The rise of online budgeting and tax tools has transformed countless lives for the better. Budgeting is indispensable for highlighting unnecessary spending and taking back control over one's life. Meanwhile, tax tools help us navigate the tax filing maze, turning a long and frustrating process into a task you can knock out on the weekend.
Millions of us grant these tools access to our finances, which is a no-brainer. However, we don't often realize that it makes them irresistible targets for cybercriminals. What risks are involved, and how can you overcome them? In this article, we'll present everything you need to know to leverage these tools securely.
What Are the Risks of Using These Tools?
To give you accurate advice, both budgeting and tax tools depend on your sensitive financial data. Tax tools may even ask for your Social Security number if you use them to streamline tax filing. The more information they have on you, the more damaging the outcome can be if that information is compromised.
For example, data breaches and account takeovers may tie your contact and banking information, allowing attackers to commit financial fraud or identity theft. Less reputable tools may even collect your data to sell it to third parties. Either way, the damage can be extensive, impacting your financial stability and mental health in the long term.
How Can You Safeguard Your Data?
The best way to keep your sensitive financial data safe is to practice due diligence and adopt several core cybersecurity habits. Here's a checklist to help you stay on the secure track.
Vet the tools you'll be using
Choosing tax and budgeting tools with a long-standing reputation, transparent data protection policies, and independent audits should be your first step. This ensures the platform has its users' interests in mind and has measures in place to protect their data. While there's always a risk, conscientious providers can mitigate much of it and inform you immediately when things like this happen.
Use a reliable password for every tool
Humans are the weakest link in any cyber defense strategy due to a lack of knowledge and complacency. The latter makes far too many people treat passwords like an afterthought or necessary annoyance rather than an effective security measure.
To ensure your passwords can't be broken in a matter of seconds by hackers, the password for your tax or budgeting tool needs to be unique, long, and complex. For optimum protection, use a password manager to generate and store such passwords securely for all your accounts.
Enable two-factor authentication
Since data breaches may expose login credentials, even the most complex passwords could become ineffective. That's why you need a means of securing account access from your end.
Responsible budgeting and tax tools will offer two-factor authentication as part of their service. Enabling it will send a code to your phone or authenticator app whenever unusual login activity is detected. You may then intervene by changing the password and regain control of your account.
Limit information sharing
You can make full use of budgeting and tax tools even while keeping information sharing to a minimum. For example, instead of linking the budgeting tool to your bank accounts, you can enter expenses manually. Use aggregate categories like "groceries" or "leisure" instead of itemized lists.
Tax tools require more sensitive data. Even so, you can postpone entering your SSN, dependent information, and employer identification until it's time to file. When you're done filing your taxes, you can remove sensitive information about yourself from the tools and just re-enter it when new filing needs to be done.
Protect your internet connection
Some people prefer to do their taxes and budgeting on the go. While convenient, this can open you up to cyberattacks and data theft through unsafe networks like public Wi-Fi. Always use a mobile VPN when connecting to such networks. That will encrypt your connection, making any data you send or receive when using the tools impossible to decipher and abuse.
Conclusion
Budgeting and tax tools empower us to make smarter financial decisions and sleep easy knowing we're square with the government. Follow the precautions mentioned above when using them to keep your financial and personal information safe.