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Keeping track of your finances with apps

Keeping track of your money and managing your budget used to mean tedious hours spent writing down every expense and adding up the numbers. Now, however, mobile applications make it much easier. You can even compare your spending against other people like yourself to see if you’re over-spending or under-spending, and get tips on how to manage your money better.

Keeping track of your money and managing your budget used to mean tedious hours spent writing down every expense and adding up the numbers. Now, however, mobile applications make it much easier. You can even compare your spending against other people like yourself to see if you’re over-spending or under-spending, and get tips on how to manage your money better.

REASONS TO USE A PERSONAL FINANCE APP

A fundamental principle of good financial management is to make a budget and track expenses against it. However, it’s easier said than done.

Even many highly intelligent people keep track of their finances in a makeshift fashion, according to leading finance app Mint. Glancing at credit card statements or half-heartedly filling in spreadsheets or maybe writing down purchases on Post-it notes don’t give a clear picture. These informal efforts tend to be incomplete and inefficient, so they don’t really help with financial planning.

Personal finance apps are a way to change the paradigm, by making it easier to set up a budget and track your spending. Good budgeting apps can even turn your mobile phone into a personal finance adviser that helps you figure out when you can spend money, pinpoint where you waste money, and increase your savings by budgeting better.

APPS CAN CHANGE SPENDING BEHAVIOUR

The key question many people have is whether an app actually makes a difference. Although research in Singapore is limited, studies in other markets show that apps can help.

Research by the Consumer Financial Protection Bureau (CFPB) in the United States, for instance, found that many people spend more than intended and consider budgeting or tracking spending to be too difficult. Since many consumers do aspire to manage their spending, CFPB conducted research on how receiving real-time spending feedback can affect behaviour.

Consumers said they could better manage their spending by using an app that provides instant information about how much money is left in their budget when they are at the cashier checkout station. The CFPB also found that consumers who used the prototype apps made significantly different spending choices. Apps can thus help consumers to forgo unnecessary spending and curb impulse purchases.

The investment company Royal London in the United Kingdom similarly found that some people who used smartphone budgeting apps report striking changes in behaviour. Examples included shopping at cheaper supermarkets or buying a quality coffee machine instead of spending large amounts on expensive coffee. Simply monitoring what they were spending every day caused the change in behaviour. Almost half of those surveyed said that using a budgeting method was helpful in monitoring what they spent.

RANGE OF OPTIONS TO HELP MANAGE YOUR SPENDING

While apps do work, one challenge for consumers here has been to find an app that works well locally. Although Mint is a market leader, for instance, it is only available in the US and Canada.

One new app created in Singapore is Seedly, which enables consumers to import credit card and banking transactions from local banks as well as some foreign ones. Seedly automatically organises your spending into categories such as food or transport and shows how you’re spending your money. As Royal London found, seeing that information can help to change your behaviour so you manage your money better.

OCBC’s MoneyIn$ights does even more. Along with tracking and categorising your spending automatically, MoneyIn$ights allows you to set a monthly budget by category, categorises your spending, and sends alerts when you are close to your spending limit. You can also compare yourself to other people like you, to find out how much people like you are spending and saving. Whereas Seedly tracks spending across most banks here, however, MoneyIn$ights just tracks your spending at OCBC and may not provide a complete picture of your finances.

While there are likely to be more local apps in the market before long, you can still use foreign ones here too. One of the more popular ones is You Need a Budget (YNAB), which helps users plan how to spend their money and figure out how best to use the money they have. Another convenient app is Wally, an expense tracking app that allows consumers to take photos of their receipts.

Search engine Google and the non-profit Centre for Financial Services Innovation are teaming up to find ways to make it easier for consumers to wade through financial apps in the Google Play store. For instance, Android users can tap Google Play’s “Improve Your Financial Health” offerings, which feature apps categorised to help with tasks such as “Track Your Expenses” and “Manage Your Money Wisely”. The Apple iTunes app store simply lists iOS apps under the broad category of “Finance”.

If you need help keeping on track, apps such as Beeminder.com help you to set goals, such as limiting spending at a coffee shop to $10 per week or reducing cash withdrawals from ATMs. Although it relies on self-reporting, its regular reminders to report help keep you on track to achieve your goals.

START MANAGING YOUR MONEY

The key to success is actually setting up a budget and starting to track your money. While it’s easy to put it off or to keep tracking spending on tiny pieces of paper, using an app can make your life easier and help to put your finances in much better shape.

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