Keeping track of your personal finances is time consuming and not what you wanted to do in your retirement years. As a CERTIFIED FINANCIAL PLANNER™ professional, I recommend all my clients automate as much of the saving and reporting functions as possible. However, I do not recommend that you use free service apps.
The downside of most of these free service apps is that you are allowing them to use your information to sell you financial and non-financial products and services that you otherwise would not have considered. The services know your income, spending patterns and the area where you live. They also expose you to a greater amount of influential advertising that can cause you to spend more money.
If you must use a free app, my two favorites are the MINT™ and Credit Karma™. Again, I do not recommend these, but I have found these programs to be secure, stable and accurate.
Instead, I recommend that you purchase your own program or use programs that your advisor or bank provide to help you to keep your finances organized.
Three of my favorite personal finance apps for retirees are:
- Right Capital — Financial Planning and Account Aggregation Service. This program also creates a budget in minutes and coordinates with your financial plan. It will tell you if you are overspending.
- YNAB 'You Need a Budget' — a Proactive tool that costs $12/month. It helps you manage your money better. It keeps you on task for achieving your budget.
- Free bill pay service through your bank — Do not send checks anymore. Let the vendor debit your account. Most vendors do not make errors, and they especially make fewer than you do writing and mailing checks. Because the bill pay service is paying your bills based on an automated schedule or Electronic Fund Transfer (EFT), you are free to travel. You do not need to be home to pay bills or come home to a bunch of unpaid bills.
The most important element of these programs is the ability to access your information on your smart phone and computer with ease when you need it to answer a question or avoid an impulse buy. I do not recommend programs that require information to be downloaded or stored on your computer, as such programs are less secure and subject to the risk of crashing. If that occurs, then data and allocations/categories are lost and many hours of your time and attention are wasted. It is important to check how long the program stores the data online. The data needs to be accessible for at least three years with easy conversion to reports that the IRS or other auditors could use.
How these apps benefit retirees
These programs can show you where you spend your money. They show the $1,000 spent in a coffee shop over a year, the $10,000 spent in a single store and the $30,000 that you have spent on food and eating out in the year. In short, they show you your true focus and priorities that direct your spending. As human beings we rationalize daily behavior, but ultimately the trend cannot be ignored. Through regular monitoring of your spending and the use of a CERTIFIED FINANCIAL PLANNER™ professional, you can stay on task to achieve your financial and non-financial goals.
Through these programs, you can see the continuous $5 charge for an entertainment app that you do not use that costs you $60 in a year. You would not throw away $60 dollars, but that is exactly what you are doing every month in $5 increments. These apps can help you identify the services that you pay too much for and the services that you get value from. I like showing a particular store how much I spent there over the course of the year, so that they know that I should be a valued customer. These apps can also help prove the purchase price on returns when you do not have the receipt. From your information, the store can find proof of your transaction to process the return.
In summary, use technology wisely. Let it automate regular tasks but leave the most important advice and management to qualified human beings. If you want to look beyond apps and find a financial planner who can help you realize your personal goals and achieve financial security, start by visiting letsmakeaplan.org for more information.