Personal financial management isn’t just for the rich and affluent.
Finance in the U.S. tends to be pretty all-inclusive, even if it may not always seem like it is. There is nothing that prevents an average Joe from Idaho from playing a high-risk investment game on Wall Street. And this gets truer the more technology evolves because technology is connecting all of us more and more each day.
With that in mind, tools and resources that used to be reserved for Wall Street investors and financial big wigs are now starting to cater to a wider range of consumers. A most PFM platforms are no different. If you want your PFM to survive these days, you have to drill down to the needs of the everyday consumer.
The info below can help you understand why you (or anyone else for that matter) really needs a PFM. If nothing else, there’s no harm in trying one out – especially if you can get it for free. Complete the form to the right to sign up for Debt.com’s recommended platform to take a PFM for a free test drive so you can decide if it’s for you.
Need a budget? Then you need a PFM.
Are you a consumer who needs to know what money you have coming in and how you’re spending that money each month?
Unless you really just don’t care about being financially successful, the answer to that question is yes. And that means you need a budget – which with today’s technology and financial diversity, means you usually need a PFM.
Fact: About one out of every three consumers use a PFM of some kind.
A personal financial management (PFM) platform is really just a super-fancy (and cool acronym) way of saying “budget.” You bring all of your account information into one place so you can see what you have coming in and going out. You can manage your money all at once to get the total picture you need. And you eliminate the hassle of pen-and-paper or spreadsheet budgeting (which is the financial equivalent of still owning cassette tapes and CDs).
So who doesn’t need a PFM?
Given the answer above, it really may seem like absolutely every consumer in the U.S. needs a PFM to be successful. But that’s not necessarily true. If your finance is entirely linear and straightforward, then it may not be necessary.
Let’s say you have one checking account and a savings account with the same bank, you avoid credit cards completely, and any loans you have are through the same bank, too. With this in mind, your bank’s basic online system may be enough to mange your money effectively. There’s no reason to bring everything together in one convenient place, because it’s already there.
On the other hand, if you have credit cards with different issuers, checking and savings with one bank but an MMA account with another, loans from several different lenders and a few modest investments, then you have more need. Essentially, the more diversity you have to your financial outlook, the more need you have for a PFM because it gets harder and harder to keep everything organized since it’s all in different places.
Who needs a third-party PFM?
This is a slightly different question from the one posed at the top of this page. A third-party PFM is a platform that exist outside of banks or other financial institutions. Platforms like PowerWallet and Mint aren’t connected to any one institution or lender. They’re available to everyone regardless of where you do your banking.
But if your bank already offers a PFM as part of their online banking system, then you may not have a need to go to a third-party provider. The only reason you would use a third-party in fact, is if the outside vendor offered better tools and features that you don’t get through your bank’s system.
Fact: About 1/3 of users take advantage of the PFM offered through their primary financial institution.
Article last modified on August 7, 2019. Published by Debt.com, LLC