Trying to save money or pay debts? These's an app for that...

Whether saving for a house or repaying debt, Ciara McDonnell finds that there is an app to help you on your way

For me, January is all about good intentions.

My partner and I promise to start saving money for the year ahead so we can finally afford to go on a holiday as well as have enough money for school books and birthdays and all the expenses that come with having children.

We are-old school budgeters; our expenditure tends to be laid out on the back of an envelope at the start of the month and inevitably gets lost somewhere along the way.

For this reason, this year we are turning to budgeting apps as a means of reining in our spending habits for 2016, and we are not alone.

As a financial planner and owner of financial advice centre The Money Advisors, Bob Quinn is intimately aware of the common problems that come with trying to budget.

According to him, budgeting apps can be helpful when it comes to financial planning.

“Budgeting apps can have a positive placebo effect on people who are trying to plan their finances. They can help them to become more focused and more familiar with their financial goals, which is the most important thing when it comes to financial planning.

“The biggest problem I see with my clients is a lack of understanding when it comes to their finances.

“We all have life goals and objectives, and our finances need to be able to help usher us towards those objectives.

“Oftentimes, our spending will push us further away from our goals, and this is what we try to show our clients.”

According to Bob, the first goal of anyone who is trying to get a hold of their finances is to map out their future.

“There is no silver bullet when it comes to financial planning,” he says.

“If you are in a large amount of debt, do not expect to be debt-free in a month’s time.

“I tell clients not to worry about nursing debt if their month-to-month cash flow supports the repayments.

“It is unrealistic to think we will never take loans or credit cards, so it’s important to realise it is absolutely fine, as long as the repayments are met, every month.”

Helen Saxon, chief product analyst at MoneySavingExpert.com says that transparency is key when starting to budget.

“An effective budget needs to cover everything. And by everything, I don’t just mean monthly expenses like your mortgage/rent, petrol bill and food shops.

“You need to include the once-a-year holiday, the new sofa and spending on Christmas. If you’re looking to technology, you need to ensure whatever app you pick takes everything into account across the year.”

FOCUSED

David Mulligan (32) is a Business Director at Radical, a full service hybrid agency. He started using You Need A Budget last year as a way to save for a house. This year, he is focusing on saving for his wedding.

“My fiancée and I bought our first home this year and will be getting married in April, so there was no better time for us to get our financial lives in gear.

“I work in digital media, so an app made perfect sense. I did lots of research and You Need A Budget stood out as the most foolproof way for us to track expenditure.

“It’s really easy to use and can be used across all devices, which was a major plus. For the first time, I was able to see where my money was going, and allocate cash to specific jobs.

“The most glaring insight came almost immediately. I was spending a lot of my earnings on nights out at the weekend!

“By changing to one night out every 2-3 weeks,I saved a significant amount.

“I have also learned cash is not always king – at least to me. If I carry cash, I will spend it. I try to carry just my debit card now, and am less likely to make smaller impulse purchases as a result.

“ Using the app enabled me to figure out how each month was going to go financially. Now I allocate every penny I earn to a financial ‘job’ – whether that be towards the mortgage or savings or groceries.

“Before we started budgeting I would struggle with monthly or quarterly surprises like doctor visits or car tax but now that’s a thing of the past.

“Since we started using the app we increased our savings by 50% while at the same time repaying our mortgage which is 1.5 times the amount of rent we were paying this time last year.”

SOLUTION

Deborah Hadley is a mother of three who returned to university to study midwifery. Her family started to budget in earnest in order to rid themselves of debt, and Neobudget played a big role in it.

“In 2009, at the beginning of the recession, my husband and I found ourselves saddled with just over €28,000 of debt. We knew we needed to implement a plan.

“We started by using a paper money envelope system. I would withdraw my grocery money at the beginning of the month when we were paid and put it in an envelope and when it was gone, it was gone. The same for petrol and other day-to-day expenses.

“In my never-ending search for a feasible app, we discovered Neobudget, an online envelope budgeting system.

“It allowed us to avoid arguing over who did or didn’t enter their coffee by allocating us each a discretionary spending amount. That way we can withdraw cash, assign it to our category and away we go, no logging in every coke or magazine!

“Both of us have the apps on our phones – him iPhone, me Android – and they sync together with the desktop version which lets us see where our money is, where it has gone and analyse the data.

“If there’s a positive balance, it’s because the money allocated there hasn’t been used. If it’s zero, it’s been paid out and if it’s negative – well, we screwed up somewhere!

“We try and sit down each month and see if anything needs to be adjusted. Our system has worked for us as we repaid €28,000 in debt between 2009 and early 2013.

“Neobudget is something we will continue to do. Once I finish university, we hope anything I earn as a midwife will go into a fund to buy a house.

“If we’re able at present to live on his salary and fund my college and diesel costs, then it shouldn’t be an issue.

“Now, there’s a light at the end of the tunnel. We still live month to month, but we know where our money is going and we know it will all be worth it in the end.”

TOP TIPS FOR A SUCCESSFUL BUDGET

Lay it all on the table

Make a list of every single outgoing that you have over the year.

What are your life goals and objectives?

Do your expenditures resonate with your life plan? If not, then eliminate them immediately.

Start an envelope system.

On pay day, only leave money in your bank account to cover direct debits & standing orders. Withdraw the rest and divide the cash into envelopes ie one for groceries, diesel etc. Only spend what is in each envelope.