Embrace the Power of Personal Finance Software Tools

Managing Your Money

April 26, 2018

The tedium of personal and family household budget planning has been immeasurably reduced in recent years by the introduction of what is known as personal finance software. These are innovations that can have a significant impact on the efficiency with which users manage their money.

Disciplined household money management

There’s a causal connection between disciplined household money management and the – considerably more sophisticated process of investment, portfolio planning and long-term wealth accumulation. Why?

Simple. Because a rigorous household budget planning process is the bedrock upon which discretionary dollars can be deployed to build longer-term financial assets.

A leading indicator

In my experience, the quality of a client’s day-today money management is a general indicator of that client’s appetite to work with me in meeting their personal wealth goals.

Reduce the tedium

The good news is that, with the aid of personal finance apps, much of the tedium of household budgeting – which typically involves sitting at the kitchen table reviewing account statements and bills – can be eliminated, or at least substantially reduced.

There are plenty of these personal finance apps out there and the three modern examples I’m going to review are – not endorsing are Mint, Digit, and Quicken.. I’ve taken the liberty of ranking them in an ascending order of sophistication – simplest first.

1. Mint1

This is a good entry level app, one that enables users to, ‘effortlessly stay on top of bills.’ Mint software issues alerts that help you schedule timely bill payments, an edge that enables its users to say goodbye to those occasional late fees to which – even otherwise canny wealth advisors – are sometimes prone.

2. Digit2

Digit offers a feature I particularly like: it helps you save money that you didn’t even realize you had. Digit automatically scans your income and spending patterns. Then it transfers a small amount of savings that it considers you won’t necessarily need into a separate account.

To me, this is a huge advantage. In effect, Digit helps you discover and save money that you would spend elsewhere. Digit is free and runs itself with the interest it generates from the users savings account.

3. Quicken3

Quicken comes in several levels of sophistication – small businesses, for example, often use its corporate applications – but it’s a terrific personal finance tool that helps you to:

  • Create and manage basic budgets.
  • See bills and money together, so you know what’s due and when it’s due.
  • Get custom tips for reducing fees and saving money.

Conclusion

What’s the one thing that every person knows about his or her finances? There’s never enough money.

Some of the apps out there connect directly to your bank account to automatically calculate your income and recurring bills, and then suggest what your daily, weekly, and monthly spending should be.

They can also suggest the amount you should be saving every month and subtracts that from your monthly budget.

Most people don’t know the specifics of how their salary is spent. And even if they do have their finances perfectly organized, all too often they miss the boat when it comes to one of the easiest ways to save — and make — money. Investing.

Michael Fahy, The Michael Fahy Group, CIBC Wood Gundy, 604-691-7207.


1 https://www.mint.com/
2 https://digit.co/
3 https://www.quicken.com