How Budgeting Apps Use Technology to Help You Save

Financial technology, or fintech, has transformed many different areas of our financial lives in recent years, as many new innovative start-ups have emerged, offering consumers new ways to save, invest, bank, and more. Budgeting apps have begun to gain millions of users, by offering ways to manage your money that simply would not have been possible before this technological revolution.

 

What Is A Budgeting App?

 

Budgeting apps are dedicated apps for your smartphone that feature a variety of clever features to help you manage your money such as:

 

• Set budgets across all your accounts

• Categorise your spending

• See your data from all your financial institutions in one dashboard

• Get alerts if you are over spending

• Plus many more…

 

For the budgeting app to get working, you need to feed it your data. To do this, they connect to your bank and other accounts via something called open banking.

 

What Is Open Banking?

 

Open banking was first proposed in 2015 in the European parliament, and the UK, so often an innovator in financial services, has been the place where open banking has made most impact. The basic idea behind banking is that an individual’s financial transaction data is their own property, and that they should have access to it. This means in practice, that financial institutions, such as banks, have to give access to this data to licensed financial technology apps, when requested by a customer.

 

Budgeting apps are one type of app that will use this process. If a customer sets up a budgeting app, they will then give permission for the app to connect to their bank (or other financial institution i.e. credit card providers, investment platforms etc), and access the transaction data. This process is highly regulated and very safe. Once the budgeting apps have this data, they can then analyse your transactions within their app, and then use their systems to give you insights into your finances.

 

One fantastic feature of the budgeting apps is that you can connect several different financial institutions to the app. For example, if you have a current account with one bank, a savings account with another bank, and a credit card with yet another provider, you can connect all of these to the budgeting app, and then see all of your financial life in one place. Definitely something that was impossible before open banking!

 

Notable Budgeting Apps

 

Emma App

 

The Emma app provides a range of budgeting and money management features, with a free version available, alongside the paid versions (which have more features) at £4.99 and £9.99 per month.

 

Snoop

 

Alongside their budgeting features, Snoop offers ‘checkers’, which analyse certain areas of your spending, for example for energy bills or insurances, and then suggest opportunities for you to save. Snoop is a free to use app.

 

Money Dashboard

 

Probably the oldest budgeting app, having been around since 2011, Money Dashboard offers a more business-like and analytical approach to budgeting, and the app is free to use.

 

Moneyhub

 

Priced at a mere £0.99 per month, Moneyhub gives users an impressive technical back-end to assist their budgeting efforts.

 

All of these apps are definitely in the running to be the best budgeting app UK.

 

Banks With Budgeting Functions

 

The rise of smartphone based app only banks in recent years, has also given consumers more options in terms of budgeting tools. Banks such as Starling Bank, Monzo and Revolut, have utilized modern technology to give options within your bank account, that in previous years would have only been possible by opening multiple bank accounts. They give the ability to create separate areas within your bank account, called things like spaces, or pots, where you can separate out the money in your account. For example, you may wish to separate your bills money from your everyday spending money, or create a space for saving. In addition, they have other money management features such as alerts, goals, and insights into your spending.

 

One big difference between the bank based budgeting features and the dedicated budgeting apps, is that with the banks, you can only analyse the money and transactions in that bank, whereas in budgeting apps you can combine the data from various different financial institutions.

 

Conclusions

 

Thanks to improvements in technology, and advances in regulation (with open banking), consumers can now take control of their finances more easily than ever before. Budgeting apps can be a fantastic way for people to budget, save and keep on top of every penny.

*This is a collaborative post.