THE EXPERIENCE of Melbourne-based FinancePath is that the relatively new trend of utilising ‘finance apps’ to guide personal – and sometimes small business – finance is becoming akin to “your unused gym membership”.
According to FinancePath director and general manager Chris Collard, “far too many” business people are migrating to finance apps only to fail to use them properly to drive positive personal and business outcomes. In fact, the whole process has been found to place people under unnecessary stress.
“It seems everywhere we turn there is media commentary regarding interest rates, how the banks are managing the changes in regulations and opinion around a potential property bubble,” Mr Collard said. “This commentary varies depending on the opinion or the ‘spin’ of the author. It’s no surprise we are all confused.”
Mr Collard said an Australian Securities and Investment Commission (ASIC) study had found about 30 percent of people found dealing with money “stressful and overwhelming”.
The Australian Financial Attitudes and Behaviour Tracker, published by ASIC in December 2014, suggested this saturation of information combined with “our increasingly busy lives” has led to a spike in the use of personal finance apps as people look for answers in trying to make sense of their own personal situations.
“Whether it is the likes of Pocketbook, Money Brilliant or My Prosperity, people are turning to these smart finance apps as a source of information as they endeavor to take control of their money,” Mr Collard said. “These apps aim to assist you to, one, track your day-to-day spending and, two, compare how much you have coming in and going out.”
Mr Collard said second only to gaming, finance apps were the fastest growing category in the Asia Pacific region.
“People are continuing to turn to these apps for convenience and ease as they seek simpler ways to gain insights to allow them to make smarter decisions with their money,” he said. “This is a great first step in getting control back, however simply downloading a finance app will only provide you nice looking graphs, unless you do something with the information.
“Just as jumping on scales alone won’t help you lose weight, simply joining a gym won’t get you lean and fit.”
Using the gym analogy, Mr Collard said many people who are not getting results themselves from self-organised exercise discovered they did make progress when they engaged with a trainer or a coach.
“The challenge with getting the most out of these apps is maintaining motivation and accountability,” Mr Collard said. “ Just like a personal trainer can assist you to put together a workout plan and keep you disciplined and accountable, it is important to identify what you are working towards and how you are going to take the next step in your financial fitness journey.”
It is the experience, knowledge and energy that counts most in finance, too, Mr Collard argued.
“Let face it few of us find budgets motivating. We want something just that little bit more inspiring,” he said, recommending most people do best from engaging a ‘coach’ or mentor.
“So, make sure the app can set and track goals and then ensure you have the support of a partner, financial professional or a mentor that you trust who will help keep you motivated and accountable,” Mr Collard said.
“Remember although this information can be useful, with no focus on a plan or a change in behavior, finance apps can quickly become the finance equivalent of your unused gym membership.”
Mr Collard has prepared a detailed analysis of finance apps and come up with what he believes are the top three available for Australians.
*FinancePath is a member of the 2017 Executive Leaders group of Victorian Leaders, the organisation inspiring and developing the next generation of leading Victorian companies.