A new financial outlook for a new year
If you often wonder where your hard-earned money goes, you’re not alone. After all, it’s easy to spend money—monthly bills and weekly groceries are on a continuous cycle. And you can buy just about anything with the swipe of a credit card. For some people, their thirst for tracking finances has prompted them to download budgeting apps. In fact, 34% of millennials say they have at least one budgeting app on a mobile device.
There are all types of finance apps, and with 24 billion downloads in Q2 2020 and users spending an average of 57 minutes each week using their app, they’re skyrocketing in popularity. If you’re wondering if a finance app would be a good idea for you, read on.
Pros and cons of a spending tracker app
When you need to start building a budget and being more aware of how much you’re spending and where you’re spending it, a budgeting app is a great place to start. By setting a budget and only “allowing” yourself to spend X amount of money in certain areas, it can help you spend less and save more.
With that said, some experts point out that apps can’t hold people accountable. While it helps you build a budget, sticking to your budget is another thing. In addition, budgeting apps may cause users to become so focused on their day-to-day spending and saving that they lose sight of long-term savings and retirement plans.
Do budgeting apps work?
The correct answer is that it depends on what you rely on your app for and how much you rely on it. In the United States, SmartDollar, an employee benefits budgeting tool, has found that its users save or pay off debt of $16,200 in their first year. However, that’s not because it’s a magical solution that fixes poor spending habits. It’s because it shows you in hard numbers your monthly spending habits and identifies areas where you can spend less and save more.
A study by the University of British Columbia in Canada found that when people start using a finance app, they spend less in dining and drinking, usually 17% less the first month and an additional 14% the next six months. This study also found that at first, users spent less on groceries and fuel—but after two months, their spending in those specific areas ricochets back (although the reasons why aren’t mentioned).
When it comes down to it, the most important thing is to figure out what your financial goals are and then use the app as a tool—not a whole solution—to reach those goals. David Murphy, Senior Technology Editor at Lifehacker® says, “The best advice is not to let the app figure out your financial plan for you.”
What exactly do finance apps include?
Most finance apps include at least the following:
- The ability to sync your bank and credit card accounts. This ensures all your income, expenses and other spending habits show in one place.
- Categories for each expense, from entertainment to restaurants and rent/mortgage to utilities. Each category is often color-coded and shown in a graph or pie chart so you can easily see how much you spend in each area every month.
- Budget customization. You can allocate a certain amount of money to each category. If you go over, you’ll receive an alert. This lets you keep an eye on your spending habits and know exactly how much you’re “allowed” to spend each month.
- Miscellaneous perks. Perks can include tips on how to save even more money, alerts when your bills are due and access to your credit scores.
Greater Alliance Federal Credit Union’s personal finance app
At Greater Alliance Federal Credit Union, managing multiple aspects of your finances is easy with our personal finance app, Money Management. Free to all our members, Money Management is so much more than just a spending tracker app that tracks your income and expenses. Because it’s a personal finance app, it can give you a full view of your finances, including:
- Your budget(s). You’ll first get an auto-generated budget based on how much you spend in different areas. From there, you can adjust your budget as needed and quickly see areas where you tend to go over budget.
- Your spending habits. Do you know how much you spend ordering take-out each month? Or how much you spend online shopping? Zero in on your biggest expenses, categorize your spending and see where you may need to cut back.
- Your debt. See all your loans and debt in one place so you’re always clear on exactly how much you owe to each debtor. You also get techniques on how to pay your debt off faster and with less interest.
- Your financial goals. You get help planning for short- or long-term goals, from going on vacation to building your dream home.
- Your net worth. Track and monitor the net sum of your finances. Know exactly what makes up your gains and losses by seeing what you have and what you owe, as well as what you earn, save, spend and pay toward debt.
With Money Management, you can easily see your entire financial picture to make informed financial decisions.
Easily manage your financial life
Whether you use a budgeting app or our personal finance app, Greater Alliance Federal Credit Union offers financial wellness services to help you lead a financially healthy life. This includes everything from free financial coaching and education to housing counseling and forming a debt management plan. Call 201-599-5500 or schedule a free appointment today to see how you can put yourself in control of your finances.