Are Budgeting Apps Right for You?
April 17th, 2018 by Bunch & Brock
Debt is part of American life — but it doesn’t have to be. Alarming Federal Reserve statistics highlighted by USA Today indicate that the average American household owes $137,063, but only brings in an annual $59,039. The silver lining? Bankrate.com reports that 58 percent of Americans maintain savings account balances that exceed their credit card debt. In 2018, many are shifting their focus to automated budgeting, assisted by modern software and apps. These technological tools help users keep abreast of both urgent financial concerns and the big picture.
The Benefits of Budgeting Apps
Struggling to keep track of your bank accounts, credit cards, loan payments, and other financial necessities? You’re certainly not alone. With so much to juggle, it’s easy to miss payments or neglect saving. An increasingly popular solution? Budgeting apps such as Mint or YNAB.
Modern budgeting apps minimize financial stress via two main strategies: analysis and automation. These apps track your spending and saving to determine where you fall short and how you can improve. They also automate bill pay and savings transfers. This allows you to avoid credit-destroying late payments. Automated apps also encourage you to contribute to your otherwise neglected savings account.
Proceed with Caution
Budgeting apps are beneficial for some users, but a poor solution for others.
First and foremost, you need to actually use your app for it to work. As Forbes contributor Kelley Long points out, many users experience a brief surge of motivation but fail to follow through. Some log in regularly but consciously ignore key app alerts.
Even if you use your budgeting app on a daily basis, there’s no guarantee it’ll actually lead to reduced spending. A useful analogy: We’re bombarded every day with detailed information about fitness and nutrition. Despite this information overload, well over half of the population is overweight or obese. The same is true for budgeting; a significant gap exists between seeing data on an app and taking necessary action.
Another reason to exercise caution before downloading budgeting apps? Security risks. Following the Equifax data breach, Americans are increasingly skeptical of apps that require them to share financial information. All apps, no matter how secure, retain vulnerabilities. It’s critical, then, that you choose the most secure option available. Aim for an app with multi-factor authentication and other beefed-up security features to keep your information away from prying eyes.
Examples of Popular Budgeting Apps
Mint – Arguably the most recognized name among today’s budgeting apps, Mint resembles Quicken but does not require a software download. Instead, it’s accessible via internet browser or mobile device. The company claims that Mint’s automated system streamlines financial management. The app integrates with all major United States banks and can even suggest accounts with improved interest rates.
YNAB – Available on a variety of devices, YNAB (short for ‘You Need a Budget’) assigns a job to every dollar. The app’s designers claim that it enables you to live exclusively off income from the previous month, as opposed to your current paycheck-to-paycheck lifestyle.
PocketGuard – This financial management system encourages you to link all credit cards, loans, checking accounts, and savings accounts in one easy-to-access location. The app immediately updates all transactions to inform you how you spend or save your money.
Home Budget with Sync – Home Budget With Sync links groups of devices within the same household to simplify family financial management. It is aimed at households.
Ultimately, no one budgeting solution benefits every household. Some individuals find success with apps such as Mint or YNAB, while others struggle to commit. Still others spend even more after downloading allegedly helpful systems.
These apps make big claims, and it’s ultimately up to users to decide whether they’re willing to take the risks of sharing sensitive financial information. You might first consider traditional means of accomplishing this. If you choose to move forward into the online personal finance world, always read up on the pros and cons before choosing a software and be mindful of security breaches when they occur.
Ready to learn more about bankruptcy, estate planning, or other legal issues? Bunch & Brock is an excellent resource. Call us today to schedule a complimentary consultation.