Benefits of using a budgeting app
Even if the budgeting app tracks your spending without providing budgeting tools, it can be beneficial for helping you identify trends and analyze your money choices.
How budgeting apps help track spending
Most budgeting apps track your spending and help you categorize it. You identify broad trends by seeing which categories your money is most likely to go toward. Additionally, many apps allow you to examine subcategories more closely to understand where some of your spending might not be aligned with your values.
Budgeting apps make it easy to track spending because the app links to your account and pulls your history for display. Once you see how you’ve used your financial resources, you can change your habits and potentially spend more consciously.
Automating savings with budgeting tools
Budgeting tools can help you visualize automated savings. With the right budgeting app, you can set goals and assign your money to buckets to help you keep track of your progress.
Most budgeting apps don’t actually manage your accounts on your behalf. However, they can track when your automatic transfers move money from a checking account to a high-yield savings account or a retirement account and provide a visual representation of your progress toward goals like building an emergency fund, saving up for a vacation or investing for retirement.
How budgeting apps can improve financial habits
Budgeting apps offer an overview of your financial habits and a way to easily see where your money is going. Depending on the features available, a budgeting app can also help you plan ahead and prepare for expenses.
When you become used to connecting with your money, you might make more conscious decisions when planning your goals. Additionally, using a budget app to track your spending can help you identify areas where you might want to cut back or where you’re spending more than you planned. Once you measure the issue, you can take steps to make changes.
How to get started with a budgeting app
Consider your financial goals and what you most want help with from your budgeting app. By understanding what information you want from the app and how you want it to help you make better financial decisions, you can evaluate which is the best budgeting app for your situation.
Setting financial goals in an app
If you want help creating a financial goal, start by answering the questions in the app. Some apps offer a series of exercises to help you identify your objectives.
Additionally, the app can review your history and provide helpful hints to create a budget or set goals. Some apps offer different buckets that assign your transactions appropriately to help you track your progress toward goals.
Pay attention to apps that offer planning for the future and are designed to help you evaluate your progress. Some apps run different scenarios and project potential results based on your goals.
Connecting accounts and tracking spending
Most apps ask you to connect the accounts you want to track. Depending on the app, this can include bank, credit card and investment accounts. Other accounts might also be available. Generally, you enter your information, which is tokenized so the app doesn’t have your login information.
Connecting your accounts makes tracking automatic. It’s one of the easiest ways to see where your money is coming from and where it’s going.
Some apps allow you to create manual entries and have special designations for cash accounts and spending. When choosing a budgeting app, decide how involved you want to be in tracking and categorizing your spending.
Adjusting your budget over time
The information you learn from using a budgeting app can help you tweak your spending plan over time. If you see that you regularly spend more in one category than another, you can change your budget to reflect that.
If your app helps you create a budget, you can adjust it as needed by answering questions. Some apps even allow you to create more than one budget.
Methodology
Buy Side by WSJ evaluated more than 15 available budgeting apps that had at least average customer reviews. We noted available features that would appeal to different styles of money management. Some of the features we focused on included automatic tracking, account syncing, reports, projects, collaboration and whether investments were included.
We also considered each app’s design, intuitiveness and ease of use. We noted whether the app achieved its intended purpose, such as ease of use for couples or the zero-based system.
FAQ
Are budgeting apps safe to use?
Generally, budgeting apps are safe to use. They often use tokenized logins to connect to accounts and usually have a high level of encryption.
Do I need to link my bank account to use a budgeting app?
Depending on the budgeting app, linking your bank account might be more effective. However, there are budgeting apps that allow you to use them manually without linking to a bank account.
What is the best free budgeting app?
The best free budgeting app is one that meets your needs. Consider what works best for you and look for an app with the features you will use.
Can a budgeting app help me get out of debt?
Using a budgeting app can help you see where your money is going and help you identify ways to cut back on spending so that you can put the savings toward debt repayment. Some budgeting apps do help you set debt reduction goals and can help you track your progress toward debt payoff.
How do budgeting apps make money?
Every app has its way of making money. Some of them make money from subscriptions, while others profit from ads. Some budgeting apps recommend products and services and receive commission when you purchase through the app.
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