How to Choose and Use Financial Software
- Be sure to investigate the security of a site or program before entering your personal financial data.
- If you choose to purchase any personal-finance software, search online for any coupon codes or discounts.
- Tax programs are ideal if your tax return is relatively simple. Make sure the program you're considering is current with the latest tax code.
Hop in your car for a long drive and you probably start glancing at your speed, gas, miles and temperature gauges. Yet during that other long drive known as life, most of us turn a blind eye to our financial gauges—either out of fear or because we aren’t sure what to do about what we see.
When installed on your computer, financial software functions like a dashboard for your money, tracking your transactions and giving you early warning when problems arise. Most programs track and display your budget, spending, banking, bills, savings, investments, retirement plans and debt levels—all in one convenient place.
The more often you look at these numbers, the richer you’re likely to become. Studies show that people who get into the habit of monitoring their money wind up wealthier than those who don’t.
Generally, financial software divides into two broad categories—money-management and tax-preparation programs. Among the best-known money management programs are Intuit’s Quicken. Microsoft Money or iCash. Web-based money management programs include Mint. Wesabe and Geezeo. For tax preparation, Intuit’s Turbo Tax and H&R Block’s software are the leading brands.
Money-management software offers:
• Budgeting — You set spending limits and manage your cash flow.
• Banking — Pay bills electronically on time, print checks and reconcile account balances.
• Planning — Monitor and pay down debt, estimate major life expenses, forecast retirement needs, and run calculations.
• Investing — Get stock quotes and track your portfolios.
• Reports — Print out summarizations and charts of your finances for review.
• Taxes — Export financial data into tax-preparation software.
Tax-prep software offers:
• Planning — Get tax advice on retirement, estate plans, investing and small business.
• Importing — Allows financial data to be transferred in from other software programs.
• Forms — Access federal and state forms.
• Reference — Latest IRS publications inform you of rules and regulations.
• Deductions — Information on applicable itemized deductions.
• Error checks — Reviews returns for miscalculations.
• On line filing — Confirmation that e-filed tax returns have been received as well as status updates.
Should You Buy It?
You could track your finances for free using a pad and pen—or an Excel spreadsheet. But the tedium of doing so could result in mistakes and make you give up.
Money-management software organizes your day-to-day financial life
in a way that’s easy to grasp at a glance and automatically updates much of the data.
Even if you use a certified financial planner (CFP) or financial adviser, these experts focus on the big picture, not your day-to-day money matters. So money management software is still key for tracking your financial life.
If you employ a certified public accountant (CPA) for ongoing tax advice or a tax preparer for your returns, tax-prep software may be unnecessary. However, if you’re unsure whether software would be a less expensive alternative to your tax preparer, you can conduct a free trial of a tax-prep program (usually available on the maker’s Web site) to see how your results compare with professional help before making the switch.
Choosing a Program
There are dozens of money-management and tax-prep software programs on the market. Some are downloads or discs that are installed on your computer. Others are web-based and house your data online. Take an online tour or download a free trial version before making a purchase.
You want see that a program’s pages are logically designed, that the setup will work smoothly for you and that its features can handle your financial needs. Not all programs offer the same features, and some provide more bells and whistles than you may want or need, such as the ability to find loan rates and link to a PayPal account.
To get the best deal on a money-management or tax-prep program, type the program’s name + “coupon” into Google and compare prices. Many sites offer e-coupon codes that are good at online retailers such as Amazon.com and YahooShopping.com .
Money-management programs. These financial programs can be purchased online or in stores—or downloaded for a fee and then installed on your computer. They are ideal for anyone who wants to ensure privacy, since the information will be only on your computer.
Just remember to back up your computer regularly to an external hard drive to ensure your data is protected should your computer be damaged or crash. Popular programs include:
Free web-based money-management sites. These sites host your data online. You open a free account and type your financial data onto money-management screens in a secure, privacy-protected space. The sites make money through advertising and other marketing strategies.
The good news is that your data is available from any computer by using your password. And if your computer fails, your data will be unaffected. These sites are ideal for those who can’t afford pricey programs or want to see whether free site-based help will suffice for their financial needs. The potential drawbacks: You get what you pay for, and many people may wonder just how safe their most data is sitting on someone else’s server. Popular sites include:
how to budget personal financesSource: guides.wsj.com