PFM (personal financial manager) – what is it and how is it important for the users?

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In one of the posts about neobank usage (N26, Starling bank, Klarna, Revolut, Tinkoff) is stated that more than half of people (55%) in the age 22-34 old and slightly less than half (47%) of 35-49 years old use smartphones to access their mobile banking more than 5 times a week – which means that practically every day.

What are people doing so much in mobile banking? – checking their balances, ordering transfers, tracking their transaction history.

Nowadays, we have the possibility to choose from our banking or especially neobanking apps depending on our intuition and simplicity of the onboarding process and the usage of the app – i.e. number of clicks for onboarding, creating an account, order of transfer, visibility of transaction and card payment history (with accurate logos and names) and fees and commissions associated with maintenance and transactions, additional services such as forex, insurance, investments.

And here comes PFM and its functionality…

PFMs are more often finding their way into banking applications and are becoming an absolute banking standard!

So, what really is PFM?

PFM is a way of managing your personal finances.

One of the most important features of PFM are savings and budgeting. You can categorize transactions – create a grocery budget, budget for entertainment, transport, pet budget could be also nice.

Some cool features are automatic saving (by payment with a card we turn on the micro saving feature – go to saving account or even auto-invest) and multiple subaccounts maintenance – you can add accounts from multiple institutions into a single view.

Moreover, PFM allows you to visualize data such as spending trends and net worth.

The key here is Payment categorization. In e-commerce and physical POS payments are used the MCC codes but this is not enough. Some companies offer other more precise solutions for identifying the right type of transaction.

And as a result, we could see the following examples of PFM – Monzo, Revolut, Moneze.

Sources:

https://www.investopedia.com/personal-financial-management-pfm-5181311

https://www.revolut.com/en-LI

3 thoughts on “PFM (personal financial manager) – what is it and how is it important for the users?

  1. 46295 says:

    Yes, PFM can actually be very useful when it comes to keeping track of your expenses. Certainly, thanks to it, you can limit expenses that are not necessary or set it to warn us against too much consumerism.
    Thanks for this article.

  2. 46373 says:

    This could be a great solution for young people living alone and starting their adult life! I’d definitely like to try it, because dealing with splitting the expenses at that young age is not easy at all. Above all, I would have full control over where, when and what I spend my money on. Thanks to this, it is also possible to reduce our expenses and also save some money! Amazing article, thank you!

  3. 46431 says:

    Interesting solution, since I started living alone I have had a problem with controlling my budget. I really like the micro-cut feature, it would rather be hard for me to put some of my money aside by myself, and so PFM does it for me. Great article, thank you!

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