Seven Ways that Personal Finance Software can help you...

With the proliferation of online personal finance software tools coming into the market, it begs the question as to why you might want to sign up and use these systems.

The advent of the mighty “Yodlee”, which is the back end engine for most of the personal finance software sites, makes getting up-to-date transaction information really easy – so we’ve put together seven reasons to use the new online software systems.

1. “See where you are spending your money”

• The personal finance software sites offers the opportunity to categorise or tag your transactions, allowing you to understand your spending patterns without the aid of a spreadsheet or pencil and paper...each site has different ways of doing this so have a look at a couple to see which suits you best

2. “Get all your finances into one place”

• The success of Yodlee as a back end screen scraping engine which interfaces with online financial accounts has meant that you don’t need to spend ages signing into different account to grab your data

3. “Set up budgets”

• All of the systems allow you to set up budgets for different category items. The better systems allow you to set up your categories into groups and to budget at both category level and group level. Don’t forget to set up a cash budget as well

4. “Track your spend through the month”

• Some of the systems do this better than others. There are three things you want to know. Firstly, how much money have you got left this month? Secondly, which budgets have I overspent? And thirdly, how much of my other budgets do I still have left. With this information you can work out if you have any changes to make so that you avoid charges

5. “Get alerts of some sort”

• Really you need to get warnings when you are overspending, when you are due to make payments, when your bank account drops below a certain level, and a few other things. Good systems give you plenty of alternatives here

6. “Review your Spending History”

• It’s really good to have very quick access to your history, helping you adjust budgets and helping you track annual and quarterly transactions

7. “Get some money-saving tips”

• The good sites are good at this. The bad sites are terrible – one of them offered me a 21” television for no reason other than they were trying to sell it. I don’t mind free sites that offer me ideas on saving money that are relevant to my circumstances but I strongly object to be being sold to or offered irrelevant things.