Budgeting Your Money Online: Fiscal Management Made Easy

En español | Where did all the money go?

If you're asking yourself that question every month, you might find the answer at one of the free online services that help you track your finances.

These websites collect and analyze information from your bank, credit card, loan and investment accounts, then help you craft — and stick to — a household budget.

See also: How bad credit costs you more.

You may want to keep track of your finances online. — Photo by Masterfile

For example, these fiscal management sites can organize the myriad purchases you make with checks, debit cards and credit cards, assigning each one to a category such as "groceries" or "auto." Your spending patterns are displayed in simple charts on your computer screen.

Many sites allow you to receive alerts by email or text in a number of situations: when a bill is due, when an account balance falls below a specified amount or when unusual spending activity is detected.

Other services include help with setting and tracking financial goals, monitoring the performance of your investments and tips on paying your highest-interest loans first.

The downsides? On some sites, be prepared for a lot of ads urging you to open a bank account or upgrade to a paid service. That's how they can offer you financial management tools for nothing. And some services are better than others at automatically collecting data from your online accounts.

Keeping your financial data safe

Some of the websites ask for the online passwords for your accounts. This allows them to fetch your financial information automatically. That's convenient, but is it safe to hand over passwords and account numbers?

The sites claim that it is, and independent reviewers agree. Typically, the sites offer high grade "bank level" encryption of all activity and allow only a few high-level employees to access passwords. The sites are continuously monitored to prevent network intrusions, and servers are under physical guard at all times.

If you want an additional layer of protection, you should choose a money management site that offers "read only" accounts. This means it can download details of your past transactions, but no one — not even you — can use it to transfer or withdraw money from any account.

Next: Protect yourself when managing finances online. >>