Online budgeting sites Mint and PowerWallet require that you enter your most personal financial information, including bank user names and passwords. Can these sites be trusted?
After the data breaches at Home Depot, Target and others too numerous to mention, it’s safe to assume that at least some of your personal information, including the financial kind, may now already be in the hands of hackers.
Mom was right. You really can’t trust strangers.
Among the strangers we’re supposed to trust are those that do our budgeting for us. Sites such as Mint, PowerWallet and others offer free expense tracking, allowing us to easily budget and keep track of our expenses. As with online shopping and banking, these services afford a vast improvement over past methods.
But are they safe?
Here’s this week’s reader question:
Time and again I’ve seen you recommend PowerWallet as a useful tool to manage a budget. However, I’m really nervous providing my user names and passwords for all my financial accounts to a third party (and online). What if my PowerWallet account gets hacked? Hacking seems to be happening more and more these days. What can I do then if someone gets my account information and steals my identity? Thanks for any information you may have to ease my mind. — Lisa
Before we get to Lisa’s question, here’s a video we produced a few months ago about the latest ways to protect yourself from identity theft.
Now we’ll explore the safety of online budgeting sites and apps. But first, let’s talk about what these things are and why you should use them.
Why you should use a budget
From General Motors to the corner store, every business tracks its income, expenses and profits. You should, too.
Knowing what’s coming in, going out and left over is critical, for a simple reason. It’s the money that’s left over that allows you to reach your financial goals. Whether it’s a comfortable retirement, a home of your own or college for your kids, the only way to get there is to find the money you’ll need. And the best way to do that is with a spending plan, also known as a budget.
A budget allows you to establish goals and deadlines for reaching them. It allows you to make adjustments to your expenses, and by doing so, increase the amount you save.
Working without goals and a spending plan is like aimlessly driving around, hoping to somehow arrive at a desirable destination. Working with them means saying exactly where you’re going and mapping out the shortest path to get there.
Why you should use a budgeting app or site
In the old days, and by that I mean before 2006, there were two ways to track your expenses. The first was by hand. You’d write down everything you spent, then keep track of it, perhaps with a budgeting spreadsheet. The second was to buy software, install it in a computer, then manually type in your income and expenses.