Kaustubh Jadhav, COO at a gaming company in Mumbai, uses Money Manager, a finance tracking application, to maintain and track his budgeting and investment needs. Jadhav has been using finance tracking applications for the past 6 to 7 years to keep a hold of ‘where his money goes.’ ‘Roughly 85 per cent of my transactions are online, and only 15 per cent cash,’ he says. The apps allow Jadhav to keep investment-related transactions automated, and differentiate between wants and needs spends. Few of these applications are connected with UPI enablers to auto-feed data into the system. ‘Initially, when I started it had a lot of manual entries but now with the UPI auto-update feature the data is stored accurately and efficiently,’ he says.
Unified Payments Interface (UPI) and other digital payment platforms have made transactions more convenient than ever before.
A recent study by Indraprastha Institute of Information Technology Delhi (IIIT Delhi) found that around 81 per cent of people use UPI daily. On average, 15.7 per cent affirmed daily average spending of around Rs 200. Regarding daily spending using UPI, respondents reported a wide range, with amounts varying from Rs 50 to 1 lakh.
Respondents gave varying opinions on how using UPI affected their budget adherence. About 23 per cent strongly agreed, 23.3 per cent agreed, 26.7 per cent were neutral, 15.6 per cent disagreed, and 11.5 per cent strongly disagreed that the UPI has affected their budget spending. The survey shows that UPI has influenced their ability to follow their budget and manage overspending.
‘There are occasions when I exceed my initial spending plans, but I rely on finance tracking applications to ensure I stay within my budget,’ a person said in an IIIT Delhi survey on ‘UPI’s Impact on Spending Behavior among Indian Users’.
As payments today have evolved from cash to cashless with the digital revolution, personal budgeting tactics for many people, like Jadhav, have also changed from paper notes to online mode. In such cases, finance tracking applications have revolutionized the way people manage their budgets.
There are various kinds of applications available in the market. Some let you enter spending details manually based on categories, while many allow account linking features to automatically track and store data.
Respondents employed various methods to manage their expenses, including popular platforms like Splitwise, and Paytm, bank statements, and applications such as SBI YONO, and Samsung Notes. Other tools included Excel sheets and dedicated finance apps like MyMoneyy, Honeybook, Monefy, Payhawk, and Money Manager.
These finance budgeting apps provide convenience, efficiency, and real-time insights into an individual’s spending habits, thereby helping them take control of their finances. However, amid growing concerns around data privacy and security, a pertinent question arises - is it truly safe to entrust sensitive banking and financial information to these apps?
Most of these apps are free which always raises the question of how do they sustain. A popular budgeting app, Mint, was officially shut down in March this year because it wasn't making enough money. ‘What if they are selling data points and analytics to other apps or using them for purposes not known to the users?’ says Vinit Iyer, a financial advisor based in Pune.
‘These apps also get access to read your messages, see photos, and OTPs, such features can be a threat to user-sensitive information like UPI or other digital payment methods,’ he adds.
“I once had a bad experience with UPI. I got a message asking me to send money, and they wanted my bank OTP. Sadly, I gave it to them, and things got messed up. They took a big chunk of cash, around 10,000 rupees, from my bank account.
Third-party exposure is one of the main threats emanating from giving access to finance tracking apps, there an individual may;
Use different accounts: Iyer suggests users always keep a separate account linked with UPI or other digital payment platforms for day-to-day expenses. This can assist you with keeping a better track of UPI-related spending, help you cut down overspends and will also limit the threat of financial fraudulent activity from your main account.
Monitor your account: The overlapping of sensitive financial information, such as bank account details, credit card numbers, and transaction histories, into these apps can be a dangerous and hectic affair. To protect card-related data breaches you should monitor your account(s) and not simply rely on app-based data management.
“These financial tracking apps cannot stop you from overspending because of the lack of human aliment. They can send you alerts, some may provide insights, but they can’t initiate the discipline,” says Iyer. Cost, expenses, and limited income are some of the reasons that make people not seek out financial advisors, and this is where these apps come in handy.
However, on the matter of discipline needed to track overspends, a financial advisor can guide you better.
By being vigilant about permissions granted to these applications, understanding how personal information is stored and utilised, and staying informed about potential security threats, individuals can strike a balance between using the benefits of such finance-tracking apps and protecting their financial privacy.
