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Why you (probably) don’t need a (boring) budgeting app

Woman Family Budget Clipart Lg

Nearly everyone hates budgeting. It’s exactly like having a nagging aunt constantly reminding you to be on time at all your appointments.

A little flexibility with money is pleasing, and we all like to splurge once in a while. But the budget is there telling you to ‘behave yourself.’

What could be more boring? Tech has come to the rescue with – what else? – an app to help you stick to your budget.

I haven’t yet reached the stage at which I have an app to do everything for me, so I have doubts.

The experts tell us that “This software makes it easier to monitor your spending and saving habits by linking accounts to an application and tracking your cash flow. These apps, free or paid, offer a range of features to improve your finances.”

We are told that an app called “YNAB” (You Need a Budget), available on both Apple store and Google Play, is “popular,” after all it has more than 1 million downloads. Apparently Millennials are gluttons for punishment.

There is another popular app called “Mint” which also does much the same things that “YNAB” does, and is also available on both major app stores.

On the other hand, YNAB says new budgeters typically save about €500 in their first two months and more than €5,000 in their first year of using the app.

How does it work? “YNAB offers a proactive budgeting approach, rather than tracking what you have already spent, like some competitors.

After signing up, you create your first budget and assign every dollar a purpose, like your rent or car payment, for example. The goal is to eventually get at least one month ahead, so you’re spending money you earned from 30 days ago. The company offers extensive educational resources and customer support to keep you on track.”

So, you start out by using the app’s planning to work out your budget. That doesn’t seem so bad, and it’s always useful to have something reminding us to pay the bills.

After that, though, the app may drive you crazy. It bombards you with financial information and with suggestions on how to save. Every time you buy something, it warns you about what you are doing.

And the app has an investment feature, so if you do manage to save a few euros, it will take up a lot of your time telling you what to do with them.

There is a positive side to this (some people say). You get more up-to-date personal financial information than ever before. Because the app nags you constantly, you pay more attention to your finances.

But financial advisors aren’t convinced. They think budgeting apps are just the starting point in your financial planning efforts. Even with sleek interface designs and the ability to aggregate all financial information in one place, even these user-friendly apps can’t offer sustained and long-term financial success since they can’t help users figure out long term goals or understand why they want to save.

And they have a point. Tracking is always useful (although not obsessive tracking necessarily). But planning personal finances requires thinking about the future, projecting what your needs will be, assessing how your family and other emotional ties affect your decisions.

A large part of personal-finance planning is emotional, and it should stay that way. You can’t start making calculations until you understand where you are going with them and how much risk you are ready to accept.

And, of course, goals will be different depending on how much you are able to save and invest.

No app, however user-friendly, is going to decide all those things for you.

So, if you have a penchant for receiving push notifications that tell you to “stop spending,” by all means download one of these new apps.

Otherwise, sit down with your family and plan your future, and enjoy a splurge now and then.


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