1. Affordability

Easy Money: How to pick a budgeting app that works for you

There are a host of tools out there aimed at helping you stay on target. Here’s what to keep in mind
Written by Kat Eschner
Your bank probably offers at least one financial app that can help you keep track of your cash. (Ridofranz/iStock)

Setting and sticking to financial goals can be really challenging. Good news: you’re probably reading this story on a device that can help. Phone apps have the potential to be a powerful tool in the fight for financial security. But that doesn’t mean you should just start installing them willy-nilly. 

TVO Today asked some experts for their picks and what to steer clear of when selecting a budgeting app.

Figure out your needs

There are plenty of digital tools to help you track spending, force a little bit of saving, and keep a weather eye on your balances. Before you open up the App Store and start scrolling, make sure you already have a sense of what your money goals are and where you’re spending right now. If you don’t know where to start when it comes to making a budget, don’t worry: you’re not alone, and the first story in the Easy Money series can help you get started

Downloading and using an app without having a plan might just stress you out, says Stephanie Wolfe, an accredited financial counsellor based in the GTA: “If someone doesn’t have good money habits in place, using an app to track spending can make them feel like they will never be able to catch up.” 

Agenda segment, October 5, 2022: Managing personal finances amid inflation

Your bank probably offers at least one financial app that can help you keep track of your cash. It’s worth considering them before branching out to other products, since they’re already part of the services you’re working with, and they’re likely the most straightforward and secure options. They’re also free for clients, while many third-party apps have a tiered model that involves paying for premium features.

“I think some of the banking apps are fabulous,” Wolfe says. “But I’m not opposed to external apps like Mint as it relates to budgeting.” (She recommends Wealthica for investing, but that’s a whole other story.)

In a way, these tools are bandaids, says personal-finance educator Shay Myers: "We actually want to make a mindset shift so we can be disciplined and save on our own." But, she adds, they're really useful if you're just starting to budget or just need a hand keeping track of your spending.

Pick an app that works for you

Like a budget itself, an app is just a tool to help you work with your money, so which app you should pick depends on what you want to do. It’s worth reading up on different options and looking at Youtube reviews of each one you’re considering. Remember, if you go with a third-party app, you’re giving it access to all your financial information, so you want to have done your homework. 

Mint, one of the most popular apps in Canada, lets you set budget amounts for all kinds of different purchase categories and track how you are spending over the month. It requires a certain amount of attention to make sure purchases aren’t miscategorized. And your accounts may not sync easily with third-party apps, meaning you’ll have to stay alert to ensure you’re getting the full picture. 

Christy Ali, a Toronto financial coach, is a big fan of the EveryDollar budgeting app. It uses the approach she advocates, called zero-dollar or zero-based budgeting. Another popular zero-based budgeting app is You Need a Budget.

Agenda segment, February 9, 2023: Why is making a personal budget so hard?

“The reason I recommend it is that everyone is in a different financial situation,” she says. Some people have more wiggle room, but many people don’t have a lot of extra cash to play with, and this approach is flexible for both situations, she says. An app should help you save time: it will calculate how much you’ve spent so far so you can see how much room you have in different spending categories before hitting zero dollars for the month. 

Keep security in mind

It bears repeating: be really careful about sharing access to your financial information. Teri Courchene, a retired economist and investing instructor, stresses that looking to the budget tools offered by your bank should be the first step in any search for an app. 

If you choose to branch out to third-party apps, “just be careful when you sign up,” she says. “I would definitely look at what advisers or financial planners, someone who does this professionally, recommend.”

Whatever you choose, remember that it may take time to get your finances where you want them — but every little step helps. 

Ontario Hubs are made possible by the Barry and Laurie Green Family Charitable Trust and Goldie Feldman in Memoriam.