Choosing one from a long list of personal finance software can be a daunting task. This article articulates the top 10 rudimentary features that ought to be present in them, to help users efficiently manage their finances.
Managing finances in the 21st century have become a herculean task, as our assets have become more diverse and dynamic in the digital age. Along with holding multiple bank accounts, we now take advantage of credit cards to purchase commodities from the market. We also undertake a vast amount of loans for education & healthcare as well as succumb to both short and long-term investments. The prevalence of numerous personal finance software in the market has made the job of managing finances significantly easier and simpler. Personal finance software are pre-packaged tools that track every single transaction and investment ventures to efficiently manage money for both individual and small businesses. They also help in fulfilling short-term and long-term financial goals by analyzing current spending trends.
The market is currently awash with several personal finance software’s. From budgeting software’s like Mint and Quicken to investment software’s like FutureAdvisor and Personal Capital, these applications cater to a vast range of financial management applications. So, before you go out and purchase one of these – make sure that you are not only comfortable with the interface of the software but also that it contains the essential features that meet your requirement. Here, we have deconstructed several software to articulate what these must-have features are.
Syncing with Bank and Credit Card
One of the most important features that are mandatory in any personal finance software is the ability to sync with bank accounts and subsequent credit cards. This permits personalized information regarding spending, available balance, and credit card statement to be automatically entered into the software, canceling the need to do so manually. This is, undoubtedly, one of the most important features that should be present in every personal finance software.
Creating Budget and Saving Goals
Developing a reasonable budget is imperative to attain short and long-term financial goals. Personalized Finance software assists users in creating them after looking at average monthly income and spending, along with any other cash flows that might incur. Along with budget creation, many of these software also allow for developing savings goals, which is user dependent and can vary based on future plans and commitments.
In today’s age, many users find it hard to pay back the loan or debt at the appropriate time, which results in the amount of loan money to drastically increase based on interest rate. Many finance software use an in-built algorithm to ensure that no matter what your expenditures are, you will always save money to pay back the loan in monthly installments. They track your debt and lets you know when you have reached a certain milestone in repaying them, boosting confidence and reducing any emotional stress that may accompany with the debt.
Investment Tracking and Training
People are increasingly investing their money in businesses, as dynamic money tends to reap returns in the future. However, it’s difficult to keep a track of multiple investments, along with the knowledge of when to pull out your investment and in which businesses to put money in the first place. Many personal finance software are equipped with investment tracking and training functionalities, which not only assist you in making an educated choice on which business to invest in but also notifies the user when to pull out the money before the shares drop in the market.
In order to perform many of the above tasks, the personal finance software must be adept at analyzing your spending habits. Using state-of-the-art algorithm, it lets an individual or business know in which area they have spent the most amount of money, also pointing out any significant trends that have surfaced. Using artificial intelligence (AI), it also notifies the user of any areas that require cutbacks, helping in securing money that can be used for loan repayments and future savings.
Assist in Tax Return
Filing for a tax return is a behemoth task, and many users fall short of accurately doing the task. Many personal finance software are equipped with tax return functionality, which can use your financial information to automatically file your tax accurately. This not only prevents any manual errors but also negates the need to hire a professional tax filer to file taxes for small businesses.
Calculating Net Worth
If a personal finance software possesses information on net income, spending, investments, and total debt – it can easily calculate the net worth of an individual or small businesses. Having this assessed is critical as it paints a wholesome picture of your financial standing in an ever competitive market.
It’s critical that the chosen personal finance software has rigorous security measures to protect personal financial information. Bank accounts and credit card details are prone to be hacked, therefore robust encryption is necessary for optimum security. Additionally, multi-factor authentication confirms the user’s identity through a secondary channel and could provide an extra layer of security for personal financing.
Both Web and Mobile Applications
Before you decide to choose any one of the personal finance software, ensure that it has a supporting mobile application, which would allow managing your finances while on the move. Just as a computer allows a user to visualize all information on one screen, mobile accounting is also important for its convenience. On the contrary, software that just operate out of mobile applications are also not deemed worthy. Using the software in the computer makes multitasking easier – like keeping an eye on your spending trends and debts while allocating funds to a budget.
Good Customer Support
Finally, it’s important that the personal finance software that you choose has a good customer support system, to answer any queries related to software hang-ups and also assist you in understanding the myriad other functionalities that seem to be going over your head. While many software have an attached manual that answers most of these queries, there is no replacement for an actual human being helping you out in complex financial matters.
Now that we have listed the rudimentary features that should be present in a personal finance software, let’s have a look at new emerging methods of money management that some software implement. The envelope budgeting system is one such, as it helps you stick to a budget by using envelopes to manage your budget. A user can put a fixed amount of money in various categories – like for shopping, gas, and electronics – after figuring out the monthly budget. Once the amount of money in each category expires, the user can’t spend any more money in that category until the end of the monthly cycle. It’s like having a cap on specific spending, and software’s such as Mvelope does it digitally. The software displays what you’ve spent from each envelope after tracking your spending, to ensure you stay inside the budget throughout the month.
The personal finance software market has seen substantial growth owing to the need for advanced financial tools to track and manage income and growth in the use of mobile applications and the internet. According to a report published by Allied Market Research, the global personal finance software market garnered $795 million in 2016 and is projected to attain $1,213 million by 2023, growing at a CAGR of 6.4% from 2017 to 2023