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Financial knowledge means money in the bank

September 16, 2011

By Alexandra Kay | Money Rates Columnist

More than 11 million adults don't monitor their overall spending, according to a recent National Foundation for Credit Counseling survey. But keeping track of bills, budgeting, watching investments, and comparing fees on checking and savings accounts to save money are tedious, time-consuming chores, right? Not anymore.

With the abundance of personal financial management tools available online today, these chores have become easier--and more rewarding--than ever. And they're not the only benefits sites like Bundle, Mint, and Yodlee MoneyCenter offer. Seventy-eight percent of the people who use these sites say they have greater control over their finances.

All three sites allow you to see all of your money in one place by aggregating your financial accounts. You sign up for free online and type in your account numbers and passwords just once. Using bank-level security, they track what you spend in budgeting categories and send you updates via email so you see your entire financial picture.

Saving you money

By staying on top of your finances, you can easily see where you can cut back. "A lot of personal finance is about psychology and behavior, and in order for you to modify a spending habit and behavior, you need to be able to see what it is you're doing," says Ken McDonnell, director of the American Savings Education Council. The idea is that you will become more aware of your spending behaviors.

Using debit cards means we're not always aware of how much and where we're spending. With your finances organized in one place, the purchases you make in different categories become more apparent--which can help you trim spending so you can put money toward other things, such as family vacations, a much-needed new car, or better yet, your savings account.

"If you place a high priority on saving for your child's college, but most of your money is going to entertainment and recreation, then it is time to look at how your spending does not fit what you feel is truly important in life," says Dr. Mary Gresham, an Atlanta psychologist who specializes in money issues.

To further help you keep your financial priorities straight, Bundle (bundle.com) can create a custom budget for you, and even let you move excess money into different categories (so you stick to your budget).

Providing you motivation

Bundle also offers insight into what others in your general location are spending in different budget categories, so you'll know if the $500 a month you spend on groceries is higher or lower than the average for your locale.

Knowing how others spend their money makes you able to avail yourself of other possibilities, says Kathleen Gurney, Ph.D., a blogger at kathleengurney.com and author of Your Money Personality: What It Is and How You Can Profit from It. If you see someone else who's been successful at modifying some of the same bad financial patterns you're guilty of, this can give you the motivation to keep trying.

And when tax time comes around, you shouldn't need to fret about what you might owe. Yodlee MoneyCenter (yodlee.com/consumer.html) offers a tax center to help you get on top (and stay on top) of next year's taxes.

Yodlee also allows you to transfer money between accounts and has a Consumer Blog section, so you can go online and learn how others are saving money.

Keeping you honest 

Finally, seeing your spending and savings patterns laid out for you on a computer screen can help keep you honest, says McDonnell. If you're tracking your expenses on paper, there's always the temptation to fudge a little when you overspend in one category. But these sites don't judge you, so hopefully you won't want to be dishonest about what you're spending--key point if you're trying to modify a spending pattern.

Mint makes unbiased recommendations on how you can save money by switching to different checking, credit card, or savings accounts depending on your spending patterns.

You can even filter offers based on rewards or other features you need. Thoroughly research any offers, though, to make sure they work for you.

The bottom line is that these sites are tools to help you watch your spending, track your investments and savings account balances and create a budget all in one place. Customize budgeting categories to your specific spending needs, and choose how much money you want to budget for specific categories, without taking away from any savings.

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