SALT LAKE CITY — And there it was at last, the text message Eric Heininger had been waiting for.
His employer had made a direct deposit into his banking account and Mint.com had sent an alert to his phone telling him the money was available. It meant he could fill up the gas in his car and pay some bills.
Heininger, 27, just moved to Chicago, blogs on student loans at theloanvoice.com and is looking for work, so every dollar counts. He is part of a growing number of people who are using Mint.com and other money apps on their phones for instant access to information about their money, net worth, investments, budgets and even bad financial habits.
Mint.com has more than 10 million users with an average of eight financial accounts attached to the program — each account sending information to Mint on the fly. The app provides instant financial feedback, particularly for the two-thirds of Mint users who use the service on their mobile devices.
With instant notification, comparison, compiling and monitoring, consumers are starting to act differently than when financial updating came in the mail once a month. The new feedback makes consumers act almost as if they are using paper money again.
Paper or plastic
Karen Carlson, director of education and creative programs for InCharge Debt Solutions, a nonprofit based in Orlando, Fla., says money apps aren't the biggest change in how people interact with money. The biggest change is the shift in thinking about money as something tangible to thinking about money as something digital, something that is more an idea than something real.
Paying for something used to be a tactile experience — wallets got thinner, bills slipped through fingers, coins rattled and checkbooks had to be balanced in a book.
"Money is now flexible," says Carlson. "It is dynamic. We have overdraft protections so that we really don't need to pay attention, because money will be there even if it is not really there. … In the paper world, we had paper tools. In the digital world, we need digital tools. We need things like budgeting apps where we spend that same time with pencil and paper and a checkbook checking our balance and thinking strategically and negotiating with ourselves about what we need to buy."
She says a phone is different than even the digital monitoring consumers do on a desktop computer. A phone is always with you. It gives real-time alerts.
Vince Maniago, a group product manager at Mint.com in Mountain View, Calif., says if a person lost a wallet it could take them eight hours before they noticed, but a phone would be noticed in less than eight minutes.
"We are more connected to our phones than we are to our head, shoes and underwear," he says. "Phones are like a direct port into our brain."
That immediacy and connection is beginning to change people's financial lives.
When a person signs up for a money app service like Mint.com, the app collects personal financial information as a part of the service, including the last 90 days of financial information, Maniago says. The program analyzes how money is spent, categorizes it and tracks it. Ninety days after sign-up, spending for things like entertainment, bars and dining out drops for about 80 percent of the people who use Mint.
"Mobile brings it home to people," Maniago says.
Victor Rodriguez in Mesquite, Texas, used Mint.com to solve a mystery. He couldn't figure out where all his money was going. Mint told the recent PR graduate the ugly truth. "A lot of it went to fast food," he says. "It was horrible. I was appalled. I thought, 'Wow! $600 a month!' Now I don't spend as much."
Rodriguez also checks the app right before he shops and goes out for errands. Because he is still looking for a good job, he says can show it to family members who are helping him out. That way they can feel confident he is not wasting money.
"It gives me a sense of accountability," he says.
In Hull, Iowa, Sharla Kattenberg and her husband found their way into mobile money apps through trying to follow radio financial guru Dave Ramsey's advice to use an envelope system. The envelope system basically means dividing monthly cash into different envelopes with each marked for different purposes such as groceries, gas, entertainment and the like.
The Kattenberg didn't like the idea of using physical cash in envelopes, so instead they use the Easy Envelope Budget Aid app — a virtual envelope budgeting system.
Each virtual envelope is displayed as a bar which turns from green to yellow as the money is used up. If the bar goes red, that means a person exceeded the budgeted amount in that envelope.
This happened recently for Kattenberg when she hired someone to hang pictures in her home. The service would cost $170, but the household envelope only had $100 in it. She transferred money from the grocery envelope to cover the cost.
"We might be starving," she says, "but we'll have a pretty house."
When couples use a money app there are no secrets. Each person knows what the other person is up to.
"I know he'll see it," Kattenberg says, "and he'll see it right away."
Together but separate
Maniago with Mint.com, however, is noticing societal trends that are challenging his company's app to keep current with people's lifestyles. He says in the not-so-distant past, most couples who got married (himself included) would combine their accounts.
Now, he says, more newlyweds are keeping their accounts separate. This means Mint.com (and, by extension, other similar apps) need to be able to help couples not only understand where money is going, but also how to divvy up things like bills and varying balances in multiple accounts.
Some financial apps are like Mint.com and use established "bank level" web security protocols. Mint also doesn't allow any altering of accounts such as withdrawals, transfers or bill-paying. Other apps, such as the popular Pageonce, can be used to pay bills.
"We would absolutely recommend anybody thinking about using an app to, before inputting anything, do some due diligence. Do some research on the company," Carlson at InCharge Debt Solutions says. "Who are they? What is their security policy? Do some Googling. Look at their BBB profile."
But all that financial information in an mobile app may not be enough, says Carlson. She thinks the personal finance world is behind the diet world in focusing too much on information and not enough on behavior modification.
"The diet world doesn't say, 'We just need to educate people on nutrition and calories,'" she says. "There is a very a clear understanding it is a behavioral issue. We all know you have to eat less, you have to exercise more. We know this, but we don't do it because we have bad habits. We have behavioral issues we need to correct."
It is the same thing with personal finances.
Carlson thinks of a healthy living app that gives bubbly encouragement alerts such as, "Keep eating and exercising like you did this week and you'll meet your weight goal in a month."
Carlson says something similar for a financial app might be great. Such an app could encourage its users with alerts such as, "Save money like this weekly and you will have $7,000 in your account by the end of the year."
Or maybe something like, "You saved $500 this month. Forget what that healthy living app says and go treat yourself with a banana split."