A Smarter App Is Watching Your Wallet

Source: The New York Times, Alina Tugend
Photo: James Yang

As artificial intelligence evolves, personal finance programs are working to offer you, and your budget, tailored advice.

This article is part of our new series, Currents, which examines how rapid advances in technology are transforming our lives.

They promise to nudge you into saving more, negotiate your bank fees, cover overdrafts and help you pay down your debt. They’ll even cheer you on when you spend wisely and remind you your bills are coming due.

These are the newest evolution of personal financial management tools, with the emphasis on personal.

Such money management software is not new; Quicken, the granddaddy of the industry, started in the 1980s to make bill-paying and budgeting easier and evolved as the industry did. Two of the top apps, Mint and Credit Karma, are more than 10 years old.

But as artificial intelligence has become ever more sophisticated, these tools — and almost all of them are apps — have proliferated; it’s almost impossible to say how many there are, but new ones seem to be coming on the market almost daily.

They are “more intuitive, more developed,” said Chanelle Bessette, a banking writer at NerdWallet, a personal finance website that also offers its own budgeting app. “These apps are getting to know their users a lot better — users are feeding them information about how they spend, and that helps the predictions become even better.”

The apps are essentially looking to become almost as good as a live personal adviser, but one that you don’t pay much for and that can live in your pocket. Some charge a monthly or annual subscription; others are free and make money through referral fees they collect when a user buys the financial products or services promoted on the site.

“Their mission before was to make it easier for consumers to budget, but now they’re really creating features that enable consumers to buy stocks, apply for loans and autosave all on one platform,” said Anisha Kothapa, a fintech analyst at CB Insights, which tracks business trends.

Companies are trying to stand out in a crowded marketplace, and while some are bundling more features to attract users, others aim to specialize.

Such apps are particularly popular for budgeting and setting goals; in this area, Mint, PocketGuard and You Need A Budget often top “best of” lists.

Like all these tools, they require a user’s credit card, banking and other financial information to track spending and income levels and then automatically sort them into categories.

Each offers something a little different. Mint provides free credit score checks as often as you like (it’s a “soft” check, so it won’t hurt your credit score). You Need a Budget, also known as YNAB, relies on a system called zero-based budgeting, where every dollar is put into an account, such as holiday spending, emergency fund and so on, so that you end up with zero.

“We really want people to be proactive, rather than reactive,” said Jesse Mecham, founder of YNAB. “People think that budgeting means they forecast what they’re going to make and what they’re going to spend; we teach people to budget only with the money you have on hand right now. We want people to change their behavior, and that comes with changing their thinking.”

https://www.nytimes.com/2021/03/09/business/apps-personal-finance-budget