An increasing number of people around the UK are looking to fintech solutions for money management help in the thick of rising costs of living.
Apps and online platforms help consumers track expenses and savings, in an effort to navigate the pinch in the population’s finances, as prices rise at their fastest pace in 40 years.
According to the Office for National Statistics, a third of households in the UK were spending more money than they earned, before the pandemic and the cost-of-living crisis hit.
With soaring energy bills exacerbating the squeeze on people’s finances, households need support to manage their finances through this turbulence.
Budgeting app Snoop, for instance, has introduced a new feature in response to the current economic climate which calculates changes in the cost of living, and balances people’s budgets proportionately, helping users to properly understand and plan for the effect of rising costs to their financial situation.
Scott Mowbray, co-founder of Snoop, elaborates on the app, “Because inflationary pressure won’t impact everyone in the same way, we’ve provided customers with personalised breakdowns that show how increased prices and taxes will impact their finances, along with ways to mitigate and offset the pressure.”
Nous, another fintech app which endeavors to assist people with money management amidst the cost-of-living crisis, provides a free dashboard which consolidates a user’s spending and forecasts how a customer’s spending will pan out over the next 12 twelve months, taking inflation into account.
A Nous survey in March showed that two-thirds of households believe that their expenses will only increase by a maximum of £1000 over the next year, but Nous data shows that actually, the average working family with two incomes is likely to see a net increase of more than £4000 once government support has been taken into account.
Greg Marsh, founder and CEO of Nous, said, “We’re trying to raise awareness of the scale of the financial tsunami that is facing UK households.”
According to Marsh, 17-25% of households currently plan a budget, with the average household excluded from around £800 of potential annual savings, due to the fact that they are not as engaged with their finances as they could be.
Nous is helping overcome this by developing a subscription based automated tool which manages vendor relationships and keeps on top of renewal notices, essentially removing the responsibility of the user to manage these themselves, when they either lack the confidence or time to do so.
Marsh added, “We think the answer to this problem is not to provide people with more budgeting tools but to take the problems away from them.”
European strategy director of Marqeta, a payments company, Anna Porra, said that sharing the ways in which budgeting tools have helped people is the best way to ensure that vulnerable people are not being taken advantage of.
This means taking greater care to create an inclusive product design, using the least amount of financial jargon possible and getting rid of any unnecessary complexity, which can help improve the user experience.
Generally, attitudes to budgeting are shifting, with people talking about their personal finances, as the pinch in incomes has created the need for people to have a better understanding of their money management.
As a result of the current crisis, people are now, more than ever, genuinely interested in staying engaged with their money, meaning that people are much more likely to be much more in tune with their budget going forward.