The mobile world allows us to track everything. This is a double-edged sword. In terms of health, it can either motivate us to exercise more (or perhaps even push us too far), or guilt and overwhelm us with constant health notifications. The same can be said for our finances. Ordering online and paying online is easier than ever. Using credit cards are now more convenient , and less painful in the short term too…really! Multiple studies have been done to show that when we use the seemingly archaic form of physical cash to spend, we enjoy the object more and also feel the pain of spending our money more: https://www.forbes.com/sites/elizabethharris/2016/07/28/study-paying-cash-hurts-and-makes-you-value-your-purchase-more/?sh=1087912d8285
On the flip side, there are more apps than ever that make automizing savings and investing easier. Spending habits can easily be tracked, along with savings goals with apps like TDMySpend and RBC Mobile’s NOMI. There are both positives and negatives to this new financial mobile world. It seems to reinforce habits we may have already have to begin with and expand them ten-fold. What do you think? Have you felt the influence of the financial mobile world and have you noticed it influencing your behaviour?
Related to this topic is the concept of mobile investing and just how easy it has become to invest using our mobile devices with apps such as Wealthsimple. Long gone are the days where people have to physically go somewhere to engage in investing activities like buying or selling shares. While mobile technologies have definitely made it more accessible to engage in investing activities, there are some risks and downfalls with just how easy and accessible it has become.
To preface, I am an accountant so while I am not a financial expert by any means, I do believe I have more financial literacy compared to some people who may not have the same background. When I first downloaded Wealthsimple, it was very easy to buy and sell shares, almost too easy. I felt some parallels to being at a casino gambling…I felt a short-term thrill when the price of any of my shares went up and a pit in my stomach when the price went down. Similar to gambling, it can be addictive when you’re ‘up’ and doing well. But are people making informed decisions when using these devices and apps? Or has it been made too easy and may lead to severe consequences for those less informed?
Hi Shannon,
I used to work in finance so this is an area I’ve watched for a while. The move towards widespread mobile trading is something that was decades in the making. I think one of the largest contributors was competition between firms driving prices down: when I started in the industry the minimum charge for a self-directed trade was $29; now less than $10 is the norm, with opportunities to trade certain investments without commissions. In the US, this is even more extreme, with firms like Robinhood offering commission free trades for everything. With lower commissions, the realist minimum amount needed to trade goes down, opening up trading to people who wouldn’t otherwise have access.
Trading has been a remote game for a long time, with phone based orders being dominant since at least the late 90s. Internet access offered another mechanism, and also reduced the monopoly brokers had on information like stock prices, further arguing for decrease in prices since what was being offered was less valuable. All of this has really increased the amateur trading scene, and definitely pros and cons. Used to be a requirement for financial firms to review every trade against a client’s investment profile, but that is problematic when there isn’t a strong personal relationship, and becomes expensive and time consuming with modern trading volumes. When I was working frontline customer service, I had people screaming at me about sixty second reviews of their orders costing them opportunities; I also had people screaming that we should have looked at their electronic order and called them about an “obvious” mistake.
An analogy here would be something like Home Depot: knowledge and tools are no longer completely in the hands of professionals, and an amateur could do good work and save themselves quite a bit of money. However, someone could also make mistakes that are expensive and/or dangerous.
Hi Shannon,
Your post, as well as previous replies, caught my attention. I have not yet engaged a whole lot in digital investing, working with my financial planner and keeping my investments managed by somebody who is far more of an expert than I am. It is hard, though, to not feel like a more hands-on approach with Wealthsimple or similar could be more financially beneficial. Reading your words of caution is, therefore, good for me.
I’m also always looking for the best tool to help with financial management as finances become more and more complicated with digital management rather than old-school paper money and cheque-book balancing. We’ve been YNAB users, but even that becomes stressful when numbers don’t seem to balance properly. Digital management and the distance it creates do indeed have its one risks and drawbacks.
I think an important addition to mobile finances is pay in an instant and service in an instant. Why go physically to the store when I can download the game/book/show/service instantaneously? We can instantly get products, or even food, delivered to use in a way that no tangible exchange of money happens. Mobile finances have resulted in a money culture where it is just numbers changing on screen. I can just etransfer my friends, set up automatic withdrawals on my phone for a new service, scan my checks to deposit them, and buy tickets to events and have them emailed to me. Mobile culture has created an instantaneous financial culture which removes thought and reflection from purchasing decisions, resulting in dangerous spending habits and a lack of respect for proper budgeting.
I agree with your concern about the instant payment system potentially creating dangerous spending habits. While it is easy for us to track our spending habits and manage our finances through mobile technology, it is just as easy to lost track of our spending and make impulsive purchases. I remember talking to a colleague who had cancelled all their credit cards because it was too easy to use their mobile devices to spend money without realizing the extent of their expenses. They reached a point where they faced substantial credit card bills every month due to the convenience of spending. They have now switched to using cash only to give themselves more time to consider the necessity of their purchases. The instant gratification culture of mobile payments can be convenient but poses a significant risk to our spending habits.