Many people take introductory economics classes in high school or college, and learn the basics of market forces, pricing, economic growth, employment, inflation, and the basics of monetary policy. Yet surprisingly few people are taught the fundamentals of personal budgeting. And if you were hoping the next generation would reach adulthood with better financial literacy, your hopes may be misplaced. Only 14 states require that high school courses in personal finance have to be offered, and only 13 require that such a course be taken by high school students.
Around 50 million of the 313 million people in the US are children between ages 6 and 17, and around 90% of them attend public schools. If they're not taught basic financial literacy at home, they may not be taught period. As for adults, they are often overwhelmed by the amount of information available to them about managing finances, and those who want to develop their personal financial management skills often don't know where to begin. For many, developing these skills can start with something much more accessible than a college or continuing education class on finances, and that something is budget apps, which are readily available for home computers and smartphones.
Budget Apps and Income
Good budget apps remind you to consider all sources of income, including employment, investment income, spousal support, and any money you make moonlighting. If you have all your income directly deposited into your bank account and use an app that links to that account, it will automatically record all your deposits, so you'll know how much goes into your account in a given month. So direct deposit not only curbs the temptation of cashing all or part of your checks (and being that much more tempted to spend), but also feeds your budget app what it needs to get a handle on your income situation.
Budget Apps and Fixed Expenses
Budget apps help you remember all your fixed expenses, including rent (or mortgage) payments, insurance costs, flat-rate phone bills, car payments, cable bills, and internet bills. If you pay child support or spousal support, your budget app can account for these, as well as any other fixed expenses, such as monthly payments made toward outstanding medical bills.
Apps and Savings
Everyone should have an emergency account. Don't feel like it's not worth bothering because you don't think you'll ever save up the recommended three to six months' living expenses. Put away what you can, because any emergency savings is better than none. Budget apps should link up to emergency savings accounts so it's easy to track how much you've set aside.
Budget Apps and Financial Goals
The best budget apps suggest popular financial goals, like buying a house or a car, or saving for a vacation. But they should also give you the flexibility to set your own saving goals. For example, if you want to save for a new gaming system for your child's birthday, plan to get married in 2014, or want to replace your plain refrigerator with a nicer one, your budget app should allow you to set up a specific financial goal and track your progress.
Apps that Tell You the Harsh Truth
When your budget app is connected with your credit card accounts, it tells you all those things you know you should write down when you're planning your budget. For example, it can tell you that you've spent $37 so far on fast food this month - the kind of thing many of us are loathe to admit. You can also set up budget apps to send you a text message when your checking account balance falls below a specified amount and when your bills are due. Apps should also allow you to make simple queries, like, "If I buy this item, will it cause me to overdraw my account?"
Budget apps paint your financial picture based on information you give it about expenses, information it draws from your bank account deposits, and information from any linked credit card accounts. They tell you that you spent $12 on finance charges this month, your emergency fund is $45 richer, and the best budget apps are able to suggest ways to save, like lower interest rate credit cards you may qualify for.
Many of us were never taught the fundamentals of personal finances in school, and it's a shame, because financial management is an important life skill. However, resources are available for anyone who wants to learn, regardless of their age or financial situation, and budget apps offer a convenient and easy starting point.
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