(MONEY Magazine) – Home-computer users typically fire up their PCs either for word processing or trying to get to level 6 on Tetris. But if that's all you are getting from your desktop, you're ignoring one of your machine's most powerful features: its ability to put you on top of your cash flow, shave hours off routine money matters and cut your brokerage costs to a sliver of what they are now.

I ought to know. I spent the best part of the past two months this spring running my financial life from my home PC. My assignment was to sample every kind of transaction that can be conducted via computer, from budgeting and banking to investing and shopping. In most cases, the programs and services I used delivered on their promises. (In fact, I'm still using them today, a month after my assignment ended.) Among the highlights of my findings:

--For about $25 a month I could research funds and check up on my stocks whenever I wanted. Plus, I was able to save 60% to 95% on brokerage commission costs by trading through the best electronic brokers rather than by calling an ordinary discount broker.

--By going online with my bank accounts, I saved half a dozen hours a month balancing my accounts, paying my bills and trying to figure out where my cash was going.

--My only major disappointment was shopping online, which struck me as overly hyped and time consuming.

Obviously, I'm not the first to discover the convenience of going digital with my personal finances. The number of Americans banking or paying bills online has tripled to 780,000 in just the past 12 months, according to Fairfield Research in Lincoln, Neb. That figure would undoubtedly be higher if not for many computer users' concerns about online security. But today's banking and browsing software, properly used, provides safe ways to do business digitally. "The danger is no greater than using a credit card at a restaurant," says Michael Wolff, president of Wolff New Media, which publishes a series of guides to Internet commerce.

Running personal-finance software doesn't require particularly sophisticated hardware. I used a PC supplied by Money with Windows 95, a 90MHz Pentium microprocessor, 16 megabytes (MB) of RAM, a 640MB hard drive, a double-speed CD-ROM drive and a 14.4-kilobits-per-second (kbps) modem (cost for a comparable desktop system: about $1,500). My setup smoothly handed all the personal-finance software I tested, but if you plan to use any online services--and you should--you spring for a 28.8 kbps modem, which currently costs about $200.

The software and services I tested fell into four broad categories. I've rated each on a five-mouse scale according to the time or money I saved by using the computer, compared with doing things the old-fashioned way.

CASH MANAGEMENT

Usefulness rating:....[Four mice]

Tracking your income and outgo is the drudgery of personal finance, just the sort of thing that people were not designed to do and computers were. Of the four major software programs meant to handle this job, Quicken ($40) is the obvious choice. One reason it is the runaway leader in its field (it occupies 80% of the market) is that data entered into it can easily be plugged into other well-regarded Intuit programs, such as TurboTax and Quicken Financial Planner. (For a review of alternatives to Quicken, plus financial planning software, see the box below and on page 139.)

Cash management programs are basically computerized ledgers that let you link together an unlimited number of different accounts, like your checking accounts, credit-card balances and investment portfolios. I started, for example, by entering all transactions from my checking account over the previous month, establishing separate categories from "Con Ed" to "concert tickets." Once you establish a few entries, Quicken recognizes which one you're entering after just a few keystrokes (it knows "car i" probably means car insurance). But the real payoff comes later--say, at tax time. Quicken can skim the information you've input to instantly answer questions like "How much did I spend in the past six months on deductible bills?"

Another boon: Because programs like Quicken make tracking your cash flow so much easier, you're more likely to actually do it. If not for Quicken, for example, I would never have realized how much I was overspending on gasoline and lunch. Sure, I could have learned the same thing by itemizing my spending by pencil--but would I really have gone to the trouble without the computer? No way.

BANKING

Usefulness rating:....[Two mice]

About two dozen major banks, including Bank of Boston, Citibank and Wells Fargo, offer online access to your bank accounts through Quicken or its main competitor, Microsoft Money. (Another dozen or so feature online banking using other software, such as Managing Your Money, and a handful use their own proprietary software.) Adding electronic banking to the basic functions of a cash management program makes both services vastly more valuable.

Most important, online banking eliminates the dreary task of having to input each transaction to your digital ledger. Instead, the bank's computer updates your account right in Quicken or Microsoft Money whenever you log on to the bank's network. Once you're hooked up, you can also pay bills by PC: Just type in the amount of the remittance and the name and address of the payee, and the bank handles the rest. And you can instruct the computer to automatically pay expenses that are the same every month.

My online account with Chemical Bank was a huge timesaver. Before, I spent about six hours a month paying bills, reconciling my accounts and budgeting on paper. Now those tasks take a mere 15 minutes a month.

However, electronic banking has some shortcomings. Banks can transfer money electronically to a creditor of yours only if the creditor is wired to receive such payments. In other words, the bank can pay your American Express bill electronically, but to pay your plumber it has to print an old-fashioned paper check and send it by U.S. mail. To make sure such bills get paid on time, you have to alert the bank five days in advance. And don't think that electronic banking means you'll never have to stand in a teller line again. I had to twice, to deposit checks.

My biggest beef with online banking, though, is the price: Most banks charge for electronic accounts. I ran up a monthly bill of about $12 with Chemical, vs. a cost of about $3.50 for the postage on my envelopes beforehand. So if you're interested in online banking, consider the handful of banks that offer the service for free. They include Citibank and CoreStates.

INVESTMENT RESEARCH

Usefulness rating:....[Three mice]

Much as I appreciated programs like Quicken, I felt that my PC really began to earn its keep when I used it to help select investments. At least 30 programs or online services help you track investments and scour databases for desirable stocks and mutual funds. (For an overview, see the box on page 140.) I thought two offered the best combination of useful data, friendly interface and value. Online service Investor Insight ($10 a month for information on 10 stocks; $20 for 50 stocks) lets you set up a "watch list" of favorite stocks, like Coca-Cola and Microsoft, and download easy-to-read graphs of their price changes and number of shares traded each day. In a very nifty touch, if you click on a point in the stock's historical price graph, the program will summon any Dow Jones news stories written about that company on that same day. It does not, however, link information about mutual funds to news.

To screen for stocks and mutual funds rather than just to look up historical information about them, I liked Reuters Money Network (about $30 a month). RMN lets you comb through as many as 26 measures, including price, earnings and debt ratios for stocks and risk levels and return data for funds, to find securities that might interest you. (The data are updated monthly, and you can retrieve prices and news related to your stocks hourly, if you choose.) Once you've zeroed in, you can ask the service to inform you when any events affecting your stock take place. For example, since I was concerned that some of my rising stocks might be getting overpriced, I asked to be alerted whenever the P/E of any of my stocks rose above 35.

I thought the two services complemented each other well, but signing up for the full package in both cases could run your total monthly bill to more than $50. A more cost-effective solution might be to subscribe to Investor Insight for your stock information and to buy RMN's module for mutual funds only. That option will cost you only about as much as cable TV--$25 or so a month--but you won't be able to screen stocks.

TRADING

Usefulness rating:....[Five mice]

Though online stock and fund research can be pricey, an active investor can more than make up for those costs by trading with one of the dozen or so brokers who conduct business on the Internet. I signed up with E*Trade (which pioneered electronic trading in 1992), because it is incredibly cheap.

You can open an E*Trade account with a minimum of $1,000 sent by regular (snail) mail. Once you are okayed, you just log on to the E*Trade Website (http://www.etrade.com), type in your account number and password--and you're off. To place orders, you simply enter the ticker symbols and execution prices. Cost: $14.95 per trade for listed stocks at market prices, $19.95 for other trades. That's 60% to 95% less than the commissions charged by big discount brokers like Fidelity and Schwab.

At that price, of course, you should expect stripped-down service, and that's what you get. Most of the online brokers offer 24-hour access, free price quotes and online portfolio updates. And both E*Trade and e.Schwab offer a few extras, like options trading and margin accounts. But you'll have to look elsewhere for the finer points of a brokerage relationship, like market commentary and everyday hand-holding.

SHOPPING

Usefulness rating:....[One mouse]

With more than 10,000 retailers from Spiegel to Spencer Gifts peddling their wares over the Internet, you might think it's easy to scoop up great deals on fabulous stuff while barely lifting a finger. The truth: Time-consuming complex graphics and the lack of ordering mechanisms generally make digital catalogue-hopping as annoying as maneuvering through a crowded mall on a Saturday afternoon.

Trying to snare some outdoorsy threads at Eddie Bauer's Website was a typical experience. By the time I located the right Internet location (http://www.dreamshop.com), watched the necessary screens of information trickle into view, and finally zeroed in on men's spring clothing, I'd burned up more than an hour. Then the final insult: I couldn't buy the $34 button-down plaid chambray shirt I wanted by PC. I had to phone in my order the old-fashioned way.

As you probably have realized, I have become a convert to digitizing personal finances, at least when it comes to banking and investing. In fact, it's hard to drag me away from my computer once I get to transferring accounts and tinkering with my portfolio. Sure, my fiancee thinks I've become a bit obsessive. But, hey, my improved budgeting skills mean I may be able to pay off her ring a few months ahead of schedule.