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Making a budget and living that budget are two very different things, and it can often be challenging to stick to a spending plan.
According to a National Payroll Week survey, 34% of Americans say it would be very difficult to meet their financial obligations if their paycheck were delayed by a week. Using a budget app is one option you might consider if you’re ready to break the paycheck-to-paycheck cycle.
Budgeting apps promise convenience and simplicity when it comes to staying on top of your money. But just how effective are they? And is a budgeting app worth your time?
How Budgeting Apps Work
Every budgeting app is different, but they mostly work along the same lines to help you manage your money. These apps can sync with your bank and credit card accounts to help you keep track of spending and manage your financial life virtually anywhere.
The main function of these financial apps is to help you create a workable budget that you can stick to, based on your typical income and spending. Some apps use a specific budgeting approach, like the zero-based budget. Others take a more general approach, allowing you to create different budget categories and assign money from your paychecks to those categories.
Some of the other things you may be able to do with a budgeting app include:
• Tracking spending. Budgeting apps that link to your checking or credit card accounts can automatically record new purchases and other debit transactions for you.
• Paying bills. Similar to the automatic bill payment feature your checking account or credit card might offer, you may be able to use a budgeting app to pay bills on autopilot each month.
• Tracking bill due dates. Due date trackers can help you avoid late or missed bill payments and this is another feature you can find with budgeting apps.
• Saving toward financial goals. Some budgeting apps have savings features. For example, you may be able to set up savings “buckets” and schedule automatic deposits or “sweep” money you don’t plan to spend into a savings account.
The main idea behind these apps is to put you in control of your money while offering simplicity and convenience.
What’s Good About Budgeting Apps
The best budgeting apps do have some pros that can make them attractive to use, especially if you’ve tried other budgeting methods or you’re just getting started with learning how to budget. Some of the benefits budgeting apps can offer include:
• Convenience. Compared to using a budgeting spreadsheet or writing down your budget on paper, an app that you can download to your phone or tablet is easier to manage. You can literally take your budget with you anywhere you go and keep tabs on what you’re spending.
• Ease of use. Budgeting apps take the hassle out of making a budget and tracking expenses. You have to sync up your accounts to the app and tell the app about your income and expenses initially. But once you get your budget set up, the app can manage it for you.
• Financial awareness. Using a budgeting app isn’t necessarily something you can do once. You still have to pay attention to what you’re spending each month. But having that information on hand all the time can help you become more conscious of what you’re spending.
• Comprehensive view. A budgeting app that links to your bank accounts, credit card accounts, loan accounts and investment accounts in one place can offer a complete snapshot of your finances at any given time. That’s helpful if you’re working on paying down debt or want to easily track net worth month to month.
Another plus of many budgeting apps is that they’re free to use. While some can charge a one-time fee or a monthly fee, there are plenty of free budgeting apps you can download to start managing your money.
Do Budgeting Apps Really Work?
Using a budgeting app can help you stick to your budget and spending plan. The challenge is knowing how to use the app to your advantage. With that in mind, here are five reasons why budgeting apps can end up falling short:
1. Lack of Commitment
Downloading a budgeting app and syncing up your accounts can help you get started on the path to managing your money better. But it’s not just a once-and-done thing.
To truly make a budgeting app work for…
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