Tap into Technology for Your Best Financial Year Yet

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By Erin Pittman

A new year wouldn’t be a new year without resolutions to be better than we were the year before. While slightly less popular than resolving to eat healthier and lose weight, many of us turn our attention to improving our finances.

In the age of technology, you no longer have to have paper and pen or a desktop computer program to track your finances. You can check all you need to know on the go in 2021. Harness the power of smartphone apps to help you spend smarter, save more and plan for the future from wherever you are.

Tracking Spending

If you’re starting at square one, your first step is to track your spending and see just where your money is going. Take the month of January to track every dollar that goes out the door, or look back at November to examine your spending habits. (Let’s be honest: December was NOT typical. Don’t judge yourself based on holiday spending. After all, you were just sending 2020 out with the bang it deserved.)

For spending tracking, Investopedia.com recommends several apps. Try Mint, a free app that has a friendly interface and many capabilities you may wish to use moving forward. It’s a great one for beginners. Or try YNAB (which stands for You Need A Budget). This one is not free but offers a free trial and promises a
budget makeover and big savings when used over a few months. It has the ability to sync with your bank account, which helps with tracking and analyzing spending habits.

Creating and Sticking to a Budget

After tracking your spending for a month, you may have some eye-opening realizations and see where it will be easy to wrangle your spending a bit. Build upon that by creating a monthly budget.

Your personalized budget creates a plan for where every one of your dollars will go. With apps recommended by NerdWallet.com, it doesn’t have to be an overwhelming task. Try the previously mentioned Mint and YNAB, if you’re happy with the format.

Other suggested options are Good Budget and EveryDollar.

Get ready to input your income and expenses into the app of your choice. You’ll want to have your monthly paychecks, bills and debts handy. Each app has a slightly different format and way of walking you through, but the basic information needed is the same: money in, money out, debt to pay down and savings goals, including emergency funds, general savings and retirement accounts.

Once you enter those items, your chosen app can create a monthly budget for you. As you spend money in each category, you’ll simply enter the amount spent and the app tallies the categories for you. Some apps link to your bank account and can track automatically for you. While apps make it easier to create that budget, make sure you turn on notifications or reminders to help you stay on track. You don’t want to look up one day and be $500 over in your monthly dining budget!

Building Your Savings

One part of your monthly budget will be your savings, to which you’ll want to contribute a portion each month. Many financial experts recommend aiming to save 10% of your income.

Whether you’re creating an emergency fund, building long-term wealth or saving for retirement,
there are apps that can help you reach your goals.

The Acorns app can help you grow your money through smarter spending, investing and saving for
retirement. Their description tags their method as “easily saving and investing in the background of
life.” Acorns also offers educational content for you to grow your own money smarts. In this category,
Mint again stands out with its holistic approach to your finances, as does Digit. Digit analyzes your income and expenses regularly, makes goal suggestions and helps you direct the right amount toward your financial goals. Digit, like many programs, makes it effortless and automatic, factors that money experts say play a key part in building wealth. Schedule direct deposits to your savings accounts and retirement accounts each payday to build wealth automatically.

Aim to reach certain savings goals, then turn all attention to paying down your debt. Perhaps a $1,000 emergency fund would give you the security you need to redirect cash to debt payments. Once you’ve reduced or eliminated debt, you could work toward building a reserve of three to six months’ worth of expenses.

Paying Down Debt

Debt is a heavy emotional weight to carry. Freeing yourself from it will allow more of your money to go to savings or current needs, providing you with a greater sense of security and emotional peace. While apps won’t magically wipe out your debt for you, they can help you track your progress, show you methods of getting out of debt and increase motivation to keep going when luxury purchases seem much more appealing than big credit card payments.

There are two main schools of thought on debt payoff: the debt snowball approach and attacking highest-interest debt first. Paying down high-interest debt saves you the most money in interest, because you are working to reduce the highest interest debt first. Whereas, the debt snowball method tells you to pay off debts of the smallest amount first. This helps you build momentum and motivation to keep going. The snowball effect happens when you pay off one debt, take the money you were paying to the first debt and apply it to the next smallest debt, eliminating accounts faster and faster.

Which method speaks to you? Well-known money management expert Dave Ramsey suggests the debt snowball method and using the EveryDollar app to track your progress. Other highly rated debt management apps include Debt Payoff Planner (free and paid versions), Mint, Tally and Debt Manager. Download a couple to see which interface suits you best. And while you’re at it, brainstorm some ways to generate momentum on paying down those debts.

Could you turn your kitchen into your morning coffee stop instead of spending $5 a day on fancy lattes? Could you brown bag it like you did in school rather than going out to lunch every day, or plan your weekly meals and cook at home? Have you tried saving money on groceries using the Ibotta app or getting rebates for online shopping through Rakuten? How about listing unused household items for sale online? A quick Google search will lend you hundreds of ideas to get that snowball rolling.

Investing

Smartphone apps are wonderful tools to get you started and keep you on track, but keep in mind that for most people they cannot replace the knowledge and insight personal financial advisors can provide.

“If you’re looking for someone to help you coordinate or keep you on track with your finances and financial goals, you should consider working with a financial advisor. A financial advisor can also provide you help and guidance on investing and building a portfolio. A well-diversified portfolio based on your investment
risk tolerance is a great place to start,” said Private Wealth Advisor Bennett Whitlock of Whitlock Wealth Management in Lake Ridge.

Once you’ve identified investment opportunities that suit your needs, there are apps available to supplement your plan and support your goals. Dive more into investing with Robinhood, Stash or eTrade.

Tackling the basics of personal finance now will set you up for financial success and freedom in the future. Tap into the capabilities of that smartphone in 2021. You hold the power to tackle your financial future right in your hands.

Erin Pittman is Editor in Chief of Prince William Living. She’s been a writer for more than 10 years, but a lover of words her entire life. In these colder months, you’ll find her snuggled up with her yellow Lab, Wilson, desperately trying to finish reading the latest best-seller while hiding from the demands of her three (wonderful) children. Reach her at epittman@princewilliamliving.com.

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