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Can Personal Finance Software Give You an Edge in Budgeting & Saving?

People have been following one form of budget or another since a medium of exchange came into existence. The earliest cavemen may have used something like sticks or stones separated into piles (three stones for Oog, one for Grog). Next came things like an abacus and paper and pen. Today, various types of personal finance software can take your budgeting efforts to a new level, making it easier and more accurate.


How Personal Finance Software Can Help

Personal finance software can help in many ways. Not everyone will find all their functions useful but there are bound to be ways that fit everyone’s situation. In this way, almost everyone can benefit from using the software to keep their budgeting efforts on track.

Account Balances and Transactions

It only takes a few seconds to bring up information regarding all your financial accounts. You will be able to know at all times where all your balances are. You will also be able to get a grip on where your money is going as all transaction information can be found for a given period in one place.

Help You Avoid Late Fees

Late fees can add up quickly. Most places add on a late fee that amounts anywhere from three dollars upwards and this is often posted to your account as soon as midnight hits. Many types of personal finance software allow you to set reminders for things like when a bill is due, when money will be added to your account and more. By setting up reminders, you won’t ever have to worry about paying a bill late, which will not only help your money situation but will also look better on your credit report.

Simple Account Reconciliation

Many people have both savings and checking accounts. If you run your own business or do freelance work, you could possibly have several. It can be difficult keeping track of several accounts at the same time but financial software can pull up all the information at once. You can easily see the cash transfers from one account to another. For example, many individuals have a bank automatically transfer funds from their checking account into their savings account each month so they don’t forget to do this. The software can be set to reflect this exchange so you don’t ever have to worry about whether you made the entry or not.

Easy Budget Planning

When you use a spreadsheet or even pen and paper, you need to manually record every little bit of information. This can lead to errors when you forget or are tired and maybe transpose numbers or make a small error in calculations. All of this can be avoided with financial software. Depending on the kind of software you use, you can have most of this work automated or you can set it to allow manual entries. In either case, things can be done much quicker and with greater accuracy.

Make Tax Time Less Stressful

Some financial software is designed with taxes in mind. You can create tax categories that you will need for itemized deductions, can differentiate income streams, and can even generate reports that will make filling out your taxes easier. You can also help keep track of tax information you will need if you are working on your own, enabling you to estimate your taxes and reducing the stress that tax time normally brings.

Pay Bills

There are some financial software programs that allow you to set up account information in order to pay your bills online. By using this feature, you shorten the time needed to make online payments and you also have an automatic record put into the expenses or payments area of the software. This means that if you also set up an alert signaling when a bill is due, you will always have that bill paid, and on time. The whole process can take only a matter of minutes to complete.

Track and Analyze Investments

The stock market can be hard to keep up with, with everything changing by the minute. Certain financial software can be set where you enter your investment information and then the software tracks the changes in that investment on the Internet, giving you nearly real-time information about how your stock account is performing.

Learn Your Net Worth

Not everyone really cares about their net worth, but many people need this information, or are interested in keeping track of it. Some of the higher-end financial software includes information on your net worth that can be accessed at any time. If this is something that you feel is needed, make sure the particular software you choose includes this ability.

Teach Children About Money

Software programs are a great way of getting children involved in just about anything. By teaching them how to use financial software on their own will help encourage future interest and ability in keeping a budget and taking control of their financial futures.


Are There Any Risks?

Most things in life come with a risk and personal finance software is no exception. While some people may be concerned that if they use an online service their credit card will be stolen or they will become victims of identity theft, this is actually very rare in personal finance software. The real risks are much less devastating, yet are still risks. The risks are greater with a free service in the majority of cases.


Privacy Issues

Some companies will use your personal information such as name, address, and spending habits to gain side income. This is done by:

  • Targeting you with ads that are based on your spending habits. This is like Facebook in that they know what you have purchased and will sell ads for related items, placing them where you see them.
  • Selling your name and address to a third party who will send you advertising.

This risk is mainly because someone is bound to be analyzing spending habits at any given time and financial transactions recorded by the software makes this an easy way to study these things. When a free service has the opportunity to make additional money, they may feel this is a good way of doing so, especially if personal information such as your name and contact information is not included.

One way to avoid this risk is to thoroughly read all the small print available before signing anything. Many places that do have agreements with research places will include an opt-out spot to check somewhere on their contract, but it is likely to be hidden in the middle of the other terms and you need to be diligent about looking for this information. If targeted advertising is annoying to you, investigate services first and try to find one that doesn’t place ads on their pages, or offers a paid advertising opt-out level.


You Could Become Lazy

The main purpose for creating and following a budget is to take personal control of your financial well-being. It is nice to make things easier. Some people have difficulty with numbers and accuracy can be less of a problem with software. When the entire process is automated, however, you become dependent on it and can become removed from the whole situation, making you lazier about having that control you were seeking to begin with. One way to help avoid falling into this trap is to find software that requires a certain amount of manual input on a regular basis. This makes it necessary to put your finances in front of you and allows you to refocus on your goals.


Not Enough Information

Financial software comes in many different packages. Not every program is going to do everything you want or need for it to do. It can be disappointing to find out that the software you invested in doesn’t live up to your needs. You end up frustrated and maybe even angry. These are the kinds of things that can make you want to give up on the whole budgeting thing and go back to hoping both ends of the month meet.

You can avoid this disappointment by not purchasing the first piece of software you come across. Take the time to research several different programs and services before settling on one. Before you start out, make a list of everything you would like your program to do and determine which items are absolutely necessary to you and which ones would be nice but not necessary. With this list beside you during your research, you have the chance of finding a financial software program that fits your needs well.


So, Will it Give You an Edge?

After thinking about all the benefits that financial software offers you may still be wondering if it is really worth the investment? After all, all the things the software does you can do manually with enough time and effort. Yes, using personal finance software can definitely be worth it as long as you keep a few things in mind.

  1. You need to use it regularly. This isn’t something you set up once and let do its thing. You need to keep track of updating information, checking progress, and taking the time to make sure you are on track.
  2. Take the time to find the software that works for you. Not all programs match everyone’s needs and it may take a few trials to find the one that fits you.

Yes, you could do all that it does manually, but it will take you many hours of time you could be spending on much more pleasurable or financially enhancing activities. You don’t have to worry about software being too tired to record the day’s transactions or forgetting to remind you of something. You have a backup available to keep you on track and help you take control of financial matters. The peace of mind is priceless.