5 Reasons You Shouldn’t Use Your Phone to Manage Your Money

January 27, 2016

A common request from users of our Financial Helpline is for money management app recommendations. I haven’t found one yet that I love, so I’m always on the lookout for new ways to make it simple and painless to track expenses, stick to a budget and save more money. In other words, I’m in search of the My Fitness Pal for money.

When I read this article about how using a screen to make financial decisions may actually promote bad behavior, it got me thinking that maybe we don’t need some magical app to make us better with money. We just need to teach everyone how to do it the old fashioned way. (In my case, that’s using a simple spreadsheet.) Here’s why I think we need to stop trying to find the perfect app and instead even the most Type B people need to master the pen and paper or spreadsheet way of tracking money:

1. It’s too easy to ignore. If I had a dollar for every person that confessed that they tried Mint but eventually the text alerts and notifications started driving them crazy, I could afford a personal chef. Yes, money apps can help you set alerts to notify you when you’re coming close to overspending, but they can easily get lost in the myriad (more fun) notifications that already flood your screen. Just nagging isn’t enough to actually keep money in your account.

2. You still have to actually maintain it. No software is perfect. Even if you are able to effectively link your apps to all of your accounts for an accurate look at where you are, you still need to log in regularly to make sure it is categorizing correctly.

If you’re trying to track spending on dining out and booze, you have to go in and make sure it doesn’t think your liquor store is a grocery store (that happened), and what happens when you buy wine while grocery shopping or if your restaurant lunch is actually reimbursed by work? You have to manually fix that stuff, and if you don’t do it regularly, it will become too much. You might as well use that time maintaining a spreadsheet.

3. My Fitness Pal doesn’t actually stop the chips from going in my mouth. You can have your phone tell you six ways ’til Sunday that you’ve blown your calorie allotment for the day before you even get to dinner, but unless I’m in the first four days or so of tracking, I’m probably still going to eat before I go to bed. Financial apps work the same way. They give you the data, but only you can take that next step.

4. My brain is changing and I don’t like it. I do think I’m addicted to my iPhone. My compulsion to check email, even when I’m already feeling overwhelmed with tasks is constant.

I’ve also noticed that it’s become totally socially acceptable to be texting, Facebooking, Instagramming, Snapchatting, etc. while hanging out with friends. I hate that! Adding financial management to my phone just exacerbates the problem so I’m putting the phone down and I think you should too.

5. We notice what we pay attention to. When I purchased my Mini Cooper, Sheldon, I was excited about the white racing stripes that I thought made him unique. Then I started to notice how many other electric blue Mini Coopers had white racing stripes. Was there a sudden surge in the popularity of this style? No, I just started noticing it.

The same thing goes for your money. I started tracking my net worth on a monthly basis a couple years ago. Nothing complicated, I just list all my accounts and about the same time each month, I add a new column with their current balances.

I love watching the amount grow in my 401(k) while seeing the value decrease on my car loan. And I LOVE putting a big fat zero down in the student loan line these days! This is a great way for me to make sure I’m checking in on my money at least monthly and it is fun to watch my net worth slowly but steadily increase. Try it and see if it doesn’t also get you starting to track other things, like how much you spent the previous month on carry-out dinners.

There is one thing I think you can use your phone to help with and that’s checking your bank account daily. Every morning when you’re catching up on what you missed on social media, add in a quick check of your bank account to see if anything funky posted overnight. This can save you from expensive overdrafts and help you catch fraud much sooner.