Expense Tracking Series - Part 4: Online Budget Apps

   Online budget apps are great timesavers because they can often be connected directly to your bank account for automation purposes. They are also very portable, allowing you to always have access to your budget. But be careful, you can become too reliant on these apps. It is easy to lose track of what the app is doing and the automation in many apps is not intuitive.

   To fully explain why I do not suggest solely relying on a budget app, we need to remember back to the first post in my expense tracking series where I ask the question, “What is the difference between expense tracking and budgeting?”. Remember that these are two different things. I have found that most online apps have difficulty integrating the two, creating an awkward interface that can be confusing.

   Have you ever used a GPS app to go somewhere and later realized that you don’t know where you are? You end up driving down the road, following your phone’s instructions, blissfully listening to your favorite song. Tuning out and blindly following your GPS can be fun if you are on a vacation adventure. But later, you probably won’t remember how you got there. Online budgeting apps tend to have a similar effect. You enter your information; let it do the math and then just follow along. It can be a fairly simple process. However, sometime later when you look at it again you can’t remember what happened or how you got there. Is that really the best way to maintain your financial well-being?  Probably not. The bad news then is that online budget apps are not usually capable of maintaining your financial wellbeing all by themselves.

   Let’s refer to my expense records from my last blog post and make some comparisons.  The picture below shows the same entries from my handwritten check register. It is well organized, automated, and the math is done for me. My bank account is connected, and all my transactions have been downloaded. Truely a GREAT time saver! And very useful!

Compare this to the handwritten check register and the spreadsheet below and everything looks great, right?

   NOW…. Imaging that my somewhat silly income of $14.72, my lottery winnings of $1,000 (which I DO NOT recommend counting on!!) and all my expenses are accompanied by 350 other transactions. Can you imagine me trying to keep track of 350 transactions on my 6-inch cell phone screen? The simple fact is that trying to look at that much information on such a small screen is not very helpful. In addition, the “mysterious” algorithms in some apps can often lead to financial apathy. Have you ever used an app, religiously entering information for a whole month only to get to the end and say, “Now what?”.  If you have, maybe you should ask yourself, “Why am I feeling this way?” or “Isn’t this app supposed to make me feel better about my money?”. In my experience, these feelings are often caused by the app's inability to adequately show me the BIG PICTURE.

   If you have tried online budget apps and ended up feeling like a failure, maybe it is time to seek the help of a Financial Coach. We can lead you toward practical use of online budget apps in conjunction with other tools so that you can have healthy finances that match your lifestyle.

One last thing, kind of an afterthought…

   Although most apps can connect directly to your bank account, they still have limitations. For example, one popular app that I recently reviewed was not capable of connecting with Fidelity Investments, preventing it from retrieving financial transactions. This frustrating lack created inaccuracy in my budget.