Money management apps work great for your daily expenses since you always have your smartphone in your pocket. You’re basically carrying your bank with you since you can check your budget and make financial decisions on the go.
This means that it’s also easier to see an opportunity to save money – or spend it in a smarter way.
To show you that money management apps are not only designed for spending money, but also for saving, we’ve outlined four steps to making savings using your money app.
Step 1: Analyze your transactions and discern needs from wants
The great thing about money management apps – they make it very easy to check your cash flow – anytime and anywhere. How much income do you receive, when does money hit your account, and how do you spend it are all important aspects of financial success.
In short – it’s much easier to save when you see how much you’ve spent and where.
Having the list of your transactions literally in the palm of your hand also helps to distinguish between financial needs and wants – a simple psychological hack that helps to cut back on expenses.
Here’s how it works:
Once you have your list of expenses in front of you, take some time to consider your true needs in several budget areas like groceries, household expenses, transport, entertainment, etc. Remember that nowadays needs are no longer just shelter, basic clothing and food to avoid hunger. Bills, insurance, transport, childcare, and medical expenses can also be classified as needs.
Then you can organize your budget according to the 50/30/20 budgeting rule. This entails dividing your after-tax income into needs (50%), wants (30%), and savings (20%).
Step 2. Keep savings and expenses in separate accounts
When you’ve determined the amount you can allocate to your needs, wants and savings, there are two ways to fill up your rainy day fund.
2.1. Separate your savings
Once a month, we’re all waiting for that magical notification that our salary has come in. But most of us already have a shopping list ready to dig into our freshly made income. This impulsive behavior often makes it very difficult to save anything.
Here’s what you can do instead:
Make a pact with yourself to transfer the amount meant for savings right after your salary has come in. You may have a designated savings account or simply another current account that you promised yourself not to touch.
If you don’t trust us, trust Warren Buffett – business magnate and one of the wealthiest men in the world, who famously said:
‘Don’t save what is left after spending but spend what is left after savings’.
If saving is your priority, then this is definitely the wisest strategy.
2.2. Separate money for daily expenses
Alternatively, you can keep your savings on your salary account, and transfer the money for your daily expenses to your VIALET Mastercard. This way, all your funds won’t be stored on one card and you’ll have peace of mind that you can spend everything that you have on your current account.
The benefits of such an approach?
You’ll know exactly how much you are spending each month on your daily expenses. If necessary, you can reduce that amount little by little and make even more savings.
Whichever option you choose, you got the essence of it:
It’s crucial to separate your savings from your daily expenses if you want to save any money at all.
Step 3: Set a limit for your weekly spending
If you want to bring more order into your personal money management habits, try setting realistic weekly (or even daily) limits for your spending.
For example, transfer only 200 EUR to your VIALET card each week and never go overboard. Transfers with VIALET are super simple and instantaneous, so you don’t have to worry about delays. When you need to top up your card again, you can do it in seconds.
How much to allow yourself to spend?
- Track your weekly spending for at least a month before making your budget so you have an idea of your typical spending habits.
- Divide the monthly expenses by four to create a weekly budget.
- Remember that utility bills may differ season by season (you can estimate an average fixed cost of utilities), or simply subtract the utility costs before you decide on your budget for the respective month.
- You can even divide your spending into categories, e.g., eating, transport, hobbies, etc. If you go over budget in one category, trim your expenses in another.
Staying within a budget can seem challenging at first, but it will become easier – and let you save money – in the long run.
Step 4: Stop paying high banking fees
Step No 4 can just as well go to the top of this list. Before you dig into your own spending, make sure you are paying as little as possible to your financial service provider.
If you actually paid attention to how much you are paying your bank in commissions, you might be surprised. These are just some of the existing bank fees you might actually be paying:
- Checking account fee (account maintenance fee)
- Credit or debit card fee
- SMS and other notification fees
- Account opening or closing fee
- Overdraft charge
- ATM withdrawal fee
- Foreign transaction charge
- Lost card fee
Count how much you spend in banking fees every month (and what it amounts to per year), and then make an informed decision if all of these charges are reasonable or if you might need another money management solution.
With the VIALET app, you can make SEPA transfers for free, and rely on a constant, low ATM commission when withdrawing money in EU countries. Opening a VIALET account is also free – all you have to do is download VIALET app.
Make smart budgeting decisions on the go
The technical side of making savings is actually very simple. The hardest part is disciplining yourself, and taking the time to analyze your cash flow.
Technology can be a great help here. Money management apps are viewable online, on your mobile device, which makes it effortless to handle your finances smartly – anywhere your active life takes you.
Use your money app wisely – as we’ve outlined in this article – and you’ll improve your spending and saving habits in no time.
Download VIALET app now and learn to save money easier!