How to Use a Household Budgeting App to Manage Your Finances
Managing finances can be tricky, but with the help of a household budgeting app, it makes the task of a monthly budget much easier.
Why You Need a Budget?
A budget is practical in that it helps you avoid missed payments and helps you track your spending. It also helps you get to some of your financial goals and dreams.
It Helps You Plan
Using a budget every month helps you set spending boundaries and intentions and gives purpose to your money. When you customize a spending plan every month, it helps you plan accordingly. It’s easy to develop a basic budget for common or fixed expenses, but it is also necessary to look at your calendar and check periodic expenses to stay on track.
It Gives You Opportunity
A lot of budgeting advice will tell you to cut back, but you can view your budget as an opportunity instead of spending cutbacks. While you do have to live within your means, it allows you to have some financial freedom, which is needed in order to have sustained wealth.
It Helps Make Tax Time Easier
When you budget, it can make your life easier in April. This way, you don’t have to go through an entire year of items or transactions in order to find everything that needs reporting and, with a budget that you have maintained, you already have collected some of this information.
There are different types of budgets that you can use with budgeting apps. You can still use the envelope method, zero-based method, or a category budget if you are using a household budgeting app.
What Can a Budgeting App Do?
Today’s world is built on convenience. In the past, you had to rely on a spreadsheet in order to organize a budget. To save effort and time, budgeting apps can now automate some of the process and help you handle the calculations. Budgeting apps are able to import financial information for a spreadsheet or directly from your bank account, streamline your savings and spending plans, and generate graphs, charts, and reports. Some may even help you with forecast spending and financial trends and flag important expenses, such as tax deductions.
Use the Right Budgeting Tool. Meet Budgetry.
Reasons To Use a Household Budgeting App
There are a number of reasons why it makes sense to use a household budgeting app or budget tracker.
- One Place For Real Time Information
It’s common to have a lot of financial accounts. You may have an online savings account but a checking account at your local bank, you can have retirement accounts for different employers, and you can open a brokerage account. This doesn’t even take into consideration the number of credit cards you may have. The average American has four different credit cards. It’s possible that you have a dozen accounts to keep track of.
Without a budgeting app, in order to check on your balances you need to log into three or four different websites to view the accounts. An app can pull all the information you need from your different accounts and put it on one dashboard. You just click one button and get real time information. This makes it easy to figure out if you are able to afford a purchase and where you stand financially. - Get Automatic Alerts
Keeping track of your finances using a budgeting app is only helpful if you are going to look at the app on a regular basis. A feature of many budgeting apps is allowing you to keep track with automatic alerts, even if you aren’t constantly opening the app. For example, you can get a notification if there is an unusual transaction on one of your accounts so you are able to check for fraud quickly.
You can also get notified of impending due dates in order to avoid late or missed payments that can have an effect on your credit score. You are able to get notifications if your checking account falls below the threshold that leads to overdrafts as well. For many apps, you are able to customize the alerts you get so you are able to tailor it to your needs. This makes the apps even more useful. - Easy Budgeting
Creating a budget and following it isn’t easy. You need to track purchases you make and write down how much you spend. These apps handle this for you and can track your spending, as well as categorize it. When you start up the app, you are able to enter expected spending on categories such as entertainment, rent, gas, and groceries. When you use your linked accounts in order to make a purchase, the app categorizes it and notes the expense for you.
You are able to see your budget at any time and know how much you have spent already in the month and how much you have left. This means you don’t have to do a lot of the work and instead you can just focus on the discipline needed to stick to the spending limits you have set. With advanced technology, many apps are user friendly. The easy-to-use interface gives you access to all your information to make the process smoother, even for a beginner. - Track Progress
Budgeting apps can help track your finances over a long period. This allows you to track your overall progress, as well as progress toward certain goals. For example, you are able to set savings goals. If you want to set up a goal to save $500 for a vacation, you are able to create this in the app, designate the account you want to use, and then track the progress. This allows you to see how close you are to going on your vacation.
You are also able to track general progress since the apps can track your net worth over time and you can see how finances have changed over the years since you began using the app. Apps can give you a way to meet your financial goals since you will have an idea of how close you are. - Become More Confident with Financial Decisions
It’s common to worry about what you are going to do with finances and it easy to be hesitant on financial decisions, especially if it involves risk. With apps, you can have an added confidence when it comes to how you are going to manage your money. If you are more confident about how you handle your finances then you are able to free yourself from some stress.
- Avoid Financial Mistakes
Some financial mistakes can be costly. For example, an overdraft can turn a $10 purchase into a $40 purchase. A missed credit card payment may cause payment fees and also an increase in the interest rate, which will cost you more over time. If you use the app to set up alerts then you have awareness of your own money and it allows you to make fewer mistakes. Managing money can be high stakes so it helps to use an app to avoid as many mistakes as you can.
What To Look For In a Budgeting App?
There are many different apps on the market, which means you will find one that suits your needs. There are a few things you want to look for when deciding.
It Works on Your Device
You will want to make sure that it’s compatible on the different devices you own before you sign up for it. You likely want it to work on your mobile device but don’t forget about the convenience of also being able to access it from your computer. Sometimes having a bigger screen makes it easier to work, especially for more robust programs.
Accessibility
It’s important that your budgeting app is accessible anywhere and anytime. Not only does it need to work with the devices you currently own, but having a centralized database is necessary in order to access across the devices without having to update them constantly and manually. This will allow you to access your budget on the go as you wish.
It Offers a Free Trial or Free Version
There are plenty of apps that are free to use. However, free apps can have limited features or a lot of in-app ads that you have to watch. Even when on a budget, it can make sense to pay for an app since the premium services can be worth the fee. If you are going to pay for an app, it helps to see if there is a free trial you can use before you sign up. If there isn’t a free trial, see if the free version works. If you are going to choose an app that you have to pay for, consider the price. The upfront cost should pay for itself in the long run. Some are going to have a fee for the download while others are going to charge a subscription fee on a monthly or yearly basis.
Common Features of Paid Apps
Just because you have to pay for an app doesn’t mean that it’s a bad thing. There are some common features that come with paid apps. These include:
·Allowing you to create savings goals.
·Syncing with your bank account. This communicates with your bank to automatically sort and record your transactions.
·Syncing with multiple bank accounts. Many free versions will only sync with just one.
·Create unlimited budgets. This can be useful if you have different savings goals or want to cut down on your spending in certain categories. Many free versions will allow you to only have one budget.
·Multi user collaboration. This is helpful for your partner to access the same budget so you both can be on the same page.
·Advanced forecasts, reports, and charts. These are helpful to let you know in detail where your money is going. Some budgeting apps will forecast how much money you are going to spend over the month if you keep going at the same rate.
It Syncs with Your Credit Cards and Bank Accounts
Most of the apps will sync with your credit cards and bank accounts and then you can automatically track purchases and income. There are some apps that you have to manually import your transactions and this can take time and defeat the benefits of using an app. You want an app that will sync with your accounts and also allow you to manually input transactions if you want to.
It Allows for Customized Spending Categories
A basic app will organize your expenses into preset categories so you are able to see where you are spending your money and how much you are spending on things such as transportation or food. The built-in categories are enough to cover the basics, but it’s also helpful for you to customize your categories so you can make the app work best for you.
It Has Security Features
Just like with any product you are using online, you want to make sure you know about the security and safety features. The best apps are going to use multi-factor authentication in order to prove your identity and encrypt data so that your information is safe.
Notifications and Reminders
One of the main benefits of using a household budgeting app is to have the reminders and notifications so you want to make sure that the app you choose has this feature. This way, you won’t forget your debts, bills, and other financial transactions. It will help you get day-to-day insights.
How To Choose a Household Budgeting App?
Now that you know which features are best in an app, you still have to choose the right one for you.
Start with a Goal
The app is a tool. You should know which challenges you want the app to help you address. While you need some help with your budget, there are also apps that can help you track other financial information, such as your credit score. If you have a specific purpose in mind for what you want the app to do then you are able to narrow down your options.
Understand the Features
When you know your goals then you are able to look at the different benefits and drawbacks of each budgeting app. Check to make sure it does have the features you want before you go through the hassle of setting everything up.
Research the Reputation
You will benefit the most from using an app that has been tested, well researched, and reviewed. Before you download a new budgeting app, determine how it was created and the reviews. Focus on both positive and negative feedback. Knowing what people don’t like about a tool can be just as helpful as knowing what they do like.
Consider the Commitment
Different apps may do more of the work for you, especially when it comes to the initial setup. Consider how long it’s going to take for you to manage your budget and set it up. If it’s too much of a financial commitment, you aren’t going to use the app as much and it defeats the purpose.
Getting Your Data In a Budgeting App
Your budgeting app is not going to be useful without your expenses, income, and other financial data. You are able to manually enter in data into the program but there can also be ways to automate the process.
Bank Syncing
You are able to sync your bank account with the app so you can pull in data, including your expenses, regular bills, and income. This will be the easiest approach for budgeting and the app handles most of it for you. The only issue is that you will have to entrust the third party with your bank info.
File Import
Many financial institutions let you export your account data, which you then import into the app. The approach can be secure and save time compared to manual entry. However, it’s not always automated and there is no guarantee that the app will have this feature.
Manual Entry
This is the most precise method but it’s also very time consuming. You need to be consistent. Depending on what you want to track, you don’t have to log everything but you should pick what types of expenses you think you should enter before you get going so you can always make sure to record those. Manual entry is usually common with free banking apps.
When it comes to which method is best, bank syncing is the easiest option. You may want to choose to do this option if your other budgeting efforts haven’t been effective since this method will allow you to be more consistent. An element of budgeting is looking at how much you are spending, and when you use manual methods, it can be easy to fudge data or forget to enter a purchase. Bank syncing makes you be honest with where you are spending your money.
Finally,
Budgets are a necessary part of financial management. Using a household budgeting app to help manage your finances is a great way to stay on track and reach your financial goals.