Article Written By: Damaris Olaechea from NerdWallet | www.NerdWallet.com
Since many are unfamiliar with money management tools, how about an analogy to help elucidate this mysterious new tool? A weight scale is intimidating in its simplicity: you step on it, and in three figures you (perhaps regrettably) see the cumulative efforts of munching on midnight snacks and not exercising. No matter how painfully blunt a weight scale can be, we can all agree that it’s a helpful tool to guide you towards a healthier lifestyle.
Personal financial management tools, also called PFMs, are a lot like that intimidating weight scale. PFMs also display figures, but instead of measuring your weight they measure your financial health. Like the weight scale, PFMs figures are useful tools for helping you maintain a healthier lifestyle. However, unlike the weight scale, the PFM will aid your financial health. One beautiful difference between the two is that PFMs can be accessed anywhere you go via your mobile phone.
About 90% of mobile banking users access mobile banking to check account balances or recent transactions. With mobile PFMs, not only can you to track your balances and expenses, but you can also track any existing debt, anticipate upcoming bills, and manage your savings. They offer valuable insights to help anyone looking to prepare for retirement, build emergency savings or guide themselves out of a nasty fiscal hole.
If you’re looking to get a better grip on your spending habits, or are trying to follow a budget to the cent, you’d do well to use a mobile PFM. Below you’ll find a few examples of the benefits provided by PFMs.
1. At A Glance Reports
Most PFMs use simple graphs or lists to show you how much spending money you have available, how much you owe, and how much you’ve budgeted. This spares you the time and trouble of thumbing though line-by-line reports when you’re ready to make a purchase, but aren’t sure if you have the funds.
2. Budget Tools
Nearly all PFMs come with some kind of budgeting tool. After all, if there’s one tried and true method of careful financial planning, it’s closely monitoring your budget. You also have the added benefit of receiving alerts via text message or email when you’re approaching your budget limits.
3. Money-flow Monitoring
One of the better features of advanced PFMs is the ability to see where you spend most of your money. This can help the conscious consumer redistribute their funds if their spending isn’t aligning with their budget.
4. Portfolio Management
Have you made investments in the stock market? Do you hold accounts in more than one place? Would you like to know how your balances are contributing to your retirement? Well, some PFMs allow you to monitor your portfolios directly through the app. Some even allow you to examine individual investments and their performance.
While PFM tools can be extremely useful, they aren’t without certain concerns. Third party PFMs, for example, do require you give them your financial account information, including passwords.
If you’re afraid of using a third party for this reason, don’t fret. You’re actually in good company. According to a recent study by Forrester Research, 75 percent of consumers would prefer to use a PFM tool provided by their own financial institution. Fortunately, many banks have their own PFMs for customers to use. Try Mercantile Bank’s MercMoney tool to see how it can help you meet your financial goals.
PFMs are a promising tool to keep track of your financial accounts. However, like the weight scale, PFMs are only effective when they’re being used with a goal in mind. After all, no one ever lost weight just by stepping on a weight scale. Take the time to determine what your financial goals are, use a PFM to help keep you on track, and watch your financial health improve!