We're excited to share this guest post from Joshira Maduro, a research analyst at LendingTree covering credit card news and spending trends.
Just as a navigation app helps you arrive at your location safely (and on time), a finance app helps highlight the path to a more secure financial future. For many, these tools have become exceptionally helpful during the coronavirus pandemic. According to the fintech company Plaid, nearly 70% of Americans reported that they would not have been able to manage their money through the crisis without the help of digital products like finance apps.
Whether you’re on track or struggling to get by, there’s no shame in using technology to help you manage your finances. Here are a few ways you can use these tools to your advantage.
You’ll get your overall financial picture
According to a recent survey, 15% of consumers feel the pandemic has shaken their financial confidence enough that they’ll never feel financially secure again. While getting back on track can feel daunting, having a holistic view of your financial picture can help you understand your overall financial health and help you create an action plan.
At a glance, many apps allow you to see your net worth, progress towards savings goals and debt reduction, and spending habits. At first, seeing your status might feel overwhelming, especially if you have a lot of debt. Knowing where you stand financially will only help if you use your current financial picture as the impetus for financial planning. As you monitor your financial activity, you’ll be able to make better decisions about your finances going forward. And as those changes lead to growing wealth and improved financial security, your financial confidence will grow.
You’ll get an especially hefty confidence boost by pairing your planning with positive self-affirmations, which research shows improves self-confidence and leaves you more open to change. In other words, remind yourself that you work hard for your money and that you have control over how you spend, save and invest, rather than getting down on yourself for your current debts.
You can establish a strong sense of control
Many people are flying blind when it comes to their finances — a whopping 65% of consumers aren’t aware of how much they spent the previous month. But being in control of our spending helps us feel more confident about our financial futures. People who don’t budget recognize that being in control of your spending provides confidence. In a survey from the Certified Financial Planner Board, 67% of respondents said having a budget would help them gain confidence about their finances.
One of the ways finance apps give you control is by allowing you to build and monitor your budget. Apps can help you easily give your money different jobs, move funds around as needed and keep track of how much you're spending each month. Sure, you can do it without them, but that would involve daily updates to spreadsheets or actually relying on cash and envelopes to stay organized.
You’ll also gain confidence (and save money on interest) if you can and monitor your improvement.
Tracking your finances can also help improve your credit from the ground up. But to get started, you need to know what you’re working with, which is where a finance app can help. Many even break down the factors that affect your score and help you identify in which areas you can improve. As you make on-time payments and reduce your debt, you’ll see your score improve, and recognizing your own impact on your credit score will help you feel financially confident.
You can feel confident in your future
Once you recognize that you have control over where your money goes, you can begin to plan for the future. Research has shown that goal setting positively impacts both motivation and performance, and seeing your own success can boost confidence.
Many finance apps allow you to see the potential outcomes of various goals, so you’ll know exactly what you need to get on track.
When you start tracking your income, savings, debts, and expenses, you’ll have the knowledge to be able to make healthy changes. Plus, you’ll build financial confidence as you see your finances improve due to your own hard work. Don’t be afraid to use technology to get ahead in your financial life — the right finance app can put you in the driver’s seat as you forge a path to a healthier financial future.
Joshira Maduro is a content market research analyst at LendingTree, where she covers credit card news and spending trends. She utilizes her background in market research and branding to develop insightful pieces that empower people to make better financial decisions.