Mint.com provides a great suite of tools for managing your money, from tracking spending to building budgets. This week, the site announced the release of Financial Fitness, a new system within the site that provides customized tips to help users pay off debt, save money and even improve their credit scores. The tips are based on the information that a given user provides to the site — which includes the bank and credit card accounts that most users give Mint.com access to so that the site can collect and interpret spending and budgeting information.

The personal finance system is based on point values. You can complete a variety of activities, such as reviewing your credit report for errors, to gain points. There are also set tasks that can earn you points on a monthly basis — such as setting aside money for savings each month and successfully avoiding banking fees. The site offers a simple interface, similar to those used on other parts of the site. You can see at a glance what you’ve accomplished, what goals you can still meet and those that you’ve had less success with.

The point system makes a lot of sense, given Mint.com’s typical user. It’s almost like a video game: you can complete tasks, advance your skills and earn points. The tasks all fall into one of five central money-saving principles:

• know your money
• spend less than you earn
• use debt wisely
• invest savings
• prepare for the unexpected

While these categories don’t sound particularly glamourous, they are core techniques to keeping your personal finances on steady footing. Having a single system to follow can also significatly simplify the process of getting financially fit.

It does take a little dedication and effort to keep up with your finances, even with a good tool like Mint.com. However, given the fact that the website will even outline steps towards financial security for its users, the work necessary to handle your personal finances is truly minimal when compared to most options that require you to bring together all of your information on your own. There’s no checkbook balancing act necessary. You can even set up Mint.com to notify you about your spending or when you’re closing in on a goal or even when your credit card interest rate changes — you can get either email or text message notifications to help you stay on track even when you aren’t logged in to Mint.com.

The new tool is still in beta — it hasn’t been rolled out to most users yet. A few sites are offering invitations to the beta, such as Mashable. It’s worth keeping an eye out for opportunities to join the beta, though, especially if you’re working on simplifying your finances. Mint.com has already eliminated most of the work that goes into keeping your own books — now the site is making it much easier to set personal finance goals and meet them. Mint.com is available only to U.S. users, but it does have a very good track record when it comes to privacy issues — one of the big issues with most online money management options.

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My grandmother still uses good old-fashioned paper and pencil to manage her money. I rely on a software package. Other options include web applications, spread sheets and a few other money management options. But how do you decide between all the options? How do you know which one is best for your situation?

There is no universal solution for tracking your money. Some people can even get away with not keeping track of their finance — although such people often have extremely simple money situations (or no money at all). But there are some ways to narrow down your selection.

When are you willing to work?

Many people can immediately tell that paper and pencil money management isn’t for them. After all, it can take a lot of work to make sure that you copy down all of your financial information to a central document. Many software solutions — especially web applications — have the ability to import your bank records, along with other monthly financial data.

If you choose software, the effort required of you in the long-term will be reduced. In the short-term, however, you will probably have to put forth more effort to set up your system. Furthermore, any time you change banks or other financial companies, you’ll have to update your system significantly.

How paranoid are you?

Managing your money through a hard copy ledger system or a spreadsheet has benefits if you are concerned about your privacy. Because money management applications have to retrieve your financial data, there is a chance (generally small, but still present) that someone else could get a hold of that information and take advantage of it. The risk grows if you use a web-based application. The makers of these applications take precautions, but it’s hard to tell what is enough.

How aware of your finances are you?

One of the benefits of having to import your own information into your money management system, rather than having software take care of that detail, is that you generally develop a better idea of your own finances. If you already have a good sense of where your money is, that’s great. If you don’t, though, entering your information by hand can help you build that sense.

In the end…

For most people, I recommend finding a money management software package that you’re comfortable. Most of us just won’t keep up with writing down all of our own finances, or even entering our data into a spreadsheet. Both these options have advantages, but it’s generally more practical to use a software solution. I do think that software that you install on your computer, rather than web applications, are usually a better choice for money management. There are some privacy concerns with online money management and it’s easier to back up your information if it’s already on your hard drive.

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