Are budgeting apps safe? Budgeting apps are safe to use—mostly. While they can be incredibly convenient as tools to help manage your finances, budget apps must handle sensitive data and personal information over an internet connection, which makes them susceptible to security risks and online criminal activity.
Fortunately, most budget apps look out for your safety and do a good job of it. You can also take several steps to help protect yourself, minimize your exposure, and stay safe in the event of a data breach or hack.
Key Points
- Budgeting apps require a user’s data, including data that transmits sensitive account and financial information connected to your bank, any online banks, credit cards, loans, and investment accounts. Some require your Social Security Number. The information is critical for the app to be useful and allow you to manage your money effectively.
- Most budgeting apps use encryption and other security measures to protect your data. Most also offer or require two-factor authentication or other identity verification methods.
- A large percentage of budgeting app providers share some of your data with third-party advertisers and business partners.
You can help protect your account and personal information by using online safety protocols, such as using and regularly changing your strong, random password.
What Are Budgeting Apps?
Budgeting apps allow users to monitor their finances from a single device and in a meaningful way. They enable you to import transactions directly from bank accounts, investment institutions, and other sources to track your spending and generate a beneficial budget-tracking system. Budget apps provide a broad overview of your finances by analyzing and reporting on information from line-by-line cash-flow details.
Each of the best budgeting apps has its own way of doing things to help you manage your money best. Detailed reports, credit score reporting, tagging recurring payments, monitoring for fraud, automating categories, and linking to your financial institutions are all common among popular ones.
However, the fact that they need to connect to banks and other financial institutions to transfer transaction data on an ongoing basis means that the security risks are real.
Related Article: Budgeting for Seniors – Tips and Tricks
Things to Know About Budgeting Apps
While budgeting apps can be helpful, there are a few things to consider before committing to one or another.
Cost
With the exception of free budgeting apps and free versions of more robust ones, having a budgeting app costs money. While it may seem strange to consider spending money on something that’s supposed to help you manage it, many apps are worth the price when they allow you to see your big financial picture.
Using a budgeting app often enables you to save money by reminding you to watch spending and helping to identify areas where you can save. Here are cost figures from the top budgeting apps.
| Budgeting App | Cost Options |
| Quicken Simplifi | $71.88 yr |
| YNAB | $14.99 mo / $109 yr |
| Copilot | $13 mo / $95 yr |
| Rocket Money | $72 to $144* |
| Monarch | $14.99 mo / $99.99 yr |
Limitations
Budgeting apps are only as good as your input. Most budgeting apps allow direct access to your banking and other financial information, which is why this article exists. While some apps allow greater or lesser flexibility and more or less detailed reports, depending on the particular app’s abilities, the biggest factor is how well you manage your input into the app and organize the data the app downloads from your accounts.
Some allow you to put in your information in bulk and check your progress infrequently, while others require you to input information and make decisions daily or almost daily. Relying on a budgeting app that you don’t adequately maintain for feedback can cause trouble regarding having poor information on which to base financial decisions.
Privacy
So, are budgeting apps safe? If you’re worried about your budgeting app not providing accurate information back to you, you can work with the app to provide correct personal finance information and spend time correctly categorizing your transactions. This will give you trustworthy feedback. The app won’t make mathematical errors.
However, if you’re concerned about your data privacy, you’re right to have questions. It’s known that between 60% and 75% of budgeting app providers share at least some of your personal data with third-party interests. Names, email addresses, and phone number information are commonly shared. However, some will share your interactions and financial data within the app with other parties.
While that’s disconcerting, it’s pretty normal behavior for online banks, lenders, retailers, or other sites that access your personal or financial information. It’s another source of revenue that they’ve come to rely on.
You can read the terms and conditions on the websites and mobile apps to find out precisely which data they share, with which type of entities, and why. Typically, advertisers make up the bulk of the recipients.
Fortunately, we live in a world where customer reviews have a lot of power. A single data breach or situation that leaks more than a little personal information quickly makes headlines, and customers run away.
That means that keeping your data in trustworthy hands and providing adequate security measures is crucial to the survival of any online entity that handles your money. However, you must still be aware and take action to ensure your safety, regardless of the company or app you give data to.
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How to Protect Your Privacy When Using a Budgeting App (or any online financial tool) |
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Budgeting Apps Pros and Cons
Nancy Butler, CFP®, CDFA®, CLTC®, CSA, is the Founder of Above All Else, Success in Life and Business, and has over 40 years of experience in financial planning, asset management, insurance, and teaching financial advisors and insurance professionals on financial topics. We asked her for a list of pros and cons regarding budgeting apps. Here’s the information she provided.
Pros
- “Many apps allow you to view your assets, debts, investments, and budget all in one place. Apps can offer the ability to link your accounts to your budget app, providing automatic updates. This enables you to see your balances in “real-time”. Some apps offer personalized credit card, loan, checking, and savings account recommendations, which may save you time and money.
- You can use a built-in list of budget items or add your own. Most apps offer the ability to build a savings goal right into your budget and track it. For example, if you have a goal of having $5,000 to purchase a boat in three years, you can put this in the budget, and it will show if you are on track to meet your goal and if not, how short you are, and may provide suggestions on how to get back on track.
- Your app may have an alert when you are near your spending limit in individual areas or as a total for the month, week, etc., to assist you in making better spending decisions going forward.
Cons
- You need to be a little “tech savvy” and have the time to set up your account completely and accurately for it to be of value to you. The old saying “garbage in, garbage out” applies here not only to the way you set up your budget but also to how you enter all ongoing data.
- You need to have the time and commitment to pay attention to the input and output on a regular basis and be willing to make changes to your habits as needed.
- If you have a spouse or partner you share income and expenses with, they need to be committed to the process as well. If you are not both in agreement, odds are, this won’t work.
- If you do not make appropriate adjustments when you receive a raise or bonus, you will not be using the app to help you as much as it could, and it can even make your other numbers wrong, causing budget problems. For example, if you receive a $4,000 bonus and do not enter it as income, the amount of income taxes outlined in your budget will be wrong. You may then owe income taxes at tax time and not have the money to pay it, throwing off your budget completely.”
We’ll add to this list and include data breaches and hacking vulnerabilities as a definite con. We’ll call the fact that most budgeting apps are as secure as they can be in most regards a pro
How to Choose the Best Budgeting App
Dr. Annie Cole, Ed.D, is the Founder and a Money Coach at Money Essentials for Women. Besides recommending one of the budgeting apps featured in our review and mentioning that Google Sheets offers a free budgeting template for those who wish to create their own system, She offered this information regarding what to consider when determining your options.
“When you’re deciding on the perfect budgeting app or tracking system, consider how you want to use the app. Are you a super detailed tracker who wants to get into the weeds? Then you’ll want an app that lets you track every penny. Looking to do something less detailed? Create a simple income and expense spreadsheet and refer back to it once a month. Find the best system for your unique circumstances and financial habits.”
What are the best personal budgeting apps?
The best personal budgeting apps are the ones that provide the functionality you need while, ironically, meeting your budget. We tested and reviewed a number of budgeting apps. Quicken Simlifi earned kudos as our top pick. While we like Copilot, and our researcher kept the product after testing, it landed in third place, missing the top spots, partially because it’s not yet available on Android devices.
YNAB is the one we like best for budgeting beginners, while Monarch is great for couples. Rocket Money is excellent for those with relatively simple budget needs or those with budgeting experience who are new to using a budgeting app. Credit Karma provides a different experience than budgeting apps, It focuses on providing a financial overview while monitoring your credit score.
