Can I Really Manage My Finances From A Smartphone App?
Remember when all you would hear during the ad breaks for your favourite television programme would be “there’s an app for that”.
This was a few years ago now, when apps were brand new and the likes of Apple, Google and Samsung wanted you to learn all about these mysterious new widgets that could solve your everyday problems at a cinch.
If we were initially sceptical, we certainly took to them in the end, but the trouble was, for every Tinder, Citymapper, or Uber, there were too many apps, rushed out by companies desperate not to miss out on the next big thing, or designed by Silicon Valley geek squads, that simply didn’t cut the mustard.
They were either too niche, too complex, too badly built, or simply released to act like Trojan horses, sneaking their way onto your phones and accessing your personal data to sell on to advertising companies.
It may have taken financial services institutions longer than most to come to the app party, but in fact, we should be thankful for that.
Banking and personal finance apps can now make a genuine difference to our lives, for the better. Here’s how.
Aggregate your accounts and see all of your finances (and bills) in one place.
An app like Mint, for example, allows you to pull all of your financial data together. Most of us probably have a couple of accounts with different banks – or at least a credit card from a different provider to our main account.; a pension account, a savings account etc. etc.
With an app like Mint, you can see everything displayed together – so you have a comprehensive, and real-time view of where you truly stand financially.
And then of course, there’s bill payments; you can also add your direct debits, credit card payments and utilities bills, schedule reminders, and make payments directly through the app.
How many times have you been caught out by a surprise bill you or subscription service you had forgotten about? A good personal finance app will let you know what payments are coming that you need to make, giving you extra time to prepare.
Budgeting & Saving
Putting away cash for a rainy day is easier said than done – but what if you had a handy app that did the hard work for you?
Qapital is a good example of a micro savings app. Qapital allows you to set savings parameters – you can tell it when to sweep money out of your checking account and put it into your savings app.
You can set short term or long goals and ask the app to transfer some money every time you complete a certain action – like clocking into work on a weekend, for example.
You should not have a to pay for an app like Qapital, or rival service Digit, either. Both are free, and act like glorified, electronic piggy banks, with interest rates, too; albeit small ones.
Saving is fun if we all do it together. That’s the theory anyway. Stag dos, hen dos, group travel, festivals and events – apps like Folio can help you link your savings efforts to other peoples, track your efforts, and sweep your bank account only when you can afford it.
It’s often said that the millennial generation value experiences over material objects - which is why apps like Folio, or Clink, if you are looking for an alternative, are catching on.
Investing For The Longer Term & Managing Savings
At the more sophisticated end of the spectrum, there are many apps out there that can help you speculate with your savings.
Nutmeg is an investment platform that helps you build a portfolio – something that banks have struggled to be able to make easy or understandable – which has traditionally played into the hands of IFAs, and, well, banks.
Nutmeg allows you to set goals and risk levels yourself, take advantage of ISAs, Pension schemes, and invest into stocks – all with a level of transparency you may struggle to find elsewhere. And there are real agents on hand to help out too.
Nutmeg’s full suite of services requires a little more than just an app, but you can still use Nutmeg’s app almost at the level of a desktop or a laptop. Personal Capital is another app that can dispense sophisticated investment advice.
The beauty of all of these apps, especially within the first 3 categories, is that they can all offer the same range of services. All of the functionality derives from the API driven back end software that allows these apps to access data from your banks, credit card companies and utility providers.
And the good news is, with the onset of PSD2, a new Europe wide payment services directive, banks and financial institutions will be obliged to share even more data.
Since your bank cannot develop an app that will give you a holistic view of all of your bank accounts and credit card statements, for obvious reasons, fintech firms are the ones who will be building the money management platforms of the future, and so far, many of them are doing a great job.
Of course, there is a trade-off. You are letting these apps know about your financial situation, and although they will not share your personal details with other companies, they may use aggregated data to prepare research reports to sell to other companies interested in market trends.
So long as you don’t download too many and keep it simple, personal finance apps can really help you save, budget, and avoid defaulting on payments.
It’s not rocket science, but it is clever, and it can be very useful.