Can financial apps help protect you from the cost of living crisis?

Soaring living costs may be putting pressure on millions of people – but smartphones can help put them in control of their finances.

Energy, food and fuel bills have all risen sharply over the last few weeks and it’s feared that prices will rise even further this year.

However, a string of useful mobile phone apps are helping hard-pressed families fight back against the hikes and get a grip on their money.

These innovative apps enable people to budget more effectively, keep track of various household expenses, and maybe even start saving.

Point of apps

Sarah Coles, personal finance analyst at Hargreaves Lansdown, believes technology can help everyone make the best of a difficult situation.

“We do everything on our phones as they’re always on and it’s so easy,” she says. “App features have also developed to make it really easy to do things that would have been a real chore.”

It means you can tackle financial tasks without having to set aside time to sort a spreadsheet. “You can also access your budget whenever you need to – and wherever you are,” she adds.

There is no shortage of apps available – so where should you start? Here we take a look at some of the most interesting free and paid-for options to consider.

Learning to budget

The first app you need is one that helps you budget. This will help you establish exactly how much money is coming into the household – and where it is being spent.

Financial adviser Scott Gallacher, of Rowley Turton, insists it’s crucial for people to understand their overall financial situation. He believes apps are invaluable in seeing where the money goes.

“Without knowing your expenditure, it can be difficult to assess how much you can afford to save for the future and what you will need in retirement to maintain your standard of living,” he says.

A popular budgeting app is Money Dashboard. It’s been around for more than a decade and classes itself as a personal finance assistant that helps you make better decisions.

It enables you to connect all your accounts so you can see your net worth at a glance, monitor bills and subscriptions, analyse spending across categories, and set spending budgets.

Of course, there are plenty of alternative apps. Emma is another popular budgeting app, as well as Moneyhub, which costs around £15 a year.

Manage a current account

The new breed of digital challenger banks have been posing a significant threat to the industry’s long-established players – and their app-accessed products are worth considering.

Starling Bank is one such player that has personal accounts offering plenty of analysis options, according to Coles.

“It can show you exactly where you’re spending your money, give insights into your spending habits, and reveal what’s breaking your budget – all at the click of a button,” she says.

Start putting money away

The idea behind so-called microsavings apps such as Chip is to tuck a little bit of money away without you even noticing.

It connects to your bank and uses artificial intelligence to work out how much you can afford to save. This amount is then automatically saved into the Chip account every few days.

You can earn interest on the money that’s saved. The app enables you to set savings goals, while there are also options to invest.

Issues to consider

Of course, you need to do your research with apps. It’s wise to remain cautious about disclosing financial information and making investment decisions, according to Coles.

“If you use a saving app, you need to check whether your money is protected by the Financial Services Compensation Scheme, as some are and some aren’t,” she adds.

The golden rule is to think before you act.

“Apps can be brilliant for looking at your spending, checking balances or examining a fund you’re considering,” she says. “However, before dipping into your savings you need to consider it carefully.”

Pensions

How about pensions? There are even apps that you can use to get on top of these long-term savings vehicles. A popular name in this space is PensionBee.

The app enables you to combine old pensions you’ve accumulated down the years and put them into a new online plan. It will even help you track down any you can’t find.

The money will then be invested in conjunction with investment houses. These are understood to include prominent names such as BlackRock and Legal & General.

Again, you will need to do your research to make sure that consolidating your pensions and having the money invested in this way meets your needs.

Check your credit rating

Other financial tasks can now be sorted out via apps. For example, credit ratings are used by a variety of businesses, including mortgage lenders, to gauge whether you are a good risk.

Information on your financial history is available via specialist agencies that have data on all the credit you have taken out.

You can find out your current rating – expressed as a three-digit number – via an app available from Experian, which is one of the most prominent credit agencies.