Online financial tools can help manage money |
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Users can set up automated budgets that notify them when they've overspent on one category, or overall. They can create e-mail
alerts to let them know what's going on in their accounts. In short, these Web sites offer a powerful, free set of tools to help you see how
your spending (and saving) patterns contribute to your overall financial picture.
Many of these sites offer social networking elements like discussion boards, messaging and personal profiles that allow
unfiltered and wide-ranging discussions of personal finance topics. While exchanging advice and opinions on financial matters on these sites
can be helpful and fun, the opinions of fellow members shouldn't be confused with the advice of a professional.
Security holds some back
But in this time of economic turmoil, when everybody could use a better handle on their finances, what hang-up could one have about using
these sites? One word: security.
"It's an issue of trust," says Needleman. "These sites work by getting financial data on your behalf from your banks, so
that means you have to give them your password. Do you trust a startup with the keys to your checking account?"
To address this issue, Mint, Geezeo and Wesabe all have layers of encryption and data security that rival those of the banks
they link to. While these sites each take a somewhat different approach to security, you can bet that the people running these sites understand
the effect a security breach would have on their own sites and their entire industry.
"We have the same level of encryption that a bank does," says Aaron Patzer, CEO of Mint.com. "And that's not just SSL encryption.
That's third-party verification ... and outside audits of our network and our security systems."
Patzer adds that the sites don't allow users to move money around or make payments from the accounts they access. So even if
a hacker did break into your account, "they couldn't move money around; they couldn't drain your accounts. All they'd know is that 'HappyGirl17'
goes to Starbucks."
"While they say they have unbreakable or very hard-to-break security, and none of them, to my knowledge, have been broken yet,
if the passwords that they are storing on your behalf did get out, it would be very, very bad, and that's what people fear," says Needleman.
On the other hand, using these personal finance tools might help protect against fraud and theft. Each site can be set up to
send e-mail alerts when purchases over a certain amount -- say $1,000 -- take place, and those alerts can go to your computer, cell phone
or PDA.
"If somebody starts buying big-screen TVs because they've swiped your credit card, you'll get an unusual spending alert,"
says Patzer.
Most appealing to young
Still, many older Americans will probably be hesitant to divulge their online banking information. In addition, the sites in this space may
have a hard time dealing with the more complex financial pictures of older users.
"I had a good budget for a month and a half, but I had to keep reclassifying my purchases, and frankly, I don't have the time
for that." says Stephen Dill, a Mint.com user in Boston. "I felt like I gave it the old college try, but I just wasn't getting a lot out of it."
"If you have a rather simple financial picture, these services will give you a good picture of it," says Needleman. "But if
you have a mortgage, an investment portfolio or alimony payments, or something like that, many of these services don't yet have the flexibility
or depth to let you get a complete picture of your finances."
But these concerns aren't stopping younger Americans from signing up in droves. More comfortable by far with putting information
about themselves online, hundreds of thousands of Gen-Xers and Millennials have already given up their online banking information in exchange
for the services of a dedicated digital number cruncher working for them 24/7. And you can expect that number to increase as Internet-savvy
young people meet financial challenges like saving for weddings, paying down debts, buying first homes and having kids. Here's a primer on
the three sites shaping up to be the leaders in this segment:
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