Xero today announced that it is going into external partner testing with its Xero Personal product.

According to Xero the product was developed because “many small business owners blur their personal and business expenses”, so a key function of the new service will allow business owners to separate personal and business expenses.

The company also said that there is space in the market for a new business model, and the new product is developed with users in mind and Xero says is “something that hasn’t been seen before”.

Just like Xero Business, the software “comes alive” when connected to a bank, but unlike most personal banking products the service will allow people to interact to set goals and track their spending.

On the Xero website announcing the new product the company said, “We want to change how people save and they act with their money.”

The company has initially been working with BNZ, but it intends to take the service to market with other banks around the world over time.

The service is expected to launch to the public in early 2010. For more information, visit the website.