Websites that help you budget better

Money movements are less muddled, allowing you to see accounts all in one place.

By , Contributor to The Christian Science Monitor

First, it happened to word processing and photo editing. Now, personal finance management has entered the nebula of "cloud computing," where Web-based applications slowly replace software installed on a computer hard drive.

A handful of websites are helping users build and manage their own budgets free of charge. By monitoring websites run by banks, credit- and debit-card companies, brokerages, and other financial institutions, these sites allow you to put your financial activity in one place

Mint, Quicken Online, Geezeo, Buxfer, Justthrive, and a few others will gather an individual's financial information over secure links daily to present a comprehensive financial picture. Each site offers different tools to illustrate this snapshot (spending comparisons, financial health scores, social network discussion pages, etc.). But all feature some form of spending tracking and budget building, which can help users stretch their dollars and avoid losses such as late fees and overdrafts.

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After registering with any of these sites, users can then provide account numbers, pin numbers, and any necessary passwords required for clearance. The sites are all insistent about their safety, using encrypted connections and promising bank-level security. And since you can't use these sites to move money, potential hackers can't either; all connections are "read only."

No online transaction is absolutely safe, however, so be sure to examine the security certificates and policies of any site before trusting it with sensitive information.

While many people prefer to not give up their bank passwords, thousands already have. Mint alone claims 600,000 users, making it bigger than all of its competitors combined, says CEO and founder Aaron Pratzer, adding that his website has seen registrations more than double since the current financial crisis hit.

"Mint actually keeps you safer because you sign on to one place to check rather than multiple places, each requiring password entry," he says.

While Quicken declined to say how many people use its online service, spokesperson Scott Gulbransen points out that the company's complete line of personal finance products serves about 9 million customers.

Mr. Gulbransen highlights the safety factor of Quicken's mobile notification features, which alerts users via text message of large or unusual charges or fees. Such notices, he says, help users "track and protect against identity theft."

Mint will notify users of any unusual financial transactions via e-mail. It also will text message balance information to a person's cellphone if requested.

In addition, the site examines spending patterns and a person's financial outlook to recommend ways to save money by switching credit cards or savings accounts. This is also how the site generates revenue, as some of the results are sponsored. But the feature always displays a mix of sponsored and unsponsored results. "We show users the best rate, regardless," says Pratzer.

Quicken features what Gulbransen calls a "paycheck outlook" that predicts future bill payments and pay periods, so users can have a picture of what they "really" have at any point in time.

For its part, Buxfer offers a shared-expenses calculator that figures the fastest way to settle IOUs with friends. Users also can choose to store sign-in information offline with Google Gears or a similar browser add-on, or to upload transaction information manually.

These sites and their competitors all categorize transactions automatically, but some are smoother than others. For example, the systems know that Banana Republic purchases are "clothing," not "groceries," but transactions at Walgreen's usually come up as "medical" or "pharmacy" expenses, despite what you bought there.

When first setting up a budget, many transactions default to "uncategorized," or fall into an incorrect category. As a result, you have to correct them yourself. Perhaps its most flexible feature, Mint has "transaction rules," which allow you to permanently set the name and category of all transactions from any vendor.

Some financial advisers welcome these sites as they make monitoring and understanding one's financial situation easier and more commonplace.

"If you're becoming a numbers person because you're using one of these websites to stay on top of things, you're ... becoming more financially literate," says Joseph Montanaro, a certified financial planner in San Antonio. "that's going to make you a better consumer, and ultimately may protect you."

Mr. Montanaro finds the charts and other graphics these sites provide helpful. He also likes the idea of individuals having a virtual "accountability partner" that watches their money. "I think anything that gets people going down that path, in terms of making smart, informed financial choices … is all a positive," he says.

Despite the support online financial management sites provide, Montanaro says, those tools only do good if they're put into practice in the real world. "Ultimately … what makes the budget work or not work are the things that you do or don't do."

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