How to Manage Your Finances via Apps?

It's difficult to manage personal finance when the goals are fluid. In fact, as a someone in the thirties the financial goals are constantly changing. One day you're looking long term to save for a house or any other big investment and next minute you're trying to balance the credit card debt because a big expense suddenly made its way through. 

And as a millennial and someone who appreciates technological assistance; a lot of financial planning is based on phone apps. I think it's the ability to have everything on phone and also having the ability to slice through the data; makes it "cooler" and informative at the same time. As someone working in software field I'm aware of the power of dashboards and various workbenches that helps make complex data 'user-friendly'.

But is there a more educated approach to managing finances through apps? As a journey should begin with fundamentals, a simple search reveals that there are multiple areas of financial planning but not all have a financial app. Also, they don't replace your personal judgement but hopefully sharpens it.

Getting in the Groove (Financial Breakup)

So one of the first area of personal finances (courtesy Minnesota Council of Economic Education) is "Thinking Economically". There are a lot of apps that can help you to start thinking economically. One of the best ones I like is Personal Capital which gives you a good breakup of your finances as well as ability to see your budget month over month. It also lets you tag your transactions as duplicate or business so you can accurate monitor your Net Worth, Budget and Cash Flow monthly. 

Although it has other functionalities like Investment Checkup and Financial Advisor but that is only available for portfolios over $100,000. But the app would give you both visual and data-driven insights that you can draw out of the free functionalities. Disclosure: I used Mint for around an year before I switched completely to Personal Capital, the reasons were completely rooted in personal preferences.

In addition there are these other account monitoring apps (technically next one is not an app per se), for example, Change that goes through your transaction and helps you with these "nudges" it sends as text on various accounts connected (for example Credit Cards, Checking & Savings Account) that track your finances. The idea is to encourage people to be self-disciplined about finances by providing them with insights that usually are not visible. So, you may find out you're overspending on magazine subscriptions. There is also Clarity that does similar things in addition to a FDIC insured savings account and ability to negotiate with service providers to lower bills (disclosure: I haven't tried this app).

And something comparable is available from Trim as well. Trim also has a Visa cash back and an Amazon 'refund on any price drops' program. Again, the idea is to become familiar with your expenses and perhaps get ideas to "trim" or "change" (ha! pun intended).

Investing

Investing is a very debatable topic. An article in NPR states that a little over half of Americans own a stock. When I started investing I was as confused as anyone else and probably I tried to "time" the market. I also realized early enough that this was an insane strategy and I needed a better plan. Although I don't claim to have a strategy yet but I'm trying to do my homework whether it is reading Warren Buffett, Timothy Sykes, John C. Bogle and others. I wouldn't comment on whether ETFs, Stocks, Mutual Funds, Bonds or Penny Trading is an acceptable strategy or not. I would comment on few apps out there to help you invest (if you don't want to that's OK too). 

These are some investment apps out there that can help you in various aspects of financial management (Note: not an exhaustive list):

401(k) Apps (what is 401(k) here)

If you're lucky enough to have an employer 401(k) you can use Blooom to balance your portfolio. It helps to manage the 401(k) by balancing the investment selection, minimizing the fees and provide other financial advising services. Re-balancing is a quarterly exercise and there is a monthly fee of $5 a month when I tried Blooom in 2016 (Update: as per the latest information on their website the fees now is $10). It does provide financial advising but I couldn't justify the $5 per month I was spending (Disclaimer: I am trying Vanguard as my employer's profit sharing is from them). 

401(k) balancing is an educated exercise but one of the most important aspect of any fund is fee. So I do run my plan through Feex where one of the services provided is a review of fees charged (they grade you like A, B, C etc. monthly). It's a good learning exercise at minimum even if you don't want to try their other services. 

Investing in Stocks, ETFs etc.

I wouldn't be commenting on the education part of investing as that's a personal journey which only you can decide. However there are plenty of apps that can help with your investments. You've Robinhood, Betterment, WealthSimple and Stash (I'm not including Ameritrade, Scottrade and other commission based trading platforms). There are perhaps others but these are the primary ones I have studied. 

Online Brokerage

Robinhood's zero fee for trading is a great way to avoid commissions on trading; you can find more details on here. Stash is another way to trade and the unique thing is you can buy fractions of selected ETFs however there is a fee depending upon the size of account; details here. While on Robinhood you can buy shares of stocks and ETFs. Although both of these don't have any financial advisement aspect to it.

Robo-advisor

If you don't feel comfortable in selecting stocks or ETFs or bonds there are apps (I keep calling these as apps but these are financial service providers in robo-advisor industry) that can create a portfolio for you and help you keep investing. Here is a comparison of Betterment and WealthFront. And there is WealthSimple, a Canadian online investment management, that was recently launched in US. Business Insider has a great review on this here. (Disclaimer: I have a Betterment account only because it was the first one I found in this robo-advisement sector).

Small Change

There are also apps that invest in small amounts by rounding up the transactions from checking or credit card accounts. Acorns is one these apps that help you automatically invest your spare change (monthly or yearly fee depending upon value of portfolio). Qoins is another unique concept that pays your debt with rounded up purchases with a monthly fee of $1.99. (Disclaimer: I have an Acorns account).

Last Word

Technology can provide a great insight into finances but at the end of the day it's not a replacement common sense. And education is the key to any financial step; even in the age of robo-advisors studying is the key as after all you have the right to know where your money goes. So use these apps or anything else you find to help improve your decisions but keep your brain working. I am not trying to endorse any of these apps but as a smart buyer you should decide whether you need any of these or not! And there are a lot of other ways besides these apps or for that matter any technology but I will leave that for you to figure out by yourself.

Common Sense - Always!