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Budgeting: Human Vs Automated

What is an automated budgeting tool?

There are lots of budgeting tools available which claim to understand your spending behaviours and trim your excess spend in ways you never realised. Using algorithms and assumptions on your day-to-day consumption, these budgeting engines will be able to provide a list of suggestions to keep spending down to reach your savings goal.

The engines will likely ask you a series of questions about how much you typically save of a pay check, and where the remainder goes. How much does rent cost you? And what about groceries? How much and how often do you spend on entertainment?

These engines don't factor in the impulse buys, or the splurges, or the celebratory drinks when one receives good news. For better or for worse, life can get in the way of a strict budget.

So, should I use an automated budget?

An automated budget can come in handy when living in shared conditions, such as with roommates or with family. This is where an algorithm will calculate the precise cost of the expense split among everyone and keep track of who owes how much.

An automated budget takes much of the stress out of working out whether you can afford something. With many budgeting tools calculating a daily allowance, factoring in all bills and charges.

Or should I budget myself?

As relieving as it can be having an automated budget set out for you, unless you're a person who will follow directions and stick to what you're told, this could prove to be problematic.

It's been seen that many people consider themselves better savers than what they actually are, willing to sacrifice far beyond a realistic budget to go to a savings account. This results in the stress of having to access a savings account to boost your everyday spend.

But there are several tried and true methods that people use to plan the expenses for the pay period. Firstly, when it comes to a budget and keeping track of all expenses, everyone in the household needs to commit to being an active participant. This keeps everyone accountable to the goals that were set together and keeps the surprise costs within your ability to absorb.

The reality is ...

Everyone needs a hybrid of the two. Some will need more help to determine what needs to saved, whereas some others need more of their own decision-making to last the month. Your personal discipline to control your spending behavior according to your budget will determine what you need.

Information is intended to be of a general nature only and any advice has been prepared without taking into account any person's particular objectives, financial situation or needs. You should make your own enquiries, consider whether advice is appropriate for you and read the relevant Product Disclosure Statement or Product Information Document before making any decisions about whether to acquire a product