Community
Propelled by the pandemic, consumer demand for digital financial services has begun to soar. With stores shutting down across the country and consumers forced to buy online, many businesses and consumers switched to contactless methods of payments over the last couple of years.
Many financial services took this opportunity to begin implementing digital solutions to encourage easier, quicker and contactless methods for users to manage their finances – in fact, 97% of financial service firms have begun making moves towards digital transformation.
With nearly all financial services making the move to a digital platform, we’ll all need to prepare ourselves for the transition to a cashless future in order to ensure a financially successful 2022.
Creating a Financial Plan Using Digital Services
A good financial plan starts with a budget. Before getting started, it’s important to analyze last year’s expenditures in order to create goals that are specific, measurable, attainable, relevant and time based. By reflecting on last year’s expenses, individuals can figure out what they really want to spend moving forward. To do so, it can help to map out anticipated costs and bills and begin budgeting for the New Year.
The following steps may help you take the first step to begin building your budget plan.
Figure out your spending power
In order to effectively budget, it is important to understand your total net salary. Keep in mind that the total net salary is the amount of take-home pay remaining after all withholdings and deductions. Once you identify the amount of money you will have coming in, you can understand how much money you have available to spend.
Budgeting apps like Qapital, Digit, Mint, and Chime are all options for those looking for an easy way to start saving.
2. Tracking expenses
The next step includes tracking your expenses. Personal expenses fall under three main buckets: fixed, periodic and variable expenses. A fixed expense doesn’t change and includes bills like rent or mortgages, car payments and monthly prescription costs.. The other type of expense is a periodic one. Periodic expenses are bills that are paid regularly, but occur on a quarterly or annual basis, like a vehicle registration or a major car repair. On the opposite end of the spectrum of fixed expenses are variable expenses. These “surprise expenses'' occur month-to-month, but the amount may vary, such as utility bills, groceries, gas, etc.
By tracking expenses, it will be easier to separate essential and non-essential spend
3. Set a goal
Once you understand the amount of money coming in and going out, you can easily pull together goals that you can realistically achieve. Think ‘SMART’ and pull together goals that are: 1) specific, 2) measurable, 3) achievable, 4) realistic, and 5) time-bound to hold yourself accountable.
How to prepare for financial digitization
Financial apps are making it easier than ever for consumers to track their spending and give them more financial peace of mind. When making the move to cash-free digital financial services, the first step is to set up a digital wallet. Setting up a digital wallet enables you to simplify payments and make contactless purchases. By just holding your phone up to a card reader at most retailers today, you can make digital payments in seconds.
Another step you can take is using an app to begin investing and saving for the future. It has never been easier to invest and save than it is today. Moving to a digital financial solution has allowed users to begin investing and saving more by setting up automatic payments to avoid late fees and improving their financial literacy by providing an easier method of accessing their finances. Before the internet, investors used traditional methods of investing like using a stockbroker to place orders and buy stocks, which was typically slower and more expensive. Today, after just a few clicks on a smartphone, anyone is able to begin investing in stocks within minutes.
Finally, to completely implement a cash free lifestyle, the most important step is to utilize a digital money transfer service to quickly and easily move funds. Digital money transfer services maximize efficiency by enabling users to easily track their payments, make currency exchanges and send and receive funds around the globe instantly. With simple transfer methods, global coverage and close to instant processing times, digital money transfer applications have become the most simple way to transfer money.
As the world adjusts to financial services implementing technology within their services, consumers will need to plan ahead. In doing so, users will be able to ensure financial success and prepare themselves for any changes in the payments space these next few years.
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
Ellison Anne Williams CEO at Enveil
30 October
Vinothkumar Kolluru Senior Data Scientist at Fractal Analytics
Damien Dugauquier Co-Founder & CEO at iPiD
Kyrylo Reitor Chief Marketing Officer at International Fintech Business
Welcome to Finextra. We use cookies to help us to deliver our services. You may change your preferences at our Cookie Centre.
Please read our Privacy Policy.