Agree or disagree, the hardest part about making purchases with a credit or debit card is that you risk overspending without even realizing it. Sure, you can use cash, but then you’d miss out on all those awesome online deals which can save you some big bucks.
Yes, having a budget helps eliminate some of the stress, but they don’t work if you’re not using it. What if you go home and realize you overspent on groceries? How will your budget help you then?
Ryan J Clark, a financial planner and coach, saw the frustration in his clients when they would repeatedly fail using existing budgeting systems. He wanted to help his clients get out of debt and live a life of financial freedom, but couldn’t find a solution that fit everyone’s needs. He knew from experience that the Cash Envelope Budgeting system worked best but summed it up perfectly when he said, “We live in a plastic world. How can anyone be successful with cash when it just isn’t realistic to do so?”
Enter his new app, ProActive he created hoping people would stop stressing or fighting over money because of poor communication for couples, or bad planning on general. He’s seen first-hand when testing the app with families how much happier they seem using it.
“The problem is that existing budgeting systems make it hard, almost a chore, and we don’t need extra chores,” he says. “Budgeting should create a liberating and freeing life when it becomes a part of you.”
How ProActive Works
ProActive works much like your traditional Cash Envelope System except instead of cash you get access to a Visa Debit Card. Proactive pulls your discretionary income from your linked bank accounts. As the money in it requires “Zero Based Budgeting” which means every dollar gets a job by being placed into an envelope before it can be spent. Allocate however much you want to different categories of spending which reflect your priorities and goals. The, whenever you go out shopping, the app will require you choose a category before you swipe. It’s that easy, no need to categorize your purchases after you shop which is typical of most budgeting apps out there. All you do is tap, swipe and you’re done.
Whenever you pull out your card to spend, you’ll first need to tell the app which category you’re spending your money on, otherwise the card will decline. Everything happens in real-time, so you know exactly how much you have left in each category. If you don’t have enough, you either don’t purchase the item you have in hand, or transfer money from another category.
The app will not take money that isn’t there, so you don’t have to worry about overdrafts. You can also deposit checks via the app, and link your rewards cards so you’re earning points as you shop. If you’re wondering if you can take out cash or use for online transactions, you can. All you need to do is choose the category you’re spending on or taking the cash out for and you’re all set.
Being More Conscious of Your Spending
Ryan hopes to help people stress less over their budgeting by helping them be more conscious of their spending choices right before they make the purchase. He’s seen how ineffective other budgeting apps are, stating that “every other system out there is optional to use, meaning they lack the power to effectively influence the user in that critical moment of purchase.”
What ProActive aims to do is to help you stop emotional or impulsive spending by forcing you to stop to look at how much money you have and pause before walking out of the store with a wasteful purchase. The idea is that the more aware of what you’re purchasing before you actually hand over your money, the more likely you’ll spend less on things you didn’t want in the first place.
Looking Towards the Future
Ryan hopes that getting a good budgeting system in place is one of the first steps to financial freedom. By using this app, couples will improve their communication and strengthen their commitment to their financial goals. Ultimately, he can see people increase their savings and using that towards debt payoff or retirement goals.
He sees ProActive integrating with a wide variety of credit unions, banks and even employers down the line. Along with the app, he hopes that financial advisors and coaches will help work with their clients to use ProActive to instill the discipline people so desperately need to be better at money management.
Using the App
Currently, ProActive is only available for iPhone users but an Android version is set to come out early 2017. You can try the app free for 45 days to get a feel for it, and it’s $7 per month after that or $60 per year. This includes one card, but you can add in more for an extra fee.
Time will tell how effective ProActive is for the millions of people who want a better way to manage their money, but for the 260+ users of the app so far, they’re liking it a lot.