance Web sites are targeting tech-savvy young people who have grown up along with the Internet. If you’re accustomed to baring your emotions on social-networking sites, the thinking goes, it’s not a great leap to share your financial mistakes, too. Still, we believe that consumers of all ages—even those who lack Web experience—who seek basic personal financial-planning help likely will find that these sites are beneficial. In general, these sites do a good job of tracking your spending, helping you to create a budget and reminding you when you strayed from your budget.

Making Cents. But how do you choose which personal finance Web site is best for you? Are there any advantages to buying the few personal finance software products that still exist? To answer these questions, we tested nine Web sites, along with one of the remaining software products. Here’s what we discovered:

  • Tough to Test: The use of free Web sites still requires an investment of the most valuable resource—your time. In many cases, you must sign up for the service if you want to get a good handle on whether a site is right for you. Most sites require that you share personal information, such as the username and password to your online bank accounts, before you even can evaluate the site. And the ones that don’t require that information give you little. In the case of one site—Geezeo.com—you access what is simply a commercial for the site rather than a tutorial on how the product works. When we pressed the Web sites about the difficulty of evaluating these sites, we didn’t hear much that makes us believe that that problem will change anytime soon.
  • Account Access: None of the sites that we tested includes an easy-to-find list of banks and credit unions that it supports. That’s a problem. Why? If a site doesn’t automatically link with a bank that you use, you either will have to enter the information manually (which can be a pain) or you’ll just have to exclude that account from your profile (which means that you won’t get a full picture of your finances). For instance, in our tests, Mint.com added an account from a major bank in seconds, but it was unable to locate a credit union that had an account that we wanted to include. In short, setting up an account on one of these sites is convenient only if the site automatically will link to your account information. Web site representatives say they’re increasing the number of financial institutions that they support. Mint.com, for example, expects to support 14,000 institutions by February, which is up from 8,000 in 2009.
  • Security Satisfaction: All of the sites that we tested provide lengthy explanations of the ways that they protect your security and privacy. And, for the most part, these sites are as safe from identity theft as the online sites that are provided by banks and credit-card companies, financial-privacy experts say. But before you input any financial information to a personal finance Web site, you should read the site’s privacy policy. Avoid any Web site that doesn’t provide a way to contact the company about security concerns. And stay away from any site that discloses that it might share your information with other companies. Such information-sharing policies give these Web sites broad leeway to sell your information, which can make it next to impossible to tell in whose hands your data might end up, experts say.

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