Budgeting Software: A Free Way to Manage Your Finances

IT'S HARD TO miss the irony: Some of the most popular software designed to help people take control of their day-to-day spending can end up being real budget busters.

Microsoft Money or Intuit's Quicken, for example, start at $20 and $30, respectively. On top of that, users often have to pay their bank a bunch of extra fees (ostensibly the fees are for allowing these programs regular access to your daily financial transactions). Bank of America, for example, charges $9.95 a month in most states, while Wells Fargo tacks on $3 — plus $6.95 if you use the third-party software for online bill pay.

All of a sudden using a pen and paper to balance your checkbook sounds a lot more enticing, right? But for those who just want the budgeting basics, there are some online personal-finance programs worth considering. Even better, most of these programs are free. Sure, these web sites may not offer advanced features — like managing your investments and tracking financial goals as Money and Quicken do — but they can be an especially useful tool when it comes to juggling the household finances.

"The big advantage is that you can see and manage all your accounts from one place, which in turn helps you figure out where you want to go, financially," says Gerri Detweiler, a credit advisor for Credit.com and author of "The Ultimate Credit Handbook."

Here's how these online programs work: You set up the site so it has the necessary login information to access all of your accounts. That way, the program can download transactions such as your latest credit-card purchase or the amount you deposited at the ATM. You can then group these transactions together to see, for example, what percentage of your income is spent on groceries and what percentage is spent on clothing.

Before signing onto one of these sites though, you should know that not all of them are created equal. Here's what to look for when choosing your virtual personal finance manager.

However, experts agree that the threat of your data being compromised through a breach of the site itself is minimal. "The real risk here is on the end user" — meaning you, says Ron Teixeira, president of the National Cyber Security Alliance. "If someone gets into your computer and steals that one password for the site, they have access to all your data," he says. "It's the mother lode." To protect yourself, install and update firewalls, antivirus software and antispyware programs frequently. Also, regularly change your passwords for both the budget program and your bank accounts, taking care to use a complex combination of letters, numbers and other characters.

But even good security on your end is no reason to be lax about which budget program you pick, says Kountz. "As these sites gain traction, they will become targets," he predicts. "Fraudsters go where the pickins are, so to speak."

To choose wisely, search blogs and personal review sites like Epinions.com to see what other users are saying about a particular finance site. Also, look for security seals from companies like HackerSafe, VeriSign and Thawte. These icons verify that certain security measures are in place to protect your information. Once you've narrowed your options, read the site's privacy and security policies carefully to see how your information is protected, and under what circumstances (if any) it will be shared.

Here's what a few of these free programs offer: