Managing money. It’s not something we discuss out in the open, but personal finance is an important issue for all of us. Every time we receive our credit card bill or get a paycheck, we make a mental promise to ourselves to spend less money, be more disciplined, and try to save more. But like most habits, it’s difficult to follow through, and most of us find ourselves in the same place the next month.
For me, and the rest of the team at Wally, managing money is an important and highly personal issue for us. We’re a small team; some of us are single, some are married, and some of us have kids– we’re real people with real problems. Regardless of our situations, we all faced issues finding a good money management tool. We turned to the App Store and found tons of apps but none that had all the functionalities we needed.
So we embarked on a mission to solve our problem and hopefully solve yours. And thus Wally was born. I’ll share more about Wally later but I wanted to start off with few tips that we’ve found useful to get you started on money management.
Know Yourself
Sit down and take a look at where you stand. Gather up all your income information including salaries, bonuses, investments, debts and major expenses. A healthy budget consists of 30% on housing and 25-30% on living expenses (car payments, bills, groceries). Buying imported goods in Australia can get really expensive so watch where you spend your disposable income.
Keep Track
Have you ever wondered, “where did all my money go?” Unfortunately, with personal finances ignorance is not bliss. Before getting in control of your money, you need to understand exactly what your expenses are. Check your statements for extra charges that can up– like your afternoon macchiato, monthly subscription fees, or health club memberships. The small 20 or 50 dollar monthly charges can add up to thousands over a year.
The easiest way to do this is to use an expense tracker app, like Wally, and keep track of your spending. Studies show that just tracking money makes you spend significantly less.[1]
With Wally, our users track expenses as they make them, tagging them with their location, category (for example, “dining out”), and who they’re spending money with. You can even add photos of the venue when you enter an expense, and indicate why you’re spending money (whether it’s for family, work, social, or personal reasons).
Pick a Salient Date
Whether it is pay day or the first of the month, pick one day of the month to sit back and review the previous month’s financial situation. Look through your bank statements (or your Wally) in detail and take note of patterns.
We seen an increase in downloads by 60% on the first few days each month– users know they should be doing something to get in control. With Wally you can adjust the start of your financial month to coincide with payday to keep everything aligned.
Switch to Cash
While credit cards are extremely convenient, it’s easy to forget about transactions that are done with just a swipe. Studies show that we’re willing to pay more for items when we’re using credit cards, as opposed to cash.[2] Withdraw the cash you think you’ll need for a week, and leave your cards at home. This by itself will help you control your spending.
Make Good Use of Extra Cash
As end-of-year bonuses come, resist the urge to spend all the money right away. Use a third to pay off an old debt, a third for a future emergency fund and then use the remaining third to treat yourself. Remember, only about 30% of your retirement income [3]will come from your pension so start saving early to pad up your retirement fund.
Make Changes for the Future
Once you’ve taken control of your finances, set goals to improve your situation. Keep yourself informed and understand if you’re spending more unnecessarily. Wally shows you anonymous comparisons to groups of users similar to you, to help you answer questions like “are my spending patterns typical? Do I save more or less than people like me?”
Saeid Hejazi is the CEO and founder of Wally – a personal finance app available on iOS and on Android as Wally+. Download now.
[1] http://www.sciencedirect.com/science/article/pii/S1057740806700468
[2] http://www.nerdwallet.com/blog/tips/credit-cards-make-you-spend-more/
[3] http://www.dailyfinance.com/2013/05/03/australia-retirement-system-privatization/
