Budgeting Apps: How Are They Beneficial ?
Money management apps help you have a clear understanding of where your money is going
If you wonder where your money is evaporating, then most probably you are failing to maintain a strict budget. Having a budget is very important to keep track of your money. Once you know where you are spending your money and how much, you can make necessary adjustments and manage your finances better. Ideally, at the end of every month, you should have a surplus which you invest. Without a budget, it is difficult to create such a surplus and stick to it. Living beyond one’s means can lead to financial disaster.
Earlier, a budget would mean either maintaining a notebook or an excel sheet. While those techniques still exist, there are several budgeting apps that can make your life a lot easier. We look at some of the key features of such budgeting apps and why you need them.
Categorize expenses: Expenses can be classified across several categories like transport, groceries, eating out, entertainment, and so on. While there are default categories, you can add your own categories too. At any point in time, the app will let you have an idea of how much you have spent in a certain category. ‘Day-to-day-expenses’, a money management app, not only helps you categorize your expenses, but each is identified with icons to help you have a clear understanding of where your money is going.
Automatic updates: The best part is, the expenses are synced by default once you have linked your bank accounts. Every time you make a purchase with a credit or debit card or through any other digital means of payment, the app reads your SMS and automatically puts the expense under the appropriate category. So, your restaurant bill comes under ‘eating out’, while your payments at fuel pumps come under ‘transport’. This makes keeping a track of expenses much easier. However, when you make any payments in cash, that needs to be updated manually. Some apps also give you an option to scan a receipt so that the expense is picked up by the app. The budgeting app ‘Wallet’ has 3,500 banks worldwide connected to its network which helps you to automatically sync all your transactions.
Manage your budget: You can also set a budget for each category and receive alerts when you are nearing or have used up that budget. Setting a budget for a certain category is important because it helps you stick to it. Let us say that you had budgeted Rs 10,000 as eating out expenses for a month. If by the middle of the month you see that you are nearing your limit, you know that you need to cut back. If you stick to your budget, you will never have the problem of running out of money at the end of every month. Budgeting apps will help you set daily, weekly or monthly budgets. The expense manager app ‘Spending Tracker’ helps you set budgets so that you can fix spending targets and stick to them. It also lets you carry forward your remaining budget to the next month or week.
Useful reports: Budgeting apps provide reports of your expenses and budget in terms of graphs and pie-charts so that you can visualize where your money is going. Such a graphic representation of data also helps you look at how your expenses have panned out over a certain period. For example, if you are trying to cut down on your eating out expenses by packing lunch from home, you can get to see the progress you have made. These apps also suggest action based on data. If you exceed the budget under certain categories or have less surplus in a month, such data will be presented to you, helping you to take appropriate action. The ‘Expenses Manager’ app helps you get an idea of your expenses through graphs with real-time data.
Track payments: These apps also help you track all the payments that you need to make whether they are utility bills, credit card outstanding, EMIs, and insurance premiums. Not only do you get reminder alerts, but these apps will also suggest how the upcoming payment will affect your cash flow so that you do not miss out on any payments. The money management app ‘Walnut’ helps you keep a track of your credit card dues so that you are not taken by surprise when paying your credit card bills.
Though these apps have pro features for which you need to spend money, the free download is good enough to have a solid budget in place. Now there is no excuse for not sticking to a budget anymore.
The author is a former journalist and blogger