The first step to saving more money: knowing where your money goes. Money Dashboard is the sexiest and most useful app to automatically track expenses.
The central idea behind the financial independence retire early (FIRE) community is to massively increase your savings rate. Before we can save, we need to know where the money goes. You can only control what you track. You need to track expenses.
Where exactly does the money go?
When it comes to personal finances, that means being able to answer the following questions:
- How much do I actually spend each month?
- What do I spend my money on?
- How much is left over each month?
The problem with our modern age of app-based banking, credit cards and multiple bank accounts: it’s complicated.
Too little money is usually blamed for having a poor savings rate. We want to save more money, yet if we don’t know where the money goes, it is logical that having more money won’t solve the problem. Understanding where we spend our money is the absolutely crucial first step to making the changes needed to take the road to financial independence.
Track Expenses and Income
To solve the problem of where the money goes, I track my expenses and income. I’ve kept detailed spreadsheets recording various spending methods: cash, debit card, credit card. This requires time, and is a form of a personal accounting double entry system. I categorise my spending and income. This gives me an overview and helps me answer the above questions.
To save more money, you need to track expenses so that you can see where the money goes.
However, I miss some expenses, such as when the bank charges ad hoc bank charges. It’s not perfect and yet I’m sort of proud I’ve built a workable solution to track expenses. I at least have some idea of where the money is going. Yet it takes time each week and month to collate everything.
The Escape Artist recommends a variation on my method, which makes a lot of sense. The idea is to manually categorise each spend and then look for ways to reduce them from the most to least expensive.
In theory, I could aggregate my income and expenses into category reports by month and year. Then I could do useful things with the data. Who has the time?
Free your Data
Data is the new oil. Yet, our banks have had our data forever. Why have the banks not solved the problem of categorising where my money goes for me? True, the newer online banks, such as Revolut, are getting better at automatically tracking expenses and categorising them.
The future is now here with Open Banking. Open banking is the biggest change to retail banking in generations. It required a legislative change in the United Kingdom to free our data from the proprietary clasp of the retail banks. As consumers, we now have access to our banking data, and crucially, can now share it with a trusted third party. This leads to massive innovation. Fintech (financial technology) companies are providing Financial Contact Authority regulated services based on open banking.
I see this model growing to encompass all data in our lives. It only makes sense that we own our data and decide who to rent it or sell it to.
Auto Magical Money Management
Our American FIRE lovers sing the praises of software like Mint, which can automatically track expenses and these can be tracked against a budget you create. You give read-only permission to your data and the product acts as a smart and shiny front-end to your data.
Basically, I want an app that:
- Automatically tracks expenses across cards and accounts
- Tracking expenses against a budget I create
- Allows forecasting and savings planning
I spent quite some time looking across the UK market and testing apps and solutions, trying to find a “Mint for the UK”. Then I found Money Dashboard.
With a few clicks in my web browser I had connected all my bank accounts, including savings accounts and credit cards. They have agreements with over 60 UK banks and growing.
I now instantly have a holistic overview of all my finances – across my laptop, tablet and phone.
Everything in one place.
Control of Categories
Categorisation (tagging) is the heart of the system. The Money Dashboard algorithm is really good and has been improving during my time using it. They have a mature set of standard categories and sub-categories. You can edit and add your own.
Money Dashboard is able to correctly tag each transaction with a suitable category for most transactions. Best of all, it goes back through your transactions and categorises them based on the algorithm. Now it is like you have been tracking expenses for years!
Unusual transactions are categorised as “untagged” for your intervention. The idea is to tag transactions with a category. You can then set all similar transactions in the past to be tagged to that category, as well as similar future transactions.
Money Dashboard Features
Visibility. The Dashboard is amazing right out the box. It’s entirely customisable with widgets. You can view whatever you like on whatever device.
Now it is clear where the money goes and where I can save more money. Money Dashboard claims that engaged users save over £200 each year in their discretionary spend.
Transactions can be viewed:
- Across all the accounts or individual accounts
- By Merchants
- By Categories
It’s all intuitive and the product is actively being developed and features improved. Data can be easily filtered by:
Budgeting and Forecasting = Save More Money
Budgets allow you to set goals for your spending. You can track expenses against your budget by allocating limits to each category / tag. Progress can be compared with previous months.
You can create weekly and monthly budgets by setting spend limit amounts for specific categories.
Planner lets you see what your balance is going to look like in the future by adding predicted transactions that are yet to happen.
You predict a future spend and set up a schedule for it to repeat. With all this automagicality (is that a word?) about it’s not surprising that Money Dashboard has predictions ready for you, based on your history. These are exciting features which I intend to explore next.
The product is free, which of course means that you are the product.
The business makes money by selling on your anonymised data. These data provide great insights on consumer spending habits which other businesses are prepared to pay for.
Money Dashboard is the first to market in the UK and is established as the definitive data source for transaction categorisation on the Open Banking model. Their categorisation algorithm is their unique value proposition.
Their business model is to operate collaboratively. Essentially, this means they rent out their algorithm so that other fintech companies can use Money Dashboard for transaction categorisation, instead of having to build it themselves. Money Dashboard then collects those data too.
Money Dashboard is already growing fast, with big brand Go Compare already on board. Expect other companies to build their fintech products on top of the Money Dashboard product. For example, Mint already integrates credit scoring.
Money Dashboard may well replace my personal spreadsheets in time. Seeing really is believing. You will not be disappointed. You will save more money by tracking your expenses.
To incentivise growth, Money Dashboard are putting their marketing spend into a member referral scheme. Sign up here to earn actual shares in the business. Gifting equity is unusual and special. Both you and the business have the same incentive for it to succeed.
Sign up to Money Dashboard with my referral, and we both get 10 member shares. That’s 10 shares worth around 50 – 60 pence at current valuation. These member shares are limited. The rest of the equity in the company is with existing investors.
You can buy new equity in the company at £12 per share through the Money Dashboard crowdfund, closing later in June 2019.
How do you track expenses?
Has Money Dashboard helped you to automatically track expenses and save more money?