There’s not easy answer to how you should choose a money management app. This is because every person has a unique situation. If you’re trying to find ways to pinch pennies, you’ll want to use a different tool than someone looking to make investments.
Fortunately, there are a lot of options available to consumers today. No matter your goals or financial situation, you can likely find a money management app that works for you.
What to Look for in a Saving App
Saving is one of the most essential elements of financial health. You can’t have monetary security if you don’t save any of your money. Unfortunately, a lot of people in the United States are struggling to do just that. A big factor is that the cost of living has risen relative to where it was a few decades ago. This doesn’t just mean things are more expensive, it means a greater proportion of people’s paychecks is now going to cover the inherent costs of life.
The solution to this problem, however, isn’t to admit defeat. On the contrary, there are apps that are specifically designed to help you navigate saving when you feel like you have nothing to spare. Look for an app that offers you automatic savings plans. Even if it’s as small as $10 or $20 per week, putting some money aside can be a lifesaver if you need it in case of an emergency.
How to Choose a Budgeting App
Budgeting, while in the same vein as saving, comes with a slightly different set of challenges. Creating a budget is a more holistic approach to your finances than saving alone. Due to this, budgeting and saving can be combined into an effective app to manage money. Like with savings, there are options when it comes to choosing a budgeting app.
Clarity Money is one of the top players in this space. This app provides users with way more than just numerical charts. It can identify poor spending decisions, recommend credit cards that fit your spending habits, and will even cancel your unused subscriptions. Users can also create various spending goals, which will automatically set aside money into different accounts. That’s a whole lot for a free service.
Should You Use an Investing App?
Investing is a whole different ballgame from saving and budgeting. While most financial experts agree you should be putting some of your income toward investments—such as mutual funds or index funds—this can feel unapproachable to the average person. This is especially true if you have no investment experience. There are, of course, apps to help with that.
There are two main routes for people who want to use an investing app. You can choose one like Acorns, which rounds your purchases up to their nearest dollar, and puts that money into an exchange-traded fund. An ETF is a type of investment tool that aims to track something—such as the S&P 500 or emerging markets. This is seen as a relatively safe way to get the benefits of long-term stock market appreciation.
People who don’t want to round up on their purchases can opt for a straight-up investment app. This allows you to deposit money, then use it to purchase stocks, ETFs, options, and in some cases, other things like currencies or cryptocurrencies. Make sure you keep an eye on how the investment app makes money. This will likely come from transaction fees, a monthly subscription, or a percentage of your account balance. Many investment apps also require a minimum balance.
Apps are a great way to stay on top of your personal finances. Consider downloading a money management app. Doing this can do a lot more than change your financial situation. It can change your life.