Using personal finance management tools to plan your finances

Apps that study your financial behaviour and help you make smarter financial decisions can keep you ahead of the curve.
Millennial and Gen Z folks pay a lot of attention to independence, whether it is for themselves or their financials. They know that financial planning has become as important as getting an education to thrive in this fast-paced world.This digital-savvy generation is not inclined toward hiring experts or managers to keep their financial health on track because the digital ecosystem has simplified this journey for them, making financial planning possible at the click of a button.

The ecosystem of payment enablers, mobile banking, and account aggregators is thriving and has created a seamless digital journey for individuals. Several applications and software tools are available to assist in monitoring your earnings, controlling your expenses, and maintaining assets.This ecosystem uses several tools to create a personalised experience for a user such as personal finance management (PFM) tools. Mobile banking apps are already integrating PFM tools, and most plan to do so to provide a better customer experience.

These tools manage your finances by grouping transactions into categories and adding accounts from various institutions to a single screen. They analyse and understand an individual’s financial behaviour and help in increasing the overall value of their financial portfolio by providing relevant insights.

A good and robust PFM tool performs a number of tasks to enable better financial views and monitoring for its user:

Account aggregation: This enables a consolidated view of different accounts in one place, including bank accounts, credit cards, and other investment accounts. The PFM tool can be used to aggregate and view all your financial information on one platform and manage your cash flow better.

Transaction monitoring and customisation: This allows you to check your transactions and categorise them to keep track of expenses on a day-to-day basis. An easy-to-use interface provides clear, enriched transactional data, which helps you understand your finances better. Monitor your incoming and outgoing cash flows and their forecasts to avoid future situations.

Categorisation: Using this feature, you can categorise transactions. You can add and update the categories as per your requirements automatically and manually. You can check category-wise spending and earnings.

Budgeting: This can help identify financial goals, reduce, or eliminate unnecessary expenditure, and set up savings plans to better manage your spending limits. It helps keep expenses under control by setting limits based on your spending habits.

Payment calendar: Visualise, break down and plan transactions in a heat map calendar for stress-free spending. You can track recurring payments or bills to avoid surprises and anticipate any repayment issues.

Predictive insights and notifications: Detect spending patterns and visualise them easily to take the next best action according to your financial situation. Anticipate issues with personalised solutions and alerts that deliver relevant and actionable notifications in real-time to better understand and track expenses.

Broadly, the PFM tool aggregates all your financial information in one place, analyses cash flows, tracks income and expenses, and generates actionable insights and recommendations for the user. Overall, they facilitate –

  • Stress-free planning
  • Optimisation of your time
  • Improved financial wellness and faster accomplishment of goals

It’s only fair to say that PFM tools are no less than a revolution in the financial management space. They have become significantly more streamlined and geared toward user requirements.While mobile banking apps perform backend tasks like bill paying and money transferring, personal finance applications study your financial behaviour and make smarter financial decisions, helping you stay ahead of the curve.With even more robust money management capabilities and a broader range of customisable features, it wouldn’t be untrue to say that they have an edge over mobile banking apps.

Put simply, sit back and relax as these tools are here to provide you with everything needed to attain your financial freedom. Utilise PFM tools to manage your money right, take control of your funds and seamlessly navigate through your financial journey.

Navin Chandani, Regional Managing Director, India & South Asia at CRIF

Source: Publication: moneycontrol.com,12th Dec,2022