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How to Choose the Best Personal Finance Software

Budgeting, Personal Finance
How to Choose the Best Personal Finance Software

Personal finance software can help you understand and take control of your financial life. It comes in many forms, like websites, mobile apps, computer programs and other digital tools.

These services are designed to make analyzing and improving your financial health easier, but not all serve the same purpose. “Personal finance” in this context can encompass things like budgeting, expense tracking, saving, banking, investing, and paying bills or taxes.

So what does personal finance software do? Some services focus on one of these areas, and others serve as hubs for many or all financial aspects.

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Do you need it?

Software is an effective way to take your financial temperature, record your activity and reach goals with less effort. It can help you identify and track spending categories, like “needs” and “wants,” and fixed and variable expenses, so you can clearly see where your money is going and how much.

It teaches you about your relationship with money and can be a learning experience for kids, too. Personal finance software offers guidance and, in some cases, completes tasks on your behalf, like paying bills, choosing exchange-traded funds to invest in or transferring money into a savings account.

You’ll likely find a way to use personal finance software to your advantage, whether you’re in debt, living paycheck to paycheck or have money left over at the end of the month. You might learn that you’re spending too much on Uber and should cut back on trips. Or maybe you’re regularly contributing to your retirement fund and just want to track your progress.

Managing your finances through a digital platform can save time, especially if it has automated elements. Some services import your financial information and give real-time updates, which means less user upkeep compared with manual methods like a pen and paper, spreadsheet or bank visit.

Your bank may have its own app with similar capabilities, but using third-party software can still be beneficial; it might be more user-friendly or let you monitor multiple financial accounts in the same place.

» MORE: NerdWallet shows you where your money goes

Types of personal finance software

There’s a wide assortment of personal finance software. Here we’ll focus on the kinds that cover most needs.

  • Budgeting: Budgeting software helps you track and categorize your spending. Mint is one of the most popular free budgeting apps. It syncs with your accounts at financial institutions and automatically categorizes your spending. Goodbudget is a hands-on alternative that requires users to input their information and set spending limits.
  • Savings: Want to build up your emergency fund or save for a new car? Software makes it easy to reserve money each month. Some services automatically transfer money into your savings account or a special account to help you save without thinking. For example, Qapital can round up your purchases to the nearest dollar and move the change into a Qapital account, or it can automatically save a portion of your money based on the “rules” you set.
  • Investment: Investing puts your money to work toward long-term goals like retirement. Apps like Stash guide inexperienced investors in building a portfolio. The more comprehensive TD Ameritrade serves beginners and advanced traders alike.
  • Taxes: If you’re looking for an efficient way to prepare and file your taxes, consider a program like TurboTax or H&R Block. These take a potentially confusing process and make it simple to understand using a Q&A format.
  • Bills: Truebill and similar services are useful for managing, negotiating or canceling your subscriptions and utilities like cable.

» MORE: Budget worksheet

How to choose

The best software for you depends on your individual needs and preferences. Think about your goals, what you need your software to do and how sophisticated you’d like it to be. For example, if you want to track your expenses and income, a budgeting program that syncs to your bank and credit card accounts can do so quickly and painlessly. Here are some other things to consider as you shop around:

  • Device compatibility: Make sure the software you want will operate on your computer or mobile device.
  • How many financial accounts you have: Some software limits the number of accounts you can add or restricts you to just one type. So if you have checking, credit card and investment accounts to monitor, look for a service that can handle them all.
  • The assistance you want: If you need help using your software or making a financial decision, will a standard user guide or FAQ page suffice? If not, perhaps you’d benefit from a service with additional support — say, one that lets you speak to a human about your taxes or has a robo-advisor manage investments for you.
  • Reports: Summaries and visual components like charts and graphs often break down your expenditures by category or amount. These allow you to review your activity and financial status at a glance.
  • Your credit score: Access to your free credit score is a plus. You can see how your financial behavior affects your credit.
  • Security: Most major software has the same security measures in place as do banks and financial institutions. Still, be cautious and do your research before submitting your personal information.

Test out a few free services or take advantage of free-trial periods to see what works for you. Software should ideally save you time and be easy to navigate. If one is too complicated or time-consuming, look for an alternative.

Should you pay for software?

Free software is a plus but might not always be the right option. Free versions may have limited features and are usually suited for those with less complicated financial situations.

When to choose free: Paying to use software isn’t necessary if you can find a free version that ticks all of your boxes. Opt out of a paid version if you don’t need the excess features or don’t have the money to spare.

When to pay: Software that comes with a price tag often includes extra services like the ability to sync with multiple accounts, keep track of more history or consult an advisor. It can be less tedious than managing your finances on your own and less expensive than hiring a professional, especially if your financial situation is complex. You might consider paying for tax software if you’re self-employed or have children. (Don’t know whether to choose paid or free tax software? Visit NerdWallet’s guide to choosing tax software.) With investing software, there might be a fee to manage your account.

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