Financial Apps Suck at Planning Your Future

Don’t get me wrong, financial apps are great compilers of data, but at a planning tool, as they say in some parts of New Jersey, “fuggetaboudit”!

Skeptical? OK, let’s begin with why you plan. It begins with a desire; a very human desire to “get from here to there.” That desire is driven by, among other factors:

  1. Your money history and thus, your money mindset.
  2. How you feel about yourself, your status and your need to achieve.
  3. Where you sit, in your mind, in your social or familial pecking order.

These factors alone render financial appscompletely lacking in real planning power because they don’t have the ability to delve into, discuss and synthesize the impact of your personal experience and beliefs into your financial plan.

How you grow up around money lays the groundwork for how you feel about money, what money means and what you consider “normal.” Some people grew up where money was used as a weapon or reward; some grew up where money was power or represented survival. These experiences shape how we think and act—we all have money stories.

Effective planning begins with an understanding of your own and how it impacts your beliefs, behaviors and habits. Tell me what app can even approach this crucial information.

Once you have an understanding of your money mindset, you have to determine whether it’s working and—if you’re in a relationship—how it meshes with theirs. If you and your partner/spouse/significant other have widely varying beliefs about money, why would the entry of numbers in a program help you work through that effectively? Again, planning is, if nothing else, personal and very, very human.

The main focus of comprehensive financial planning is centered around the following:

  1. Cash flow management
  2. Debt management
  3. Investments
  4. Risk management
  5. Retirement planning
  6. Estate planning
  7. Tax planning
  8. College planning
  9. Medicare/Medicaid and elder planning

Each one of these topics is subject to not only the constraints of your resources, but also heavily shadowed by emotions. Consider how fear alone may play a pivotal role in motivation.

The fear of not having enough money might drive a couple in opposite directions because they define “enough” differently. Is the fear real or imagined? These questions, which are typically dealt with and discussed fully in the confines of your relationship with a skilled planner, are simply not available at the App Store.

Cash flow management is a great example.  While your application or program might be awesome at compiling information, it cannot explore why one feels the need to spend on certain types of expenditures. The ‘why’ is important as it digs deeply into motivation and behavior. Your program might tell you to save a certain amount of money per month, but if you’re dealing with stress and financial insecurity, you might defer to ‘retail therapy’ to soothe your spirits instead of adhering to a number on your screen.

Good planning—meaningful planning—is about what is behind your goals, not just a calculated number. You must turn on the light of understanding of your history, beliefs, behaviors and habits, so that more meaningful decisions can be made. Sorry, there’s no button for that on your smart phone.

Achieving your life’s dreams isn’t about a number. It is about living the values that mean the most to you and your family.

Being able to make decisions that align with those values requires a level of experience and objectivity that can say, “No, you can’t get there if you keep doing this!” or “Yes, you have plenty of leeway in your budget to accomplish that!” or “Maybe you can focus more here, than there, because of a particular risk that you might not have considered”, or “I think you’d be better off if you worked with a therapist first, before you tackle the financial aspect of your life.”

Honest and thorough discussions, along with good data, create great plans. Numbers in boxes create a number in a box that isn’t real life and doesn’t account for your beliefs, behaviors and habits. They don’t motivate, they don’t understand your deepest desires and fears. They are  cold and reduce success to binary: you win or you lose. Forgive me, but that’s just ridiculous.

It’s ok to use tools to assist you, but where humans are concerned—especially when it comes to you and your money—human connection, understanding and experience will help you move towards a meaningful outcome. Not some dopey program.