Why some Gen Z savers and financial experts say to put down the apps and budget by hand
Abby Bailey wasn’t convinced by the popular budgeting app Mint.
The app didn’t feel user-friendly to Bailey, who said her bank and credit card accounts couldn’t sync. She desired more customized spending categories. And she felt that the platform, which its owner, Intuit, recently announced would be shutting down, provided a more retrospective look at her monthly spending rather than a tool for holding herself accountable.
Instead, the 25-year-old chose an old-fashioned strategy for some of her Gen Z peers: she created her own budget.
“It makes me more aware,” said Bailey, an occupational therapist who lives in Center City Philadelphia and keeps a digital spreadsheet open on her laptop at all times.
Bailey has encouraged others her age to experiment with manual budgeting as well. As a side hustle, she began selling her budgeting templates on Etsy for $5 each, a one-time purchase that is less expensive than the $35 to $99 that some consumers pay for apps each year.
While apps can automatically upload transactions from linked accounts and calculate how much money has been spent in various categories, “if you’re writing it down yourself, you’re like, ‘Oh, maybe I should spend less,'” Bailey said.
Taking control of your finances
Some of Mint’s 3.6 million active users are saddened by the impending closure (the company encourages users to migrate their data to Credit Karma).However, financial advisers and researchers report that people are more likely to stick to a budget if they do at least some of the work themselves.While up to 90% of people aged 24 to 54 have linked their bank account to an app, only 20% have used those apps in the last three months, according to the Wall Street Journal, citing a 2020 survey from market researchers Aite-Novarica.
“I don’t think apps are bad,” said Wayne W. Williams, an associate professor of accounting and certified financial planner at Temple University. Indeed, these apps are “very useful and convenient, but you lose control and the ability to do long-term” goal-setting and planning.
Williams continues to use the “tried and true, pen-and-paper worksheet approach” for his personal finances. Meanwhile, his students report using apps to track their spending rather than budgeting. Regardless, Williams advises people to develop the habit of reflecting on their current and past spending habits, as well as their financial goals.
“People don’t dedicate the time to spend looking at their money,” he says, because so many aspects of consumers’ finances are automated and online. “People don’t stop and do it at least on a monthly basis.”
Finding what works
Carly Burd and her boyfriend, Tyler Hembd, of Montgomery County, Pennsylvania, recently performed a manual financial audit and began budgeting by hand as they save for a home.
Burd, 26, found the practice to be a welcome change from previous experiences with apps like Mint and You Need a Budget, which she found to be “self-punishing” and unforgiving.
“I found it to be in black and white,” she explained. “It didn’t give me grace.”
Maintaining a strict gas budget, for example, was difficult, she said, given how prices can fluctuate dramatically over the course of several weeks. She added that, with inflation, the same could be said for grocery bills. And if you went a few dollars over in a certain category one month, you’d get a visual indication that you’d failed.
In fact, it exacerbated her extreme financial anxiety, with which she — and many other American adults — are still dealing.
“Budgeting is really ugly,” she complained. “People would rather look the other way.”
She claims that as she takes a more active role in her finances, her relationship with money is changing.
According to experts like Williams, there is no one-size-fits-all solution. Some people in the Philadelphia area attribute their financial success to their consistent use of apps.
Hallie Black, a 31-year-old consultant, believes she would not have been able to buy her home in Philadelphia’s Roxborough neighborhood earlier this year if she hadn’t used the You Need a Budget app for years.
She was skeptical when she first started using the app almost five years ago, especially since it cost $99 per year. But she was quickly hooked, especially because the app allows users to be more hands-on than some other personal finance apps.
“It is so worth it,” Black said. “What makes it unique is that you only budget with the money you have.” I like it because you can control where your money goes, similar to a “digital envelopes” system.
One of the reasons Black believes she has stuck with the app for so long is that it allows users to look back, see their historical spending, and gauge how far they’ve come.
Others are still looking for the best tools for them.
“I take it week by week,” Iasia Carabello, a 23-year-old career nanny living in Philadelphia’s Brewerytown, said. For the time being, she said she budgets manually, focusing on rent and student loan payments. Carabello has been hesitant to use apps due to data privacy concerns, she claims.
“There will undoubtedly come a time when I will have to tighten my financial belt.” “I’m taking it slowly right now,” she explained. “A lot of things about finance aren’t taught in school… It’s difficult to learn more.”
Need budgeting help?
Wayne W. Williams, associate professor of accounting at Temple University and certified financial planner, offers the following advice:
—Don’t go on autopilot: Check your accounts on a regular basis, enough to know how much money you have in the bank and how much you earn and spend each month.
—Allocate time to assess your finances offline: “The complexity of an individual’s expenses and income” should be proportional to the amount of time available. Do this offline.”The apps are convenient, but they aren’t necessarily instructive.”
—Identify areas where you overspend: This could be a result of habits formed during pandemic quarantines when you had more disposable income.
—Audit your subscriptions: Many people lose track of auto-debit subscriptions. Cancel any subscriptions that you are no longer using.
—Be wary of big data: Be wary of credit card offers and other suggestions made by apps using your financial information. “It’ll probably reinforce bad behavior as opposed to create better behavior.”
—Set goals: Just as you would for your physical and mental health, set short- and long-term financial goals. Create a strategy for meeting them.
—Make debt repayment a top priority, especially on credit cards and high-interest loans.
—Don’t be afraid to seek professional assistance: there are even free services available, such as counseling through the nonprofit Clarifi.
