Security and Budgeting Apps
Last week, I received several comments about the “No Budget App.” essay.
I get why some households are reluctant to have their spending shoved back in their faces. A million financial writers think that individuals know their budget is personal finance 101, and that it is required for good financial outcomes (it is not). Budgeting, saving, and investing are recycled words that lose inspiration without a foundation.1
I see a lot of value in a budgeting app when it offers the ability to roll up every financial transaction into an organized structure. I am risk-averse, and I’ve used a budget app for years. In the late 1980s, I used a desktop software product called “Managing Your Money” to organize transactions. Then, Mint.com came on the scene, and my life changed because Mint permitted the roll-up of transactions into an organized structure. Mint.com was my longest app relationship until Intuit altered Mint and integrated it with Credit Karma in the fall of 2024. I like to summarize my credit card transactions, bill-pay use, brokerage account transactions, and ATM pulls in one place.
An archive of transactions is a personal choice, but if you would be in but are scared about security, read on.
Security and Budget Apps
A common objection to budget app usage is cyber risk: potential users are not keen to share their usernames and passwords to every financial account with some online software provider.
I reached out to Shawn Cao, who founded Fina Money, and asked him about security.
Question for Shawn Cao: “Could you respond to an objection I am receiving about a budgeting app......that it unnecessarily exposes a user to cyber theft.”
Shawn: “In the past, finance and budgeting apps stored user credentials in-house, creating an additional point of vulnerability for potential data breaches. However, modern apps have largely adopted the OAuth mechanism, eliminating the need to collect credentials directly. Instead, authentication and authorization happen securely between users and financial institutions, which then issue time-limited access tokens for apps to retrieve data.
Additionally, cloud-based apps like Fina Money benefit from the robust security infrastructure of leading providers such as Google Cloud, AWS, and Azure. These technology advancements have minimized security risks significantly, making modern financial apps safer than ever.”
If you want to get into the weeds, Shawn wrote about security and his software here.
The Budget App Process
If you have never trialed a budget app to learn how your financial accounts are shared, here is a quick tutorial using Fina Money.
After setting up a Fina account, the user’s first step is to add their financial accounts. Here is the view:
Once the +account button is selected, the user is asked to identify the type of account.
Once one type is determined, the user is passed along how the account should be added. I’d never use a budget app to manually enter accounts and transactions because manual entry defeats the app's value. Instead, I’d choose “Link account with Plaid.” Plaid is a proxy app. If your financial institution does not do business with Plaid, try MoneyKit.
You might wonder, “Now I have to share information with Plaid?”
I followed up with Shawn Cao:
"Share with me the role of Plaid…. I could see users who use Fina, add an account, then are sent to Plaid wondering “what just happened.”
Shawn replied, “They are proxy for apps to talk to finance institutions, like a mail man. [As] an app, we usually have no ability to talk to thousands of banks to connect with them. By talking to the proxy only, they represent the app to talk to all institutions to fetch data.”
So, after authorizing Plaid to be a go-between your financial institution and Fina, Plaid connects,
Plaid lists more obvious financial institutions and provides a search box.
After the connection, transactions are brought into Fina, and the user can categorize and organize as they see fit. Repeat to add another account, etc.
If you have never used a budget app like Monarch, YNAB, or Fina Money, you should be able to trial them.
Remember: there is a vast market because every adult is a potential user. If the trial isn’t apparent, drop customer support a note and tell them I sent you.
Personal finance 101 involves an individual knowing their maximum living standard, whether they learn that on their own or use an advisor adept enough to calculate the living standard number.