In the age of the sharing economy and paltry wage growth, achieving financial stability can feel like an elusive goal, so personal finance startups are stepping up to fill the gap.

A series of smartphone apps and tools gaining traction with consumers promise to make it easier to manage their money and build savings — and offer alternatives to the costly loans people might resort to when funds are low.

As mobile banking grows, apps are evolving from tools to see balances and deposit checks, to programs that nurture healthy financial habits. The newer apps hitting the market offer to take the work out of saving or warn consumers when they are likely to overspend or miss a payment, says Steve Shaw, vice president of strategic marketing at Fiserv, a financial services software company. Others help those who need extra cash to hold them over until their next paycheck.

“It makes you more intelligent and smarter with your money,” Shaw says.

Use of mobile banking is on the rise as more people with smartphones look for new ways to manage their money and investments on the go, Shaw says. At the end of 2014, 35 million households used mobile banking, up 17 percent from the year before, Fiserv reports.

Some programs are tailored to freelancers and hourly workers who face unsteady or unpredictable income. But others offer more general guidance. Some people could use the help: The majority of Americans have only enough savings to cover one month’s living expenses, according to Pew Charitable Trusts. For low income households, savings are likely to run out after nine days.


The lowdown: Automates savings by studying a person’s cash flow and making transfers two or three times a week.

Price: Free

Travis Smith, a 35-year-old Web designer in Chicago, generally decides how much to save after looking at how much money is left in his checking account at the end of the month. But since February, Smith has used Digit, an app that automatically
saves money for users every few days, say $10 or $20, based on the person’s cash flow.

Digit determines how much that person can afford to save without running the balance so low that she would miss the money. The program does this by analyzing when a person is paid, his spending habits and what bills are coming up. It then automatically transfers the money that could be saved, be it $5 or $20, into a separate account. Updates are sent by text message.

Smith, one of the program’s earliest users, says he’s saved close to $1,500 so far and used the bulk of it as spending money during a family vacation to Portland. The program sent him a GIF of Scrooge McDuck diving into a pile of money to congratulate him for saving his first $100.

“The human brain is not wired for the complex financial world we’ve created around us,” says Ethan Bloch, chief executive
of Digit. Without more guidance, most people spend too much and save too little, Bloch says.

The startup drives home the importance of savings by paying small bonuses to people who leave their savings in place for at
least three months. The reward is tiny – about 5 cents for every $100 saved. Since it launched in February, Digit users have saved $23 million.


The lowdown: Levels off earnings by transferring money from savings when paychecks are low and pocketing the difference when pay is above average.

Price: App is free, but users pay $3 a week for the service

For some households, the biggest challenge is not saving for the long term, but dealing with unsteady income — where pay fluctuates wildly from week to week or from month to month.

The average low-income household, for instance, experiences about three months a year when pay is at least 25 percent greater than average and three months when income is at least 25 percent below average, according to a report by the U.S. Financial Diaries, a project that followed the weekly cash flow of 235 families for a year.

And that instability isn’t unique to hourly employees low on the income ladder. A report by the JPMorgan Chase Institute that analyzed the cash flow for checking account customers found that about 25 percent of people saw incomes rise or fall by 30 percent or more from 2013 to 2014.

“When your income is spiking and expenditures are spiking, it’s very hard to put away a regular amount each month,” says Jonathan Morduch, economics professor at NYU’s Wagner School and a lead researcher for the financial diaries project.

An app called Even tries to smooth out that income volatility by analyzing pay trends and calculating an average paycheck.
During the weeks that a person’s earnings are above average, the app will automatically pull the extra cash into a separate
account. On weeks when a paycheck is below average, Even will boost available cash by pulling from the reserve fund or offering an advance. As soon as the next better-than-average paycheck arrives, Even will pay itself back.

The idea is to help people pay their bills on time by removing that volatility in pay, co-founder Quinten Farmer says. “If
you think about how many people in pretty traditional jobs struggle to budget,” he says, “imagine doing that and also not
ever knowing what your paycheck looks like.”

The app is available by invite only now but should be more widely available after January. It doesn’t charge interest for fronting some extra spending money, but there is a cost: Users pay $3 a week for the service.


The lowdown: Helps users prioritize bills by showing income and expenses side by side.

Price: Free

About 77 million Americans – or about a third of consumers with credit files – have had a bill sent to collections, according
to a report by the Urban Institute and Encore Capital Group’s Consumer Credit Research Institute. Some consumers get overwhelmed after an emergency sets them off track.

Other times, consumers make mistakes when they skip out on balancing their checkbooks to make quick spending decisions based on their balance that day, says Tyler Griffin, co-founder of Prism.

People might only focus on the bills due now, and not on which bills are most important, Griffin says. Prism tries to make
it easier for people to prioritize and spot shortfalls by showing a person’s income, and expenses, side by side.

On one bar, the app shows a person’s expected earnings. Directly underneath, it breaks out the bills coming up, giving a visual warning that the next paycheck may not be large enough to cover all of their expenses.

“That allows you to say, just by looking at it, that ‘I can’t afford the credit card bill this month’ or ‘I can’t afford the
cable bill,'” Griffin said.


The lowdown: Provides an advance on earnings, removing the standard two-week wait until payday.

Price: App is free, but users can tip what they want for the service.

Even workers who are smart about setting priorities will face times when they’ll have the money to cover those bills — just not by the due date. Activehours tries to fill the gap. People can request to be fronted the cash they’ve earned as soon as their shift is over. They need to provide proof by snapping a picture of their electronic time card. (It doesn’t currently work for salaried employees.)

Founder Ram Palaniappan says he thought of the app because of an informal arrangement he had with his employees at a previous company. Once the person’s paycheck comes in, Activehours withdraws the amount of money it fronted directly from the person’s checking account. The company doesn’t charge interest or a regular fee, instead asking consumers to pay what they think is fair. Zero is always an option, Palaniappan says. But so far customers have been willing to pay for the convenience, he says.