Budgeting is the act of dividing up a limited resource.
We budget every day without even realising, so it’s really nothing daunting.
When you gave yourself that extra piece of chocolate today instead of saving it for tomorrow 🍫 That was budgeting. And when you decided not to share it with your sister, that was budgeting too. See… you’re already a natural!
So-far-so-good, but creating a budget might not feel like so much fun if there’s no chocolate reward to incentivise the process. And that’s where a financial management app might be able to help by saving you some heavy lifting 🏋️
We’re going to explain what a financial management app is, tell you how a financial management app works, and most importantly, suggest the best financial management app available for budgeting!
What is a financial management app?
When we think about budgeting in the context of personal finances, it’s really the process of managing income and expenses.
A financial management app links to your bank accounts and credit cards to help you organise the way your money is allocated and monitor your spending.
The purpose of a financial management app is to ensure that there’s enough spending money to cover immediate bills, and that you also include provision for your future self and any children that you already have or may plan to have 🌱
Ultimately, a financial management app is a modern tool to help you reach your saving goals. And while the features may now come in a handy package, in many cases the principles are as old as money itself.
A good financial management app should include the ability to Round Up the loose change from your purchases and let you organise your savings into individual Interest Pockets, which are simply ways to mimic traditional budgeting techniques like using spare change jars and envelope budgeting.
Is a financial management app safe?
Getting to grips with your financial accounts can be laborious, but thanks to Open Banking there are financial products available, like free financial management apps, which use this technology to simplify the process for you.
That technology also keeps you in control of who you share your financial details with, which is why you’ll be asked to reconfirm this and relink your account(s) every 90 days.
Before using any financial management app you should check that the company is authorised and regulated by the Financial Conduct Authority (FCA).
This gives an indication that any money you deposit is protected, and that if something were to happen to either the company who makes the app or one of their suppliers, then you can still get your money back safely.
How can an app improve financial management?
Creating and sticking to a budget is a key life skill and an essential aspect of financial management that can help you achieve your financial goals.
The most immediate benefit of using an app to help you budget is that you shouldn’t run out of money when you need it. Which means less stress!
Using a financial management app is a great way of ensuring that you don’t get into debt. Plus, by paying your bills on time you can build a healthy credit score and get access to better rates on personal loans or mortgages in the future.
A financial management app is a useful tool to help guide your overall personal financial strategy, which means you’re more likely to be able to weather financial storms because you have money saved for that rainy day ☔️
They do this by allowing you to track your spending and manage your cash flow, day-to-day, so you can move closer to your long-term dreams!
Are there benefits of using an app to manage your finances?
Benefit 1: Say goodbye to spreadsheets
To create a budget you’ll first need to track your earnings and the fixed expenses that you know you’ll need to cover with that monthly income 📊
Not only can a financial management app take the pain out of this process by quickly accessing your financial records to build a picture of your transactions, but it may also be able to identify where you can make immediate savings.
By analysing your regular payments you can identify any unwanted subscriptions, and the most sophisticated budgeting apps on the market may even be able to automatically compare the price of utility tariffs in your area and help you switch suppliers to save money on your household bills.
Benefit 2: Automate to accumulate
Tackling your finances to create a spending and savings plan is a rewarding process… but probably not something you want to repeat every month 🤓
One of the main advantages to using a budget app is that you’re able to make budgeting automatic. Standing orders are fine for fixed payments, but not so good when it comes to accounting for fluctuations in spending.
Even the free version of a financial management app like Plum features a unique algorithm which can calculate and arrange additional savings, even when you’re not thinking about it, and without leaving you short!
Benefit 3: Budget in real time
No matter how disciplined we are, there are always spending urges we struggle to control. Resisting impulse buys is a key part of budgeting, and also an area where having good visibility of your budget can really help.
By combining all this data, the best financial management apps can even give you an adjusted balance, which takes into account any recurring bills due before your next payday. It’s an easy way to track and adjust spending at a glance.
What is the best financial management app?
Although the technology is still fairly new, there are a few different financial management apps available. Plum is one of the best financial management apps you can use to help you save more and make your money go further.
Some key benefits of using the Plum financial management app:
- Arranges savings without you needing to think about it
- Tracks your spending and adjusts your budget in real-time
- Offers interest on savings or investment options for the long-term