The Dirty Secret of Budgeting Programs

The Dirty Secret of Budgeting Programs

The Dirty Secret of Budgeting Programs

As we all know, monitoring your spending can be extremely frustrating and a challenge to maintain. To help with this challenge, budgeting programs have exploded in popularity over the last few years; Mint and You Need A Budget (YNIB) are just a couple of the more popular examples. There is a hidden and dirty secret about these budgeting programs; if you use them, you are now more liable for fraud in your bank accounts.

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Budgeting Software and Liability

In theory, these budgeting resources are fantastic and very convenient. Modern lifestyles are extremely hectic and it can be a challenge to properly monitor your spending. To make things more difficult, it’s easy to miss a few expenses and need to start over. These budgeting programs – formally called budget aggregators – help by automatically retrieving all of your debit and credit card spending.

To take advantage of these programs, you’ll need to give them your confidential banking information. This includes your bankcard number, online password and even safety questions. This is where the problems start.

Canadian Banks make you responsible for fraud when you disclose your banking access information to a third-party. A third party includes all of the financial aggregators. You are now financially responsible for any direct losses that could arise from the budgeting programs such as a website hack or internal theft. In addition, the banks may also make you responsible for other loss that could may only possibly relate to the financial aggregators.

The full reality is that you can be legally responsible for any money that is taken from your accounts, which can also include overdraft, credit card balances, lines of credit and really anything that arises at the bank. So you can owe more than you event have in your account!

By dealing with a bank, you’ve already agreed to their legal clauses. Money Sense Magazine verified with the five main banks that account holders are responsible for losses related to financial aggregators. Also, the financial aggregators have legal clauses that limit their responsibility. So you’re in trouble if something sours. For those adventurous, I’ve included a couple related legal clauses at the end of the article.

So What Can You Do Instead?

As mentioned in a past article, monitoring your expenses is a passive budgeting technique that is best used to diagnose consistent financial problems and shock people to changing their finances. Beyond those reasons, I have found that this form of record keeping often discourages people from personal finance and has a detrimental effect.

Instead, it’s best to start by creating an estimated future budget that is periodically reviewed. Importantly, this budgeting technique’s foundation is built on your financial goals and dreams. This approach is much more assertive and is easier to accomplish. You can find a budget template and more here.

If you decide that it’s still important to monitor your expenses, then there are several ways that you can do it;

  • Use a bankcard or credit card for your expenses and then review your statements. Take special note of any cash transactions.
  • Manually enter your transactions in a spreadsheet or budgeting program.
  • Use the jar technique by putting your desired spending target in a jar and once it’s empty, you’re out of luck!
  • Also, feel free to share any extra way that you stay on plan.

Conclusion

Embracing financial aggregation software can have serious financial repercussions. This budgeting programs make it easy to sign-up, but just hard to be clear on the negative consequences of their programs.

That’s it for this week, but please feel free to contact me with any financial questions.

The Friendly Financial Coach
Helping You Grow

Mint’s Legal Disclosure

budgeting programs bank sales best accounts budget financial literacy budget Friendly Financial Coach Bank Account Help Toronto Retirement education Matthew Siwiec

CIBC’s Legal Disclosure

budgeting programs bank sales best accounts budget financial literacy budget Friendly Financial Coach Bank Account Help Toronto Retirement education Matthew Siwiec

2 thoughts on “The Dirty Secret of Budgeting Programs

  1. Tia

    Hey Matthew,

    I’ve been using Mint for a while with all my bank accounts and credit cards. Just the other day when I was updating my banking information and providing Mint with my new security questions, I couldn’t remember why exactly I trusted this website. I am confident in the security of the website, but with this new information I decided to delete my account. Mint says I should get a confirmation e-mail soon saying they have “expunged” my information from their systems. Is this enough to get me back in good standing with my banks, or should I change my passwords and security questions yet again? Thanks!

    1. Matthew Siwiec Post author

      Thanks for reaching out Tia!

      I would most definitely change your banking passwords and security questions. Did they also have any credit card details or CVV on the back of your debit card?

      In the unfortunate case of any fraud, you want to create an argument that would argue that it did not occur because of Mint having your personal financial information in the past.

      Feel free to email me directly at info@ffcoach.ca to discus this more confidentially.

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