December 19
By Yin Nwe Ko
In the realm of personal finance, the quest to help individuals spend less money has proven to be a challenging venture. As the clock ticks towards 1 January, the day Intuit will officially shut down the budgeting app Mint, it joins a long list of startups that once aspired to capitalize on promoting financial responsibility. The fundamental issue, it seems, lies in the fact that a scant number of people actively seek assistance with their budgets, and even fewer are willing to pay for such services. This trend is evident in the demise of other budgeting apps like Simple, Clarity Money, and Finn, which all faced closure despite initial promises.
Mint customers now find themselves in search of alternatives to track their spending without shelling out subscription fees, leading to a recalibration of expectations in the landscape of budgeting apps. Catherine Van Weele, a marketing coordinator from San Diego, expresses disappointment in discovering that many replacements come with a subscription cost.
Now, let us delve into the struggles of budgeting apps, exploring the demise of Mint and the broader challenges faced by such services in a world where financial responsibility competes with more engaging pursuits, such as trading meme stocks or learning languages through popular platforms. Ultimately, the article emphasizes the growing need for effective tools in financial planning, even as the landscape shifts toward subscription-based models and banks enter the arena with their own offerings.
There is a hard truth about the business of personal finance: It’s pretty tough to make money by helping people spend less money. When Intuit shuts the budgeting app Mint down on 1 January, it will join a packed graveyard of startups that have tried and failed to cash in on financial responsibility. The problem with budgeting apps, it turns out, is that few people really want help with their budgets, and even fewer are willing to pay for it.
Simple (2009-21), a digital budgeting app, was acquired by Spanish banking group BBVA for $114 million and closed six years later. Clarity Money (2016-21) closed three years after selling to Goldman Sachs Group. And there is Finn (2017-19), JPMorgan Chase’s homegrown app that sought to help millennials track their spending with emojis.
The fallout means Mint customers searching for a new place to track their spending for free or anyone who wants to turn to budgeting apps to manage their money better should lower their expectations. If they want an app that will survive, they will either need to pay to subscribe to a competing service or manage money themselves with a spreadsheet or pen and paper.
Catherine Van Weele, a 23-year-old marketing coordinator in San Diego, spent the past week researching replacements for Mint. She said it was disappointing to learn that most existing alternatives charge a subscription fee.
For now, she has settled on using the expense tracker attached to her brokerage account from Fidelity, even though it doesn’t have all of the flexibility she liked with Mint.
“I understand that you need to pay for an app…or you’re the product, but that’s definitely a barrier for me,” Van Weele said.
Minting everything but money
Mint launched with a lofty vision of using technology to help people make better financial decisions.
There is little evidence such services move the needle much for people who aren’t already engaged with their finances. Despite developers’ best efforts, no app or service has figured out a way to make managing your day-to-day finances as engaging as trading meme stocks on Robinhood or learning a new language on Duolingo.
“Someone is going to become really, really rich if they can figure out how to get unmotivated people interested in really thinking about money,” said Utpal Dholakia, a marketing professor at Rice University who has studied people’s relationships to money.
The team behind Mint felt the drudgery of managing money just needed a Silicon Valley makeover. The service was designed to be a dashboard of your financial life, linking all your bank and credit card accounts and automating much of the analysis of your spending. It was also free. The market for budgeting software at the time was dominated by Quicken, spreadsheet software then owned by Intuit that was sold in a box and came with a 92-page user manual.
Many Mint customers were like Julio Perez, a 35-year-old event planner in New York City.
He spent a few weeks trying to get the hang of the programme in 2016 but dropped it after getting frustrated by constantly having to manually edit transactions incorrectly categorized by the algorithm.
“It didn’t assign things in ways that always made sense to me,” said Perez, who prefers using a spreadsheet.
The costs of managing funds
Mint made money from referral fees when users signed up for new bank accounts or credit cards that appeared in ads on the site. But the people most likely to log into the app and see the ads were among the least likely to need the products that were advertised, Dholakia said.
Emily Luck, a 31-year-old from Williamsburg, Va, diligently checked Mint at least once a week since she made a joint account with her husband in 2012. She said she never clicked on an ad.
“We just have one credit card, and we’re not interested in opening a bunch of other ones, so I just ignore them,” Luck said.
Financial data aggregators such as Mint pay to connect to each account customers want to view on their platform. This costs between $6 and $7 for a customer annually, said Aaron Patzer, who founded Mint in 2006.
“A big reason this industry has been stuck is because the aggregation challenge has been so difficult and expensive,” said Val Agostino, a former Mint executive who launched Monarch Money, a competitor, in 2021.
That challenge has become more complex as more people open multiple financial accounts.
Rocky Mark Juan, a 36-year-old from the Bay Area, said he has at Mint. That list includes his four checking accounts, brokerage accounts, mortgage, student loans, and 14 credit cards. He has used Mint almost daily since 2011 and trained his budget’s algorithm to recognize subcategories as specific as “boba” tea.
“I’m one of those obsessed users,” he said.
These rising costs, coupled with low engagement, mean most of these businesses have now either thrown in the towel or are trying to make more money from existing customers. Rocket Money and YNAB (An American multi-platform personal budgeting programme based on the envelope system), two other popular budgeting apps, switched to subscription models in 2016 and 2017, respectively. Newer companies in the space, such as Monarch Money and Tiller, charged subscription fees from the beginning.
Banks offer their own tools
Despite the failure of the free budgeting apps, the need for better ways to plan your money continues to grow. Households save less and borrow a lot more on costly credit cards than they did 20 years ago, federal data show.
Some banks are hoping to fill that need and can afford to offer similar features at no cost. Bank of America launched a financial planning tool in 2020, and JPMorgan Chase introduced Wealth Plan in 2022. Since Wells Fargo rolled out LifeSync to its retail bank last month, it has already reached one million users, said Evelyn Varner, the executive behind the new budgeting tool.
“Nobody wants to track an expense item for expense item tracking,” she said.
An app that scolds you to keep your wallet in your pants will never be as exciting as trading stocks, buying concert tickets, or scrolling social media, said Patzer, Mint’s founder.
“It’s not the dopamine hit of Instagram and YouTube. It’s adult stuff. It’s responsibility.”
All in all, the landscape of money-saving apps faces a harsh reality as Intuit’s decision to shut down Mint adds to the graveyard of failed startups attempting to make a profit from fostering financial responsibility. The challenges lie not only in the reluctance of individuals to seek help with their budgets but also in their unwillingness to pay for such assistance. The demise of once-promising apps like Simple, Clarity Money, and Finn underscores the difficulty sustaining free budgeting services. Mint users now find themselves navigating a market where subscription fees are prevalent, prompting some, like Catherine Van Weele, to compromise on features in favour of free alternatives. Despite the struggles of budgeting apps, the demand for effective financial planning tools persists. While some banks are stepping in to offer no-cost solutions, the shift towards subscription models among existing apps suggests a need for sustainable revenue sources. In the ever-evolving world of personal finance, the quest for a universally engaging approach to managing day-to-day finances remains challenging, leaving financial responsibility in the realm of adult obligations rather than the dopamine-driven allure of social media or stock trading.
Reference: The Wall Street Journal, 20 November 2023
