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Should you use online personal finance software to manage your money, or is it better to stick to desktop software?

Desktop financial software runs on your computer’s hard drive and is purchased in a box or as a download. In either case, you need to install the software on your computer.

The advantages of desktop financial software are: As long as your computer is running, you can access desktop financial software. You maintain ultimate control over the security of financial data (if you use passwords, antivirus software and a firewall. Compared to online software, desktop financial software offers more financial management features. If you have a well-equipped computer (fast processor, maximum amount of RAM), desktop financial software should run responsively.

While the disadvantages are: If you forget to back up data regularly and your hard drive fails, recovering the data will be very expensive, if recovery is possible at all. Most desktop financial software installs without a hitch, but this is not true 100 percent of the time. This is because no two systems are alike due to differences in hardware, settings and software. It is more difficult to share financial reports between computers, and sharing data entry tasks may be impossible. If you have a budget computer or an older computer, new desktop financial software may run frustratingly slow. Fully-featured desktop financial software like Quicken, Microsoft Money, or Moneydance run slower on older or budget computers.

There are fewer free desktop financial software options compared to online financial software. Desktop financial software is usually more expensive than web-based financial software.

Online financial software runs in Internet Explorer or Firefox browsers, although some run in Safari or other browsers.

The Advantages: Since online software does not run on your hard drive, you will never deal with problems that often occur when installing software. Mac or PC, it usually does not matter since online financial software runs in browsers that are compatible with both systems. Online software accessible anywhere there is an Internet connection. Good online financial software stores data securely on the file servers via automatic backups.

Online financial software makes it easy to share data and financial reports with others. Online financial software is usually inexpensive, and is often free.

The Disadvantages: Good online software is more secure in many ways than desktop financial software. But there is no guarantee that all online financial software is 100 percent hacker-proof. Check the online software privacy or security statement (see Tip at bottom of this page). If your Internet connection goes down, you will not be able to access your online software. If the online software goes out of business or you switch to financial software, you could lose your data. To avoid this, look for online software that lets you download your data (such as a CSV file) to your hard drive.

Check your finances online on a public computer and forget to log out, and the next person who comes along may be able to get into your records. Online financial software can sometimes run slowly, especially if the software has many features, like accounting software does. Online financial software usually has fewer features compared to desktop financial software.

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