Thinking about my future finances as a 20-something is like thinking about my death: I prefer not to dwell on where I'm headed or when I'm headed there.
There's a problem with my penchant for putting things off and that's getting what I want in years to come. To reach that dream of living on a tropical island one day, I need to make a behavioral change now.
Some fintech startups are striving to propel people like myself out of denial by launching new web and mobile apps that help predict cash flow and visually answer questions on a chart like: Am I on track to afford a house in 10 years? And will I run out of money in two months at the rate I'm spending? The idea, which takes a cue from the Ghost of Christmas Future, is to get a person to proactively change her spending present in order to try to make her goals a reality in years to come.
The latest company to offer a forward-looking service straight to consumers is Planwise, a personal finance management company out of San Francisco. Planwise launched an iOS app in mid December that helps consumers visualize estimates of their financial outlooks.
The twist in Planwise's service is that consumers don't aggregate their financial accounts to see pie charts of how they spend their money. Rather, the startup focuses on showing consumers possible scenarios of her future finances based on a few data nuggets she shares with the startup. It's PFM-lite, and the consumer's data is anonymous.
"Most PFM tools focus on where you are today and where you have been," Niall Wells, CFO, COO and business development exec at Planwise tells BTN. "People don't care that much about money. …The times they do care about money is when they undertake a large transaction or are about to run out of money. We position our tool more from a behavioral standpoint."
The idea of the calculator-like service, according to Wells, is to work like Google maps: use it when you need to get somewhere. That's all.
The Planwise app works like this: A person puts in estimates of personal info such as how much cash she has at the bank, monthly expenses, and her financial plan(s) like buying a house or maybe a bleaker scenario, like losing a job. Then the app visually charts out her future finances based on that scenario and offers important alerts, such as "rent expense > 35% of income" to a user. If a person wants to save her data to check out later, she can create an account.
The best part of the Planwise app is how intuitive it is. A tour guide function made navigating the app very straightforward. The design, which is understated, has several nice visual touches, including how the input sections lights up pink when the user is entering data.
However, in trying out the service, I realized just how disconnected I am from my typical expenses. My main expense guesses were truly guesses, even though it's all information I should know. My personal failing puts a thorn on estimating my future finances when I don't yet know my present.
That said, Planwise is sure to evolve and Wells hinted that the company is looking at ways to connect users with banks in 2013 - on the consumers' terms and when they are interested in attaching the app to their bank accounts.
Also looking ahead, Planwise plans to introduce an Android app in early 2013.
"We think innovation and technology will evolve around data and forward-looking decisions," says Wells.
Others agree. Planwise's latest app development reflects a growing trend among several PFM vendors, including Strands Finance and Banno, of launching features that visualize consumers' future cash flow using more personal finance data sources.
Banks, meanwhile, haven't really introduced the forecasting feature set into their digital banking offerings, with some exceptions. KeyBank, for example, launched a balance forecasting service in November called myControl Banking, but the feature was down on Friday.
The challenges to a bank in offering such services are many and include helping consumers understand what they're looking at, and tackling compliance concerns. That said, some are testing the waters.
Wells Fargo, for example, has been testing out a forecast feature that shows a 30-days-out cash flow for its online banking channel.
In digital banking, forecasts are coming.