Creating a budget is a great first step to getting your finances under control. However, the problem comes in the execution. Very few people are able to set and follow a specific financial plan. When overspending becomes a problem, many people today turn to money management apps. These mobile and PC applications are designed to help you spend your money wisely by tracking your expenses, income, savings, and investments. And while they are very popular, some users have complained that they do not work. So, are money management apps effective? Should you consider one?
How Do Money Management Apps Work?
Money management has a long history and wide applications in different areas of life. For instance, financial experts have long stressed the need to set aside an emergency fund. FSCB, advises its clients to put away some money every month, no matter how little, for emergencies. Such a fund is designed to protect them from having borrow at high rates during an emergency.
In travel, financial experts have also noted that many people find it difficult to stay on top of their finances while on the go. Many resources exist to help travelers bank, budget, save, trade, and invest while on business trips or vacations. One such resource is NAGA Pay, the all-in-one personal finance app launched in 2020 by German fin-tech startup NAGA.
Beyond travel and emergencies, money management is also crucial for personal entertainment. Entertainment activities like playing video games, going to the cinema, and attending operas can quickly eat into a budget. Over the years, financial and government experts have passed money management measures to keep entertainment spending in check.
In Australia, for instance, parliament is set to pass a new legislation to allow online gamers to ban themselves from all online casinos through a national self-exclusion register called BetStop. BetStop is very similar to the exclusion program Gamstop that currently exists in the country. Gamstop temporarily restricts players from accessing the best paying online pokies in Australia when they go over-budget or experience problem gambling.
Money management apps work on similar principles. They vary widely but, for the most part, they sync with your bank accounts to help you track your finances from a single virtual portal. Many money management apps allow you to create and follow a budget, which is crucial for impulse buyers, overspenders, new earners, and anyone looking for financial stability.
In addition to budgeting, a money management app can help you organize your bills, track their due dates, save toward a financial goal such as a vacation, or record your transactions. All of these features allow you to track your spending and make healthy financial decisions.
Benefits of Money Management Apps
Money management apps are popular with good reason. If you have trouble controlling your spending or planning ahead, a money management app is a beneficial tool to try because it offers:
Convenience
With a money management app, you can automatically record and execute your expenses. This is a more convenient alternative to writing down a budget on paper or using a spreadsheet. The format is also more portable, so you can bring your budget with you everywhere you go.
Simplicity
Once you sync up your app with your accounts, the app can manage and track your expenses for you. You can also set it to execute your payments before the due dates. This way, you don’t have to pore over every detail of your financial situation every month.
Comprehensive Analysis
Money management apps that allow you to link your credit cards, bank accounts, investments, and loan accounts can give you a complete view of your finances. At a glance, you can determine how much money you owe, have saved up, have invested, and have available for use. This analysis is useful for debt tracking or net worth determination when necessary.
Sound Financial Planning
Access to your financial information at all times can improve your financial decision-making process. Since you still have to keep an eye on your money movements, a money management up puts you in the best position to make informed financial decisions.
Are Money Management Apps Safe to Use?
Despite the many benefits, money management app detractors complain of the security risk of linking your accounts to an online application. Experts agree these apps present a real danger of hacking and identity theft. Because money management apps, which are run online, combine all your financial accounts, they often attract unscrupulous cybercriminals looking to steal your funds.
Experts also maintain that while many money management apps use the same security standards as online banking platforms, they are not programmed or regulated the same way. It all comes down to the steps you can take to protect your money when using a budgeting app.
Safety Tips for Money Management Apps
Always work with a reputable money management app with a long history and excellent consumer and watchdog reviews. Essentially, avoid any app whose history you cannot trace beyond a few sketchy online claims and spammy emails.
It is also important that you regularly update the app and install anti-malware and antivirus software on your device. If you receive an email from the app, confirm that the email address is as it appears exactly on the official website, and never click on strange links.
Create a strong and unique password to protect your account and enable two-factor authentication. When in public, avoid using your money management app over public WiFi unless you have a VPN.
Why Might a Money Management App Fail to Work?
Money management apps are a genius way to plan your finances, but they are not magic. For instance, the app may not work for you if you are not committed to the process. Setting a budget is only the first step. You must see the budget through and follow your plan to reap the benefits.
You should also never leave everything to the app – adopt a proactive approach. You must keep track of movements in and out of your account. In most cases, you can set notifications to let you know when a bill is almost due or when you are about to go over budget.
Lastly, learn accountability. Your money management app can suggest you cut back on vacations, but following through is up to you. This is the only way the app can help you.
Wrapping Up: Should You Use a Money Management App?
If you have difficulties creating and sticking to a budget, consider a money management app. Money management apps work when they are used properly and supplemented with accountability and good financial decisions. Remember to take steps to protect your finances from cybercriminals and follow through with your financial plans.
