Americans, in times like these, want to improve their financial behavior. So they sign-up for budgeting apps that promise to help alleviate the stress of their finances.
Unfortunately, this doesn’t always work.
In a 2019, American Psychological Association (APA) survey, Stress in America, 6 of 10 U.S. adults said their biggest personal stressor is money.
Although there are budgeting apps that you can use to get a handle on your money, most budgeting apps don’t change financial behavior, long-term.
There’s no doubt that these apps track your money going in and out of your various financial accounts, but there are multiple reasons they don’t work well for behavior change.
Here are a few reasons why apps don’t change behavior:
1. You Don’t Have to Use it Daily
If you’ve spent time setting up your new app account, your motivation to maintain your money is high.
After all, you’ve spent time linking your bank and credit card accounts.
However, once you’ve automated the data collection, you don’t have to think about it on a regular basis.
In fact, according to a Lexington Law survey, 26% of Americans check their bank account only once a month (8%) or less than monthly (18%).
You may have notifications set up to flag your attention about an issue with your budget. Even if the alert technically reaches your inbox, it’s easy to ignore when you don’t have to launch the app to handle your day-to-day spending.
2. Too Complicated to Manage
Budgeting apps do some of the heavy-lifting when it comes to pulling in the numbers from your financial accounts.
But to successfully change financial behavior, you’re required to put in work, too.
If you’re checking in with your finances only once a month — sometimes less frequently — you’re looking at a lot of information to sift through and make sense of.
Managing your budget in bulk through an app then gets tedious.
This is especially true, if certain purchases are categorized incorrectly.
For example, it might categorize a frappuccino purchase at a Starbucks that’s inside your Target as a “shopping” expense, rather than a “food” expense.
Also, not all budgeting apps account for nuanced details. This might come up if you paid for brunch with a friend using your debit card, but are reimbursed later. These deficits add more complication to managing a budget and can be demotivating to sustain.
3. It Doesn’t Have Real-Time Consequences
In behavioral economics, “present bias” occurs when you make choices that give you rewards in the present versus making choices that give you greater rewards in the future. This is commonly referred to as, “immediate gratification”.
Since many budgeting apps aren’t a barrier or presence in real-time — like when you’re in a department store and spot a pair of shoes you hadn’t planned on buying — there’s no immediate consequence to bar you from making an impulse purchase.
Instead, the immediate, “present” effect is the reward of having the shoes and the long-term reward of building an emergency fund is a less enticing reward.
Check out our video that explains how Qube Money creates real-time consequences.
The shifting of your spending habits — from saving money, for example, to buying shoes — becomes a passive act.
You’ll eventually be reminded that it happened during your self-imposed budget review, but you can only address it reactively.
You’ve already exceeded your monthly shopping budget and didn’t meet your savings goal for the month. Do you see how that doesn’t change financial behavior?
4. It Doesn’t Hold You Accountable
Often, budgeting apps assume that your financial journey involves a story of one.
Only you can hold you accountable. Go in and analyze what worked and what didn’t, and making changes to do better next month. That’s a lot to ask of someone who’s started a new budget or may have trouble keeping a budget.
What budgeting apps don’t always have the option for is inviting your support network into the financial picture.
Your spouse, for example, has a stake in your budget. You might be dealing with a shared household budget to manage or have shared life goals.
Whether you need to budget for the mortgage every month or set money aside monthly toward a home down payment, communicating your spending habits with your spouse can lead to greater accountability and motivational support.
As an added bonus, a budgeting approach that offers your partner transparency encourages trust and collaboration in the relationship, according to psychology experts.
5. It Doesn’t Change Financial Behavior
Successfully staying within your budget each month requires more than a basic app. While a budgeting app gives you an idea, your own willpower is a necessary part of the equation.
Those with low willpower are more likely to over-spend, says the APA.
Willpower is an internal resource that you spend, like money. The more you have to expend willpower multiple times in a short period of time, the less willpower you have over time.
Similarly, if you’re faced with multiple financial decisions in a short period of time, you’ll exhaust your willpower faster making yourself susceptible to over-spending.
Making deliberate, bite-sized decisions daily, versus making multiple decisions — like reworking various budgets and money goals — in one sitting can help preserve steam when it comes to willpower.
This is what will change behavior.
How to Budget for the Long-Term
Budgeting apps can help you get control of your money to an extent. They give you the numbers and figures regarding how your money management is performing.
Ultimately, however, you need more to give your budget the gas it needs to run, optimally. That way you don’t fall into the category of “budgeting apps didn’t work for me.”
A few things a sustainable budget includes are:
- Automating necessities. Setting aside funds for non-negotiable expenses, like rent, utilities, and monthly debt payments.
- Daily check-ins. A budgeting system that forces you to look at your budget categories and how you’re doing on a daily basis.
- A simple concept. Like losing weight — calories in, calories out — the app should show you every dollar coming in and out.
- A way to tag along with you. An effective budget follows you everywhere you go. It doesn’t give you an option to set your budget and cast it aside in a dark corner. Instead, it’s a part of your day-to-day spending (or saving) habit.
- Accountability. The budgeting system itself lends an extra layer of accountability or it encourages you to recruit your own personal accountabilibuddy to keep you honest about your progress.
- It shifts your psychology. A vague desire to accomplish a goal or want a financial outcome isn’t enough to keep you on track. A tangible and concrete change in your actual behavior is what’ll make a new habit — and budget — stick.
Conclusion Why Budgeting Apps Don’t Work
Qube Money is being developed to check-off each reason most budgeting apps don’t work.
Although there’s no single solution for everyone, Qube Money encourages you to internalize your budget by making deliberate changes to your behavior on a daily basis.
This level of empowerment will yield manageable results over time.
Most budgeting apps don’t work for people and we’re on mission to change that!
To learn more about the unique budget system, watch this video: