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As-Salaam Alaykum dear readers,
In this post, I wanted to write about using open banking tools such as Mint, Curve and Dave to manage your budgets and various credit cards in one location to get a handle on your finances. These open banking tools connect to your bank accounts to pull in your transactions and provide you data on how your spending your money. You are able to use these tools on desktops and smartphones through their respective applications.
What are the benefits of using these tools?
I will breakdown some of the benefits these platforms offer people looking to understand their cash flow and trends while looking at your financing.
Aggregate your Finances into one Place
These tools allow you to pull in all of your bank accounts, credit card balances and investments into one view to help you understand your Net Worth. Net Worth refers to an individual’s net economic position which is the value of the individual’s assets minus liabilities.
Examples of assets that an individual would factor into their net worth include:
- Bank balances (chequing and savings)
- Retirement accounts
- Investment accounts
- Home worth and owned vehicles
Examples of liabilities that need to be looked in regards to net worth are:
- Credit card debt
- Secured debt (such as a home mortgage)
- Personal loans (such as car loans or lines of credit)
- Student loans
Budgeting and Trends about your Money
You can also begin to see your spending history over time and report on how your income is being used in a given period of time. These tools also allow you to create a budget, so you can see if your overspending based on things like:
- Categorization of spending such as (rent, entertainment and loans)
- Upcoming payments that come out automatically (eg. mobile phone bills and monthly memberships)
- Targets and thresholds you’ve set to alert you if you are overspending on your budget
- Graphs and analytics showing your spending / income over time to help you plan or reduce spending
Automated Savings, Virtual Cards and Overdraft Protection
These innovative platforms also provide functionality that traditional banks don’t offer their clients. Once signed up, users are able to leverage features (to name a few) such as:
- Automated savings that looks at your income / spending to put cash away for emergencies
- Consolidation of multiple accounts and credit cards to a single card; allowing users to simplify their banking
- Cash back on purchases with specific retailers
- Overdraft protection for those who frequently have a negative balance in their bank accounts
- Access to prefered foreign exchange rates and travel insurance for people travelling to different countries
Clients looking to use open banking platforms should stick to one, as it’s meant to simplify and consolidate your personal finances. These tools can help people get a handle on their debt, income and cash flow which will help them on their path to financial independence.
I hope this post on open banking was interesting and insightful! As usual, I would love to here any comments, feedback or suggestions on new topics on the Muslim Financial Independence Blog or on my twitter @muslimfinancial. See you all soon!
As-Salaam Alaykum