Tip: Like any good tool, apps are as useful as you make them. An app may be able help with financial decisions and transactions, but it won’t get you to stick to a budget.
CategoryOne of the first things to consider is what type of financial apps may be most useful. BankRate.com breaks them into four categories:
Budget tracking apps allow users to record expenditures as they are made to keep track of bank balances and budget categories. Some allow users to make a budget and then watch how closely expenditures are tracking to it. Financial assistant apps collect, store, and report information from users’ various savings and investment accounts, providing a single place to keep track of asset performance. Loan calculator apps estimate payments and current balances for loans. Some also track how long it will take to pay off one or more loans. Spending and saving apps allow users to perform a wide-range of activities, including “what if” scenarios.
Fast Fact: Worldwide, one survey estimated 1.4 billion smart phones and 268 million tablets were active at the end of 2013. Source: ABI Research, 2013
CriteriaOnce a user has decided on a category of app that may be useful, there are additional criteria to consider.
Credibility. As everyone knows, not everything written on the internet is true. For example, The Wall Street Journal and The New York Times are generally considered more credible than an anonymous blog. The same principle applies to apps: understand who’s providing the information. Security. A financial app that wants to access personal financial information — such as bank and investment account balances — must be secure. Look for apps that highlight security, use 128-bit bank-level or 256-bit military-level encryption, and have been verified by TRUSTe, VeriSign, or MacAfee.⁵ Clarity. A personal finance app should provide information that is easy to understand. There are some apps that provide detailed charts on stock performance using a wide variety of financial analyses. However, if you don’t understand the underlying analysis, the app may be useless. Relevance. Remember the old saying: “If the only tool you have is a hammer, you tend to see every problem as a nail.” ⁶ The same applies to financial information. A mutual fund company may be a great source of information about mutual funds, but it may be less useful at providing information about estate planning.Using an app to help with your personal finances may be a great first step in becoming a better money manager. And asking yourself a few key questions before you download may help you select the app that best fits your personal finance needs.
- PC Magazine, January 31, 2013
- Apple press release, January 7, 2013
- Android Official Blog, September 26, 2012
- U.S. Census Bureau, February 5, 2013
- PC Magazine, July 26, 2012
- Abraham Maslow quote from Brainy Quote, February 5, 2013
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