Having a constant, instant ability to shop, order takeout or call a cab can drive unnecessary spending to an unhealthy level. You’re bored on the train? You can purchase and download a book instantly, or get that new album within about a minute. Can’t face the chilly temperatures at the bus stop after a long day at the office? An Uber driver is a few minutes away.
It can be a slippery slope, but experts say convenience has its advantages, too. Used strategically, online tools can also make you more cognizant of saving and goal setting.
“It’s always been easier to spend than save, but the bank’s objective is to help [consumers] save and reach financial goals,” says Cayley Kochel, spokeswoman for Tangerine Bank.
1. Track spending. “We live in a virtual money society — cash is so rare and going to the bank is becoming so obsolete,” says Laurie Campbell, executive director of Credit Canada. “If we’re going to be working in a Monopoly money environment where we exchange hands electronically, we have to be cognizant of what’s in our bank accounts and what our budgets entail.”
Smartphone budgeting apps, such as Mint and Spendbook, are free and widely used. You simply plug in allowances for various categories to set your budget and sync your debit and credit cards to your account to track spending.
Campbell says banks offer similar or identical tools in their apps, so you don’t have to go to a third party. The Bank of Montreal, for example, offers MoneyLogic, which tracks spending and budgeting goals. It also has student budget calculators and cash flow worksheets, all accessible online.
Bank apps also allow you instant access to your current statement and available balance (that is, your balance after all pending transactions and deposits have cleared). So even if you don’t use a spending tracker app, you should at least be keeping an eye on your balances.
“[Online spending] allows you to potentially ignore the spending you’ve done, whether on credit card or online,” says Kochel. “A mistake that consumers make is not checking into their current balance and what they have outstanding.”
Some banks are piloting voice banking as well. With voice banking, you can interact with your bank’s app using a conversation interface.
Kochel says ideally, you could ask your app how much you spent on hydro bills last year or how much you spent at restaurants last week, and your app should respond to you in real-time, allowing you to delve even deeper into your habits.
2. Complete banking tasks immediately. Not only do mobile bank apps provide an instant snapshot of your finances, but you can accomplish other banking tasks on them, too. For instance, many banks, including Tangerine, RBC, CIBC and Scotiabank, allow clients to deposit cheques via mobile.
You can also pay bills from your smartphone, and transfer funds between your accounts within the bank or, sometimes, another person’s account.
With all of these capabilities at your fingertips, there’s no excuse for missing a payment (resulting in late fees) or not getting your cheques deposited in a timely enough manner to avoid overdrafts. Furthermore, you don’t have to spend the gas (or pay for transportation) to get to a branch, either.
3. Automate savings. If you’re carving away at a savings goal, try setting up automatic withdrawals from your checking account into a savings account.
“I always encourage clients to set up automatic savings plans,” Campbell says. “When you get paid, the money is put away right off the top and you don’t miss it.”
Your bank’s app is capable of doing this so you don’t even need to visit or call your bank to set it up. This also makes it easy to adjust the amount you transfer. If you set too ambitious a goal, you can easily adjust it to a lower amount. And vice versa — if you have plenty left over between paycheques, you can allocate a bit more toward savings with a few taps of your finger.
Banks are coming up with even more ways to help you save. For instance, with Scotiabank’s Bank the Rest program, each time you make a purchase with your debit card, the amount is rounded up to the next multiple of $1 or $5. This can be set up in your app and also monitored using your app.
“Have [the difference] automatically transferred to a savings account,” says Mike Henry, Scotiabank’s senior vice president and head of retail deposits and lending.
Or, try the Tangerine app’s Small Sacrifices feature. It helps clients see how a small sacrifice — say, forgoing a morning coffee — builds up over time. Your small sacrifice of $4.50 every day goes into a savings account instead and the app projects how much you’ll save after a few months or even years.
4. Set up alerts. Your bank account and credit card balance could be constantly fluctuating. You can use your banking app to set up alerts that will notify you when you’ve spent a certain amount on your credit card in one day, or if your account dips below a certain amount. You can even get an alert when a deposit goes through.
“Alerts can be customized to keep you on track,” Kochel says. You can opt to receive the alerts via email or from a push notification from your app, she says. When the alert comes in, you’ll know it’s time to limit your spending, or look into possible fraud.
