Rookie Investor: Budgeting Apps

Welcome, Rookie

If you are a beginner when it comes to investing, and trying to find your way through this pretty complicated maze, you are not alone. Millions of newbies joined the ranks of DIY investors in 2020 as Tesla, tech stocks, crypto and clean energy captured our locked-down imaginations!

However investing of course comes with risk. And trying to work out who to trust or where to start can fry the smartest brain. We’ve got some tips on how, where and whether to start.  

Should you be investing? 

Although we believe that investing is typically the most sensible thing to do with long-term savings, it isn’t always right for everyone. We know markets can be bumpy so this isn’t a short-term game.  And if you’re paying off expensive debt then it’s pointless investing on the one hand if you’re paying double-digit interest rates on the other.

Similarly, it's probably better not to invest if the risk seems too daunting right now and you’re likely to shriek and bail the first time that markets have a shocker. You do need to be able to stomach some ups and downs. It is also important to have at least a few months worth of cash savings before you start putting significant chunks of money into investments.

If you’re not quite at the stage to Press Go then check out what we think are some helpful budgeting apps below. Build that cash safety net first and get the foundations in order.

But if it’s time to join the ranks of DIY investors, we’ll help you find the best home for your stocks and shares ISA - typically the 'no-brainer' tax free account to start with.

 

 

 

Budgeting Apps - What are they and how do they work?

How is a saving app any better than totting up the difference between what you earn and what you save on the back of a post-it note, or even a more sophisticated excel document?

Saving apps seamlessly integrate with your bank account using clever AI and new open-banking technology, giving them the ability to analyse your incomings and outgoings, assess your salary, overdraft, debt, monthly subscriptions and more to calculate how much you can afford to put aside each month.

It then does what we often struggle to do and actually puts that money aside for us, into a separate pot or account, where it sits collecting interest, far enough away for us to think twice before spending it but close enough for us to access it if we really need it.

It's the nerdier, more sensible version of you! 


 

The apps also have jazzier features and tools, alerting you to things that you may be unaware of, such as duplicate subscriptions. The first step to saving money is to stop paying for Apple Music AND Spotify!

If the spending analysis and budgeting suggestions don't help you boost your savings, they will at the very least give you a considerably higher level of self-awareness around your money habits.

 

 

The Apps – What are my options? 

There are more and more apps emerging in this space. Here we review three we like. You can read additional detail here.

 

 

 

Popular Questions


Q: What if the app saves too much?

A: If at any point you want to withdraw money from your saving pot or overrule the AI, you can. You can also adjust the settings to tone down the aggressiveness of the AI's saving level in the future. This gives you complete power over the app whenever you want. 

 

Q: Can investing help me pay off my credit card debt?

A: Technically yes, but in reality, absolutely not. The best thing you can do to reduce the weight and drag of credit card debt is to channel all of your resources and spare money into paying it off as quickly as possible. It only makes sense to invest surplus money if you are anticipating performance growth greater than the interest rate you're currently paying. And in 99.99% of scenarios that will not happen. 

 

Q: Why should I have 3 months savings before investing?

A: If you don't have savings for a rainy day and something happens that leaves you needing some extra cash, you don't want to be in a position where your only choice is to sell your investments. Especially if the market isn't doing particularly great and your investments have decreased in value. 

 

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Budgeting Apps Reviewed

We cast out eyes over some of the top saving & budgeting apps available right now, comparing and differentiating their key features and pricing tiers.

Budgeting Apps Reviewed

best-for-beginners-isa.png (1)

Best Buys 2021: Best for Beginner Investors - ISA

The best investment platforms and robo advisers for beginner and first-time investors. Based on customer reviews and expert analysis of 30 test accounts.

Best Buys 2021: Best for Beginner Investors - ISA - 1

best-for-low-cost-isa.png

Best Buys 2021: Best for Low Cost - ISA

The most cost effective investment platforms and robo advisers for ISA investors. Based on customer reviews and expert analysis of 30 test accounts. In this instance, we modelled various portfolios based on differing sizes, holdings and trading levels in the ISA accounts.

Best Buys 2021: Best for Low Cost - ISA - 1

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Best Buys 2021: Best for Beginner Investors - Pensions - 1

The best investment platforms and robo advisers for beginner and first-time pension investors. Based on customer reviews and expert analysis of 30 test accounts.

Best Buys 2021: Best for Beginner Investors - Pensions - 1

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