Review: Free sites help you manage your money

These personal financial management sites will help you manage your finances, set a budget and get out of debt.

Now that you've finally filed your 2008 taxes, how about starting out on a new foot and getting your finances organized? Next year when tax time rolls around, you could be sitting pretty while others sort through shoeboxes full of receipts.

There is no shortage of places to go to seek financial wisdom on how best to manage your money, but many people find that the best and least-expensive approach is to manage it themselves.

A number of free, personal financial management sites have popped up to help you do just that. These sites are no substitute for professional advice if your financial situation warrants it, nor are they even a replacement for more robust financial management applications such as Microsoft Money or Quicken. But they do offer a no-cost way to consolidate your financial information -- including credit card accounts, investments and loans -- into one easy-to-manage place.

These sites can also help you manage your bills, remind you when bills are due, help you set a budget and track where your money is going. Some even offer advice on how to save, get out of debt, lower your bills and save for retirement. A few center around online communities, where the power of social networking is harnessed to offer advice and tips from like-minded individuals.

Access to your information

For these sites to track your financial information, you first need to enable online access for your accounts on the Web sites of your respective financial institutions, such as banks and credit card companies. All of the sites that I looked at claim to work with thousands of major financial institutions, and all were able to successfully access my bank accounts and credit cards. However, not all of them can currently access investments or loans.

You enable access to your accounts by selecting the institution while you're in the personal financial management site and entering your log-in credentials. Sometimes that's all you need to do to enable access; other times, you might need to answer a few bank-provided challenge questions on the personal financial management site or enter an access code that your bank e-mails to you.

A natural concern is: How secure are these sites? Can you trust them with your information?

The sites that I looked at claim to use "bank-level" security with Secure Sockets Layer (SSL) and up to 256-bit encryption. Most of the sites assert that even their employees don't have access to your financial institution log-in information. By default, the sites don't even show your full account numbers; they simply display information such as "Bank of America -- Checking xxx-1234." Most even let you edit an account name, so you can change it to say something like "joint checking."

It's important to note that these sites are only downloading information from your financial institutions -- this is a one-way, read-only communication. So if someone did get access to your financial management site account, they could certainly see where your paychecks come from and where you bank and shop, but they can't make any changes to any of the accounts.

However, this information could potentially be used for phishing attacks or social-engineering scams, so you still want to be sure to keep your log-in credentials secure as possible and use a difficult-to-guess, non-dictionary password.

Efficient organization

Once you've given a personal financial management site access to your online accounts and downloaded your financial transaction information, you still have some work to do. The power behind all these sites is the information and advice they can give you about your spending. In order to do this, the sites need to categorize your transactions.

You'll need to go through of all your downloaded transactions one by one and assign a category to each, such as "groceries," "car payment" or "rent." Some of the sites are good at guessing the proper categories, and all recognize repeating transactions, so you should need to make only a few edits that will automatically populate to other transactions. Once your transactions are categorized, the sites then have the information they need to show you how much you are spending on items such as groceries or entertainment and can help you set up a realistic budget.

I compared five free sites: Geezeo, Mint, Quicken Online, Thrive, and Wesabe. I also checked out two other sites: Green Sherpa (which, when it comes out of private beta, will cost $7.95 per month) and Rudder (which charges a fee if you have over 200 transactions). They all offer the same basic functionality, but each does it in its own way, and some offer more features than others.

If you're interested in getting your personal economics in shape, one of these is sure to meet your needs.

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