Safety First: Online vs Desktop Personal Finance Software

Managing Money Online Has Advantages

Online personal finance software apps are very popular for the conveniences and financial data security they offer. In fact, online tax software has exploded over the past few years with the IRS encouraging its use. Read on to learn why using online personal finance software can be safer than using desktop financial software.

Personal Finance Data Safety

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An online personal finance software app stores your financial data on developer's or provider's servers. Since this data isn't on your hard drive, if your computer gets hacked, your financial data stays safe.

Before you start using an online financial app, read the details regarding security measures provided. Here's what you should find:

  • The application provides the highest level of data security, in line with security provided by financial institutions.
  • Your data is encrypted, so no one can read it or use it.
  • Reliable online financial apps provide a secure firewall to filter network traffic and stop malicious attacks over the Internet.

Too many home computer users don't bother with firewall, antivirus and anti-spyware software and if they do, the software is often not set up for optimum protection. Broadband connections often don't have properly secured routers. Both of these practices leave you wide open to someone hacking into your computer and getting access to your data. This is not an issue when you use an online financial app from a quality provider.

No Software Installation

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Use online apps to avoid desktop software installation pitfalls. Don Farrall/Getty Images

Forget about botched software installations, storing install disks, and forget about ever having to reinstall software that becomes corrupted and stops working.

Online money management apps run over the Internet and are brought to you through your favorite browser such as Firefox or Internet Explorer, so you never need to be concerned about software installations going wrong.

Automatic Software Updates

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Because online personal finance apps do not reside on your computer's hard drive like desktop software, you never need to wait for an update to download or install. Online apps update behind the scenes and you'll never even notice minor bug fixes (unless, of course, the fix remedies an issue you've had with the app). With online financial apps, you're always running the most up-to-date technology.

Your online app provider will probably email you or use an internal communication method - like a blog or discussion forum - to inform you about updates that involve big changes to the user interface, reporting, transaction downloads, etc.

No Back Ups Required

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Hard disks can and do crash, often causing irretrievable data loss. A good automated back up plan that is frequently tested should be in place for every home computer user, but in reality, most people procrastinate about backing up.

Data used with online financial software apps is backed up often on file servers without the online software app user having to think about it. Ideally, a fault-tolerance system should be in place and provided so you can use the online app even if the provider has system problems.

Tips for Better Online Money Management Safety

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  • Before using any online financial software, look for a privacy or security statement on the website, usually found at the bottom of the web page or in the "About Us" section of the site. If you don't find a published security statement, contact the provider to request a copy of the statement - or don't use the software.
  • Check the data backup policy from online financial software you are considering using and be sure you are comfortable with it. Be sure to find out about the online financial software provider's fault tolerance measures, which should be included in their security statement.
  • Almost all online financial apps run Firefox, Safari, Chrome and Internet Explorer, but read up on the features and other information to find out if the financial app you are considering runs in your favorite browser.
  • Check the data backup policy from online financial software you are considering using and be sure you are comfortable with it. Be sure to find out about the online financial software provider's fault tolerance measures, which should be included in their security statement.
  • Having a strong password is your responsibility and is something an online personal finance software provider can not control. A strong password is one that is difficult or impossible to guess and is usually a combination of letters and numbers that mean nothing to anyone, even you.