The biggest advantage of using accounting software to manage your personal finances is the ability to house all of your information in one place. This allows you to see how much you have, how much you owe and even when you owe it. You can also get a customized view of your complete financial position without having to log in separately to all the bank and investment websites that hold financial information for you. (If you're interested in managing your money online, read our report on personal finance sites, which covers free services like Mint.com, Buxfer.com and Learnvest.com.)
Another advantage is that personal accounting software will store your financial information for as long as you want, so you don't have to file paper statements. It can thus serve as long-term storage for easy tracking of spending by category. You can create budgets and do long-term goal planning, as well as create custom mini-reports, get tax advice and save scanned documents.
However, the software doesn't do everything for you. You still have to set it up, which can take a few minutes to a few hours, depending on the complexity of your financial information and how detailed you want to get. Though you can download a lot of information from financial sites, you'll still need to enter some transactions manually.
We did not find many comparative reviews of the latest versions of personal accounting software, most of which were released fairly recently. Only TopTenReviews.com and FinanceSoftwareStore.com have thorough reviews that compare Quicken 2012, Moneydance 2010 and less well-known financial software packages. User reviews at Amazon.com provide a glimpse of the pros and cons of Quicken 2012, including upgrade trials and tribulations, from a firsthand perspective. They also rate alternative financial accounting software You Need A Budget. About.com, PC World and CNET offer single-product reviews, and About.com offers several overviews of the software available for specific segments of the market, such as those who use Macs. A few other sites, including PersonalFinanceReviews.com, FiscalGeek.com and GetRichSlowly.com, offer reviews and user comments that are worth a look.
The alternative to desktop software is using online services, such as Mint.com, to track your finances. The advantage is that these sites do most of the work for you; in exchange, you have to provide the login information for the accounts you'd like to track. Quicken now owns Mint.com and discontinued its competing free service, Quicken Online.
See our report on personal finance sites for more about Mint.com and other free online services. In addition, many banks and brokerages offer financial management tools on their websites.